Hence, such an income is chargeable to TDS in many countries across the world. TDS is a type of direct tax deducted by a person making payments. Thus, an individual or a company making a payment is required to deduct Tax at Source as per the Income Tax Act. Provided such payment is more than the threshold limit set by the tax authorities. So, a certain percentage of payment is deducted by a person at the time of crediting the payment of a specific nature to another person under TDS.
Further, the amount deducted is transferred to the government account. The person making the payment after charging TDS is called the deductor. And the company and the person receiving such payment is called the deductee. The deductor is responsible for deducting TDS before crediting the payment and depositing the same with the government. TDS is deducted regardless of the mode of payment, that is, cash, cheque or credit. It advocates dividing the responsibility of collecting tax between the person deducting such a tax and tax administration.
Furthermore, it leaves the government with a regular flow of cash. The company shall provide Mr. Gupta with a Form 16 describing particulars in detail regarding the amount of salary paid and tax deducted on the same.
However, had Mr. Gupta been working as a professional and received professional fees from an organization that is subject to TDS, then he will be provided Form 16A for the same. The concept of TDS is based on a simple principle i. A set of scenarios will be helpful in understanding the concept:. XYZ in exchange for professional services. Scenario 1: Mr. XYZ raised the invoice after completion of work on 31 st July and the rest of the payment is to be made.
Scenario 2: Mr. XYZ raised the invoice on 15 th July and was paid whole consideration at one go on 31 st July. Scenario 3: Mr. For example, the salary of Mr. Hence, provisions of TDS shall attract only if the minimum salary is above the basic exemption limit. There are around sections that prescribe different types of payments on which tax is deductible at source.
Here, we are going to discuss some of the most commonly encountered nature of payments on which tax is to be deducted at source. Numerous transactions are covered under the purview of TDS sections and calculation of TDS can be tricky in some sections.
Here, we shall discuss some examples of different sections to make the calculation clear. Example 1: Under the section, A tax is to be deducted on payment of interest other than interest on securities. Also, note that no tax is to be deducted on savings account interest. The definition of a contract is derived from the Indian Contract Act, and covers almost all types of contracts under its purview.
However, no tax is to be deducted where:. Payment of TDS each month and filing of quarterly return of TDS are 2 separate processes and due dates for these processes are different. The due dates for the payment of the deducted TDS are on or before the 7th of next month. The deductor can claim excess tax deducted as TDS Refund. The excess amount will stand refundable. The amount of excess payment will be considered higher of the actual amount paid by the deductor or the amount of tax deducted.
If there is any tax liability, the excess amount is first adjusted against that and the remaining, if any, is refunded. The provision of section A of the Income Tax Act states that the people who require deducting tax at source have an obligation to acquire a TAN. It is an alpha numeric number of 10 digits. Any failure to follow the provisions of this section will attract a penalty of Rs. TDS is a significant tax deduction for other people also like a businessman. The tax can be adjusted towards the total tax liability finally ascertained.
For a salaried person, TDS is deducted if the individual is falling under the slabs of income tax. So, for TDS deducted on rent and for purchase of property, the due date is 30 days from the end of the month in which TDS is deducted.
The deductee also gets a certificate from the deductor stating the amount of TDS. A deductor deposit the deducted tax to the government and then the details are filed quarterly by TDS return.
There are different forms for filing returns based on the purpose of the deduction of TDS. Now let us take a look at the below table:. For Example, The employer issue Form 16 to salaried employees and Form 16A for non-salaried employees within a specified time.
They also need not apply for TAN. If you have any questions, leave them in the comments section below. Customer Login Demo Request. Call us :
0コメント