TA X DEDUCTED AT
SOURCE
NEHA SONI
WHAT IS TAX
To run a nation judiciously, the government needs to collect tax
from the eligible citizens; paying taxes to the local government is
an integral part of everyone’s life, no matter where we live in the
world. Now, taxes can be collected in any form such as state
taxes, central government taxes, direct taxes, indirect taxes, and
much more. For your ease, let’s divided the types of taxation in
India into two categories, viz. direct taxes and indirect taxes. This
segregation is based on how the tax is being paid to the
government.
TYPES OF TAX
TAX
DIRECT TAX INDIRECT TAX
FATHER –
FATHER – JAMES WILHEMN VON
WILSON (ITALY) SIEMENS
INCOME TAX WEALTH TAX GST CUSTOMS
INTRODUCTION
The concept of TDS was introduced with an aim to collect tax
from the very source of income. As per this concept, a person
(deductor) who is liable to make payment of specified nature to
any other person (deductee) shall deduct tax at source and
remit the same into the account of the Central Government.
The deductee from whose income tax has been deducted at
source would be entitled to get credit of the amount so
deducted on the basis of Form 26AS or TDS certificate issued
by the deductor.
1) LESSBURDEN
2) REFUND WILL BE CLAIMED
3) GOVT – NO MORE TAX EVASION
WHEN SHOULD BE TDS BE DEDUCTED AND BY
WHOM ?
Any person making specified payments mentioned under
the Income Tax Act are required to deduct TDS at the time
of making such specified payment. But no TDS has
to deducted if the person making the payment is an
individual or HUF whose books are not required to be
Audited. (A CHARTERED ACCOUNTANT IS
REQUIRED TO PROCEED FOR THE AUDITING
PROCESS)
EXAMPLE
Shine Pvt Ltd make a payment for office rent of Rs 80,000 per month
to the owner of the property.TDS is required to be deducted at 10%.
Shine pvt ltd must deduct TDS of Rs 8000 and pay balance Rs 72,000
to the owner of the property.Thus the recipient of income i.e. the
owner of the property in the above case receives the net amount of
Rs 72,000 after deduction of tax at source. He will add gross amount
i.e. Rs 80,000 to his income and can take credit of the amount already
deducted i.e. Rs 8,000 by shine pvt ltd against his final tax liability.
CONCEPTS OF TDS
• IT IS NOT ANOTHER TYPE OF TAX RATHER THAN A WAY
OF COLLECTION OF INCOME TAX.
• A FORM OF ADVANCE TAX
• THIS CONCEPT WAS FIRST INTRODUCED IN 2004 ON
THE PRINCIPLE OF “PAY AS YOU EARN”
PROCESS OF TDS
PAYER DEDUCTS TAX FROM
PAYMENT CREDITED
PAYER DEPOSIT TAX TO
GOVERNMENT
PAYER TAX RETURNS OF TDS
PAYER ISSUE TDS CERTIFICATE TO
PAYEE
PAYEE CLAIMS REFUND OF TDS IN
ITR
WHAT IS PAN ?
• Pan is Permanent Account Number
• It is alpha numeric concept
• Containing 10 digits (AAAPS1234K)
• Composition of PAN - 5 alpha 4 number 1 alpha
• The fourth letter of the pan is (p) if it is for person, (c) for
company, (f) for firm
• The fifth letter stands for first letter of surname.
• Every deductee has to give the pan details for the prescribed rate of
deduction and to claim the TDS refund
• Form 49A to be filled to obtain pan
• Applicants are required to pay a charge of Rs. 110 which includes a
processing fee of Rs. 93.00+GST 18%.
WHAT IS TAN?
• Tan is Tax Deduction And Collection Account Number
• Every deductor/payee to obtain the TAN
• Consists of 10 digits
• Alpha Numeric Concept
• 4 alpha 5 number 1 alpha (PAN – 5 ALPHA 4 NUMBER 1ALPHA)
• Form 49B to be submitted at any TIN. Charges – RS 62 + GST 18%
• TAN is used in any TDS related matters (such as Return / TDS deposits)
What is the due date for depositing the TDS to the
government?
The Tax Deducted at Source must be deposited to the
government by 7th of the subsequent month.
JANUARY – FEB 7TH
Feb = march 7
Mar = april 30THE MONTH ( DEPOSIT)
1 april f.y
For instance: TDS deducted in the month of June must be paid
to the government by 7th July. However, the TDS deducted in the
month of March can be deposited till 30th April.
How to deposit TDS?
Tax Deducted at Source has to be deposited
using Challan ITNS-281 on the government
portal.
How and When to file TDS returns?
Filing Tax Deducted at Source returns is mandatory for all the persons who
have deducted TDS. TDS return is to be submitted quarterly and various
details need to be furnished like TAN, amount of TDS deducted, type of
payment, PAN of deductee, etc. Also, different forms are prescribed for filing
returns depending upon the purpose of the deduction of TDS. Various types
of return forms are as follows: SALARY – 24Q
Form 26Q TDS on all payments except salaries
Q1(APRIL-JUNE – 31st July
Q2 (JULY- SEPTEMBER) – 31st October
Q3(OCTOBER- DECEMBER) – 31st January
Q4 (JANUARY -MARCH)– 31st May
What is a TDS certificate?
Form 16, Form 16A, Form 16 B and Form 16 C are all TDS certificates.TDS certificates have
to be issued by a person deducting TDS to the assessee from whose income TDS was
deducted while making payment.For instance, banks issue Form 16A to the depositor when
TDS is deducted on interest from fixed deposits. Form 16 is issued by the employer to the
employee.
Assesse- 1) any person who is liable to pay income tax
2) any proceedings are going on in the income tax department
3) Any person who is liable to pay any interest or penalty is an assesse
CERTIFICA BASIS DUE
TE DATE
FORM 16 TDS ON YEARLY 31ST MAY
SALARY
PAYMENT
FORM 16A TDS ON QUATERLY 15 DAYS
NON FROM THE
SALARY DUE DATE
PAYMENTS OF FILING
RETURN
FORM 16B TDS ON EVERY 15 DAYS
SALE OF TRANSACTI FROM THE
PROPERTY ON DUE DATE
OF FILING
RETURN
FORM 16C TDS ON EVERY 15 DAYS
RENT TRANSACTI FROM THE
ON DUE DATE
OF FILING
RETURN
CONSEQUENCES OF NON DEDUCTION OF TDS
IF A PERSON WHO WAS RESPONSIBLE FOR DEDUCTING TAX AT
SOURCE FAILS TO DO SO, THEN THE ASSESSING OFFICER HAS THE
POWER TO DISALLOW WHOLE OF SUCH EXPENDITURE.
FOR EXAMPLE _ ABC LTD PAID A COMISSION OF RS 2 LAKHS AND
OMITTED TO DEDUCT TAX ON THE SAME, THEN THE ASSESSING
OFFICER WILL DISALLOW DEDUCTION OF SUCH EXPENSES IN
TAXABLE PROFITS
LATE PAYMENT OF TDS
Tax is to be deducted and paid to the credit of
government on every 7th day of the succeeding
month in which the tax has been deducted
otherwise, interest @ 1.5% per month of TDS
amount subject to maximum amount of TDS is
levied.
LATE DEDUCTION OF TDS
TAX IS TO BE DEDUCTED AT THE TIME OF PAYMENT /
OR CREDIT GETTING DUE OR PAYMENT WHICHEVER
IS EARLIER.
IN CASES OF LATE DEDUCTION OF TAX , INTEREST
@1% PER MONTHS TO THE TDS AMOUNT SUBJECT
TO MAXIMUM AMOUNT OF TDS IS LEVIED
ABC COMPANY WAS SUPPOSED TO DEDUCT TAX OF
RS 20000/- ON 15TH JULY BUT INSTEAD THE SAME
WAS DEUCTED BY THE COMPANY 1 ST AUGUST
INTEREST – 200/- ( 1% OF 20000) FOR ONE MONTH
Late Filing of TDS RETURN (SEC 234E)
Assessing officer may direct a person who fails to file the
statement of TDS within due date to pay penalty minimum of RS
10,000 which may extend to RS 1,00,000.
It also cover the cases of incorrect filing of TDS return.
Basis of calculation
For Resident (any person who is present in India 182 days or more during the
previous year) 6(1)(a)
Or
60 days in the p.y and 365 days in the 4 years immediately preceding the
previous year. 6(1)(c) – only subsequent Rate
For Non Resident – Rate + Surcharge + Cess
What is Surcharge - Surcharge is a tax on tax. ( jo zyada kamate hai unko zyada tax dena
padhta hai) 50lakh– 10% and 1 crore se zyada hua toh – 15%
What is Cess- Cess is a tax. It is usually known as tax on
tax. Cess is generally levied for promoting services like health,
education. Current Cess – health and education Cess @ 4%
For Non – Resident (double taxation)
• NRI can avoid paying double tax as per the Double Tax
Avoidance Agreement. Usually non resident Indians live abroad,
but earn income in India.
• This means that they would have to pay tax twice on the same
income, to avoid this tax relief under DTAA can be sought
between two countries.
• Tax relief can be taken –
• A) Exemption method
• B) tax credit method
How do I know how much TDS has been deducted and whether it has been credited
to me ?
These are the following steps:
1) Log on to income tax India E- filing website and click on the link “Register Yourself”
2) Enter your details as per PAN and generate a password
3) Once you have logged into the portal, click on the option “ View tax credit statement”
4) After clicking on this link you will be directed to another website called TRACES (TDS
RECONCILIATION ANALYSIS AND CORRECTION ENABLING SYSTEM) where you can
know about complete details of your tax deducted at source, advance tax paid and other
important details.
How to apply for TDS Refund?
• To file your TDS online, you have to first register yourself on the IT
department’s website: https://incometaxindiaefiling.gov.in/.
• After registration, you can file your income tax return by downloading
the relevant ITR form.
• Fill in the requisite details, upload the Form and click on submit.
• Upon filing the ITR, an acknowledgement is generated for the ITR
submitted, which you must e-verify. You can do e-verification by using a
digital signature, an Aadhar-based OTP or your net banking account.
How to Register in TRACES?
RACES registration is mandatory to file Correction Statement. It helps to file online
corrections. Once you are registered you can avail many facilities provided by traces.You can
view TDS/TCS credit, verify form 16, view refund status etc. Here are the steps to
register in TRACES: Step 1: Click on “Register as New User” tab,
Select “Deductor” as the type of user and click on “Proceed”.
