Tds
This query is : Resolved
08 July 2013
Could you plz tell me what does TDS means and how it works.. I m getting lot of confusions on it can any1 clear it.
09 July 2013
Overview of TDS:
TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the Government account. It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries, one of the countries is USA. The concept of TDS envisages the principle of "pay as you earn". It facilitates sharing of responsibility of tax collection between the deductor and the tax administration. It ensures regular inflow of cash resources to the Government. It acts as a powerful instrument to prevent tax evasion as well as expands the tax net.
Objectives of TDS:
Tax Deducted at Source was introduced in India to facilitate the payment of tax while receiving the income and it follows the concept of “Pay as you earn”. However, the purposes of tax deducted at source is changing slowly. Now, the objectives of tax deducted at source are:
· To enable the salaried people to pay the tax as they earn every month. This helps the salaried persons in paying the tax in easy instalments and avoids the burden of a lump sum payment.
· To collect the tax at the time of payment of income to various assessees such as contractors, professionals etc.
· Government requires funds throughout the year. Hence, advance tax and tax deducted at source help the government to get funds throughout the year and run the government smoothly.
· It helps to spread the tax net wide enough to include persons who might otherwise have evaded taxes. The minimum thresholds are raised and the rates are reasonable and comparable with the rates prevailing in other countries. Hence, it is very vital to make all the persons earning the taxable income pay the tax. But, the best way to make them pay is to deduct tax at source.
TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the Government account. It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries, one of the countries is USA. The concept of TDS envisages the principle of "pay as you earn". It facilitates sharing of responsibility of tax collection between the deductor and the tax administration. It ensures regular inflow of cash resources to the Government. It acts as a powerful instrument to prevent tax evasion as well as expands the tax net.
Objectives of TDS:
Tax Deducted at Source was introduced in India to facilitate the payment of tax while receiving the income and it follows the concept of “Pay as you earn”. However, the purposes of tax deducted at source is changing slowly. Now, the objectives of tax deducted at source are:
· To enable the salaried people to pay the tax as they earn every month. This helps the salaried persons in paying the tax in easy instalments and avoids the burden of a lump sum payment.
· To collect the tax at the time of payment of income to various assessees such as contractors, professionals etc.
· Government requires funds throughout the year. Hence, advance tax and tax deducted at source help the government to get funds throughout the year and run the government smoothly.
· It helps to spread the tax net wide enough to include persons who might otherwise have evaded taxes. The minimum thresholds are raised and the rates are reasonable and comparable with the rates prevailing in other countries. Hence, it is very vital to make all the persons earning the taxable income pay the tax. But, the best way to make them pay is to deduct tax at source.
09 July 2013
Who shall deduct tax at source:
Every person responsible for making payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax.
However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the file was subject to Tax Audit in previous year, he is required to deduct tax at source.
Every person responsible for making payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax.
However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the file was subject to Tax Audit in previous year, he is required to deduct tax at source.
09 July 2013
What a deductor must do?
1. Obtain TAN
Every deductor is required to obtain a unique identification number called TAN (Tax Deduction Account Number) which is a ten digit alpha numeric number e.g.DELH90468K.
This number has to be quoted by the deductor in every correspondence related to Income Tax matters concerning TDS.
2. He/She should obtain PAN of the deductee.
3. He/She should deduct the tax at correct rate.
For Rates see:
https://caclubindia.s3.amazonaws.com/cdn/files0512/78886_56153_tds_tcs_rate_chart_f_y_2013_14.pdf
4. The tax deducted has to be deposited in the designated banks within specified time. (Govt. deductors shall transfer the tax deducted through book entry in Government account).This is detailed below:
â–¬ By or on behalf of the Government : on the same day,
â–¬ By or on behalf of any other person : On or before the 7th of the following month.
However, for the month of march the tax should be remitted by 30th April.
Note: w.e.f., 01.04.2008 electronic payment of tax has to be done by all corporate assesses and all persons whose cases are auditable under section 44AB.
5. Use challan no. 281 for depositing TDS amount.
6. File statements of tax deduction in the prescribed time.
The due dates for filing of TDS/TCS statement are :
15th of July for Quarter 1,
15th of October for Quarter 2,
15th of January for Quarter 3 and
15th May for last Quarter however for TCS statements (Form 27EQ) the due date is 30th April.
7. Use correct form to file TDS/TCS Returns. They are:
Form 24Q for salaries
Form 26Q for non salaries
Form 27Q For Non Resident (TDS deducted u/s 195)
Form 27EQ for TCS
Form 27A/27B Control sheet for electronic TDS/TCS
1. Obtain TAN
Every deductor is required to obtain a unique identification number called TAN (Tax Deduction Account Number) which is a ten digit alpha numeric number e.g.DELH90468K.
This number has to be quoted by the deductor in every correspondence related to Income Tax matters concerning TDS.
2. He/She should obtain PAN of the deductee.
3. He/She should deduct the tax at correct rate.
For Rates see:
https://caclubindia.s3.amazonaws.com/cdn/files0512/78886_56153_tds_tcs_rate_chart_f_y_2013_14.pdf
4. The tax deducted has to be deposited in the designated banks within specified time. (Govt. deductors shall transfer the tax deducted through book entry in Government account).This is detailed below:
â–¬ By or on behalf of the Government : on the same day,
â–¬ By or on behalf of any other person : On or before the 7th of the following month.
However, for the month of march the tax should be remitted by 30th April.
Note: w.e.f., 01.04.2008 electronic payment of tax has to be done by all corporate assesses and all persons whose cases are auditable under section 44AB.
5. Use challan no. 281 for depositing TDS amount.
6. File statements of tax deduction in the prescribed time.
The due dates for filing of TDS/TCS statement are :
15th of July for Quarter 1,
15th of October for Quarter 2,
15th of January for Quarter 3 and
15th May for last Quarter however for TCS statements (Form 27EQ) the due date is 30th April.
7. Use correct form to file TDS/TCS Returns. They are:
Form 24Q for salaries
Form 26Q for non salaries
Form 27Q For Non Resident (TDS deducted u/s 195)
Form 27EQ for TCS
Form 27A/27B Control sheet for electronic TDS/TCS
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