Difference between tds and income tax

Dear Vishwas

Generally, expenditure of some person would be the income of another person- you agree? Then why a person making payment to another person would not deduct some portion as income-tax of the second person and would not remit the amount (tax) so deducted to the credit of the Central Government?

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Let us suppose. I receive from you an amount of Rs. 120000 (Rs. 10000 per month) as rent for my house I let you run your business in.  This 120000 is expenditure for you and this Rs. 120000 is income for me. But I may evade this rent from my income-tax return. But you can claim the Rent amount as expenditure to run your business. So the Government introduced TDS Sections. If you want to claim this Rs. 120000 as expenditure, it is your duty to deduct some amount from the rent and remit to the credit of the Central Government.

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Remitting tax to the credit of Central Government does not mean to remitting your tax liability to the Government. You are just remitting money of other in your hand to the Government.

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If you still want to know more clarification. Write to me at sssvksridhar @ yahoo.co.in

The other person has to deduct the tax. Because of this direct payment of tax by the other person on behalf of the assessee, the assessee will file his income tax return, an pay his balance income tax, If he's not liable to pay tax, will get refund from department. TDS provisions are to overcome loss of revenue to govt due to evasion of tax.... The other person that is payer will deduct and pay tds, as non deduction or non payment of tds, results ito disallowance of expenditure to the payer u/s 40(a)(ia)

See, TDS stands for Tax Deductable at Source. This refers to the amount that many salaried professionals find deducted from their salary from their workplace itself. It is also an amount that many contractors, architects, and other service providers find deducted from their payment. Income tax is what you pay on your total income after subtracting the exemptions you are applicable for. Now whatever amount remains (if it remains) after subtracting your tax amount from the TDS will be returned to you.

Regards

Mitali Das

income tax