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Withholding tax

Neha Thakkar (-) (403 Points)

19 March 2013

Can anyone please guide me on the topic " withholding of tax" ...

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5 Replies

Bharat chandan (student) (158 Points)
Replied 19 March 2013

wht is ur query????

Neha Thakkar (-) (403 Points)
Replied 19 March 2013

I am not clear on this topic... can you please make me clear for the concept of withholding tax sir?

Bharat chandan (student) (158 Points)
Replied 19 March 2013

pls dnt call me sir I am jst an article CA final student withholding of tax means to hold tax before making payment to another party there are different section in different payments like if u r paying salary then u shud deduct tax before making payment under sec 192 at an average rate still I am not able to get it wht is ur query its just TDS

Bharat chandan (student) (158 Points)
Replied 19 March 2013

waiting for your reply

Hanish Chaudhary (Chartered Accountant) (333 Points)
Replied 20 March 2013

@ Neha

Withholding tax is same as TDS only. Below i mentioned some basic idea of what is TDS all about. I hope it will help you. Revert back in case of any further query.

Tax Deducted at Source (TDS)

You need to understand this case to get a basic idea of TDS. There is a company which is paying salary to its say 150 employees. Now when the income tax computation is done, all 150 employees have to pay say Rs.1000 to Government on account of Income Tax. Our Government says, it is very difficult to collect Rs.1,000/- from each of the individual, so they appoint an agent to collect tax from these individual and deposit the amount with government. This is some what the concept of TDS. Instead collecting taxes individually, they ask the company only to deduct the amount of tax and pay it to the government. The company thus acting just like an agent collecting taxes from individual. As the amount of tax is deducted at the source of income only, it is refered as Tax Deducted at Source (TDS)

Basic Things

The obligation to deduct tax at source is upon the person responsible for paying the income / amount subject to the provisions of TDS. He has to apply for Tax Deduction A/c No. (TAN) in form 49B. He has to deduct tax on the income / payments made as mentioned in Section 192 to 196D of Income Tax Act. The TDS has to be deducted at the time of payment or credit whichever is earlier. He has to deposit the collected amount vide challan no 281 to the Central government within requisite time. He has to file quarterly returns in form 26Q, 24Q, etc and issue TDS certificates (Form 16/16A) to the parties. On the basis of TDS certificate (or form 26AS), the persons who tax is deducted claims that tax in his income tax return as prepaid taxes.