Income Tax (IT) department is all set to make collections through Tax Deduction
at Source (TDS) more transparent. After making it mandatory for government and
corporate organisations to file TDS returns online, the department has now
decided to extend same facility to others as
well.
"Online system would do
away with intermediaries and the whole procedure would be fair now. All one has
to do is to fill the prescribed form and submit it online with no involvement of
any paper work. The form can be downloaded from NSDL website," said IT
commissioner DC Pant.
No
documents are required to be attached as the form itself is exhaustive. Pant
said that the deductor will only have to quote the PAN of the person on whose
income he/she is deducting the
tax.
In TDS mechanism, payer of
the income has a role to play. Like a tenant who pays a rent to the tune of Rs
1.20 lakh and above would deduct the tax and then pay the rent. He/she would
deposit the amount deducted as tax with the government and hand over the
necessary documents (form 16/16A) to the landlord who would in turn present it
as a proof of tax paid on the income earned through
rent.
Another important thing
regarding TDS is that tax deductor must have Tax Deduction Account Number (TAN).
It is a ten-character number unique and identifiable to a particular deductor.
Application for TAN in prescribed form (49B) can be made to National Security
Depositary Limited (NSDL) through its franchisees in different cities. Pant
said, "A deductor can have different TANs for different
cities."
Some of the payments
that attract TDS are salary, rent, interest other than interest on security,
payment under a contract of work, payment of insurance commission and payment
for professional or technical
services.
Apart from being
convenient and economical, TDS safeguards against possible avoidance or
concealment of taxable income. "In America, 97 per cent of tax collection is
through TDS, whereas in India it is as low as 30 per cent," said Pant, adding,
"It is likely to increase in
future."
The commissioner said
in Lucknow, the tax payers not only comply with norms but are also eager to know
about it. "We conducted a seminar on TDS in February which saw a gathering of
more than 200 people," he
said.
Every deductor is
statutorily required to deduct tax at prescribed rates on specified payments and
deposit the deducted amount within the prescribed time to credit of government
account, failing which penal action can be taken under various provisions of IT
Act, 1961.
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