All About TDS (TAX DEDUCTED AT SOURCE)

All about TDS (TAX DEDUCTED AT SOURCE) Read this full article on TDS as it will help you to understand in a better way all the concepts of T

Ankita Khetan

Feb 8, 2018

Last update on Feb 8, 2018

All about TDS (TAX DEDUCTED AT SOURCE)

Read this full article on TDS as it will help you to understand in a better way all the concepts of TDS. After reading this article CONCEPT of TDS will be in your pocket. Enjoy reading. What is tax deducted at source? For quick and efficient collection of taxes, the Income-tax Law has incorporated a system of deduction of tax at the point of generation of income. This system is called as Tax Deducted at Source, commonly known as TDS. Under this system tax is deducted at the origin of the income. Tax is deducted by the payer and is remitted to the Government by the payer on behalf of the payee. The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government. What are the duties of the person deducting tax at source Following are the basic duties of the person who is liable to deduct tax at source.

He shall obtain Tax Deduction Account Number and quote the same in all the documents pertaining to TDS.
He shall deduct the tax at source at the applicable rate.
He shall pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard*).
He shall file the periodic TDS statements, i.e., TDS return (by the due date specified in this regard*).
He shall issue the TDS certificate to the payee in respect of tax deducted by him (by the due date specified in this regard*).

*Refer tax calendar for the due dates. What to do if the TDS credit is not reflected in Form 26AS Non-reflection of TDS credit in Form 26AS can be due to several reasons like non-filing of TDS statement by the payer, quoting incorrect PAN of the deductee in the TDS statement filed by the payer. Thus, in case of non-reflection of TDS credit in Form 26AS, the payee has to contact the payer for ascertaining the correct reasons for non-reflection of the TDS credit in Form 26AS. At what rate the payer will deduct tax if I do not furnish my Permanent Account Number to him As per section 206AA, if you do not furnish your Permanent Account Number to the payer (i.e., deductor), then the deductor shall deduct tax at the higher of the following rates :

At the rate specified in the relevant provision of the Act.
At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
At the rate of 20%.

How can I know the quantum of tax deducted from my income by the payer To know the quantum of the tax deducted by the payer, you can ask the payer to furnish you a TDS certificate in respect of tax deducted by him. You can also check Form 26AS from your e-filing account at https://incometaxindiaefiling.gov.in You can also use the View Your Tax Credit facility available at www.incometaxindia.gov.in I do not have PAN. Can I furnish Form 15G/15H for non-deduction of TDS from interest As per section 206AA, a declaration in Form No. 15G or Form No. 15H is not a valid declaration, if it does not contain PAN of the person making the declaration. If the declaration is without the PAN, then tax is to be deducted at higher of following rates :

At the rate specified in the relevant provision of the Act.
At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
At the rate of 20%.

Would I face any adverse consequences if instead of depositing TDS in the Government's account I use it for my personal needs Yes, failure to remit tax deducted by me in the governments account within stipulated time-limit would attract interest, penalty and rigorous imprisonment of upto seven years. I have not received TDS certificate from the deductor. Can I claim TDS in my return of income Yes, the tax credit in your case will be reflected in your Form 26AS and, hence, you can check Form 26AS and claim the credit of the tax accordingly. However, the claim of TDS to be made in your return of income should be strictly as per the TDS credit being reflected in Form 26AS. If there is any discrepancy in the tax actually deducted and the tax credit being reflected in Form 26AS then you should intimate the same to the deductor and should reconcile the difference. The credit granted by the Income-tax Department will be as per Form 26AS. If I buy any land/building then is there any requirement to deduct tax from the sale proceeds to be paid by me to the seller Yes, Finance Act, 2013 has introduced section 194-IA which provides for deduction of tax at source in case of payment of sale consideration of immovable property (other than rural agricultural land) to a resident. Section 194-IA is not applicable if the seller is a non-resident. Tax is to be deducted @ 1%. No tax is to be deducted if the consideration is below Rs. 50,00,000. If the sale consideration exceeds Rs. 50,00,000, then tax is to be deducted on the entire amount and not only on the amount exceeding Rs. 50,00,000. If the seller is a non-resident then tax is be deducted under section 195 and not under section 194-IA. Thus, in case of purchase of property from non-resident TDS provisions of section 195 will apply and not of section 194-IA. What to do if tax is deducted but the ultimate tax liability of the payee is nil or lower than the amount of TDS In such a case, the payee can claim the refund of entire/excess amount of TDS (as the case may be) by filing the return of income. What is the difference between PAN and TAN PAN stands for Permanent Account Number and TAN stands for Tax Deduction Account Number. TAN is to be obtained by the person responsible to deduct tax, i.e., the deductor. In all the documents relating to TDS and all the correspondence with the Income-tax Department relating to TDS one has to quote his TAN.PAN cannot be used for TAN, hence, the deductor has to obtain TAN, even if he holds PAN. However, in case of TDS on purchase of land and building (as per section 194-IA) as discussed in previous FAQ, the deductor is not required to obtain TAN and can use PAN for remitting the TDS.