What is TDS?
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The prescribed rate of deduction of TDS varies based on expense recognized by the Income Tax Department.
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TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deductee.
As per Sec. 201(1A) of the Income-tax Act, 1961, if the Assessee does not deduct the whole or any part of the TDS or after deducting fails to pay the TDS as required by or under the Act, then the Assessee is liable to pay simple interest on the amount of such TDS, for every month or part of a month, at the rate of:
As per Sec 234E of the Income tax Act 1961, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues, maximum to the amount of tax deducted.
Form 16A should be issued within 15 days from the due date for furnishing the statement of tax deducted at source.
Quarter ending 30th June – Due date 31 July to furnish the statement
Due date for issue of TDS Certificate is 15th Aug
Quarter ending 30th September – 31st Oct to furnish the statement
Due date for issue of TDS Certificate is 15th November
Quarter ending 30th December – 31s January to furnish the statement
Due date for issue of TDS Certificate – 15th February
Quarter Ending 31st March – 31st May to furnish the statement
Due date for issue of TDS Certificate is 15th June
The New Form No. 15G and 15H is applicable to all Tax payees who do not want TDS Deduction on their Income from Fix deposits of Bank/company, postal fix deposit, Senior citizen Saving Scheme.
This form submission is valid only for 1 year and you need to submit this form again at starting of every financial year.
Please ensure to mention and submit your PAN card detail to the bank while submitting form 15 G or 15 H. In case you fail to submit PAN card detail bank will deduct TDS @20%.
At the time of filing his returns and calculating the tax liability, the taxpayer may realise that his tax liability is considerably less than what he has paid. In such events, he can claim the refund of the excess tax paid/deducted at source during a financial year. But in cases where the taxpayer feels that his final tax liability for the financial year is going to be NIL or less than the TDS rate applicable on a particular income, section 197 / 197A allows him to apply for a lower rate of TDS / no TDS.
This application has to be submitted to the assessing officer in the prescribed form 13. If he does not apply for the Lower / Nil TDS certificate, he can still claim a TDS refund by filing his annual return. Usually, it takes 1-6 months after he files the return. This can block his significant income with the tax department. TDS needs to be deducted even if the assessee is falling below the minimum tax bracket. In such cases, he can avoid unnecessary TDS by filing Form 15G / Form 15H to the banks or by submitting Lower / Nil TDS certificate to the deductor. The income tax department processes the refund along with an interest of 6% in some cases. Most of the refunds are made in electronic form, directly to the bank account of the Assessee.
TDS exemption is applicable when
If the tax is deducted under sections 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194I, 194J, 194LA and 195 and if the assessee feels there must be less or no tax deductions of TDS then the following procedure has to be undertaken.
a. An application for NIL/lower deduction of TDS using the FORM 13 has to be filed with the Income Tax Assessing Officer for seeking permission
b. The Assessing Officer disposes of the applications within a frame of 30 days
c. The taxpayers are advised to furnish complete and correct details for processing the application at the first instance
d. Only if the AO is satisfied the process of issuance of the certificate will be done
e. The copy of this certificate can be attached to the invoice given to the deductor, and he can use this to justify the lower tax deduction
f. This certificate is valid until the AO cancels it
g. TDS exemption / lower TDS is not applicable under sections 194B, 194BB, 194DA, 194E, 194IA.
Know the procedure of checking TDS status Online in India.
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