Tax Deducted at Source (TDS)

SARAVANAN.S

Assistant Professor, SIMS

      TDS is a system introduced by income tax department where the person responsible for making the specified payment such as salary, commission, professional fees, interest, rent etc, is liable to deduct a certain percentage of tax in advance  by making payment in full to the receiver of the sum. The concept of TDS is based on a simple principle that tax is to be deducted at the time of payment getting due or at the time of actual payment whichever is earlier. The Person responsible for paying salary is liable to deduct tax on estimated salary at prescribed of 15% with an exempted limit such as House rent allowance, conveyance, traveling expenses.

The minimum salary one should have for TDS to be deducted by the employer is based on the tax range. For salary up to 2,50,000 no tax, income from 2,50,000 – 5,00,000 is 5% tax, income from 5,00,000 – 10,00,000 is 20%, above 10,00,000 is 30%.

    For Example Mr. Ram makes payment of 100000 towards professional fees to building planner, Ram can deduct tax of 10,000( 10% of payment) and pay the net of 90,000 to the planner. The deducted amount of 10,000 by ram will be directly deposited to the credit of the government.

The TDS certificate is issued by the deductor are;

• Form 16 : Is issued by the employer to an employee on tax deducted for the year
• Form 16A: Is issued other than salary TDS.

Payment of TDS each month and filling of quarterly return of TDs are two separate processes. Due dates for the payment of deducted TDS is to be done on or before 7^th of every month. Due dates are applicable to all non-government assesses and government assesses who deposits tax to income tax department.