TDS also called Tax Deducted at Source collects tax at the source from where your income is generated. TDS is used by the Government as a tool to collect taxes. This reduces tax evasion at the source of income. This is done by taxing your income (either partially or wholly) right at the source of income, rather than at a later time.
TDS for Financial Year 2019-20: TDS is applicable on your earnings like salary, interest income, commissions received and so on. Do note that TDS is not applicable on all income and on all transactions.
TDS is just a type of advance tax. It’s deposited with the Government and the job of depositing it, lies with the deductor. You can claim the deducted TDS as a tax refund after filing ITR or Income Tax Returns.
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The tax deducted at source must be deposited with the Government by the 7th of the following month. TDS deducted in the month of August must be paid to the Government by the 7th of September. But, the TDS which is deducted in the month of March can be deposited up to 30th April. Tax Deducted at Source must be deposited using the Challan ITNS-281 on the Government Portal.
SEE ALSO: Where is TDS Deducted?
It’s mandatory to file tax deducted at source for all people who deduct TDS. TDS returns are submitted quarterly after furnishing details like TAN, amount of TDS deducted, PAN of the deductee and type of payment.
Understand TDS certificate before filing TDS. Your Form 16, Form 16A, Form 16B and Form 16C are all TDS certificates. The person who deducts TDS, issues the TDS certificate. Your employer issues the Form 16 to you (employee). Banks also issue the Form 16A to you or any depositor, when they deduct TDS on FD interest.
Let’s understand when to use Form 16 and Form 16A with an example:
Mr Ramesh works as a salaried employee for XYZ Company. The XYZ Company issues Form 16 to Mr Ramesh. It contains the detailed salary break-up and the tax deducted on the same.
What if Mr Ramesh worked as a professional? Well, he would have received professional fees from the Organization, and TDS would be deducted on it. He would have been provided Form 16A.
TDS Rate Chart FY 2019-20:
Income Tax Slabs for Individuals
Income Tax Slabs for Senior Citizens
Income Tax Slabs for Super Senior Citizens
Your salary consists of various components and together this makes up the CTC or Cost To Company. The key components of your salary are:
SEE ALSO: Method of TDS Calculation
HRA: If you live in a rented house and pay rent, you get the house rent allowance also called HRA.
Investments and expenses under Section 80C: You get a tax deduction on investments like PPF, NSC, ELSS, SCSS, Sukanya Samriddhi Yojana, premiums paid on life insurance, 5 year tax saver FD, EPF (employee contribution). You also get Section 80C benefits on home loan principal repayment and tuition fees paid up to 2 children for higher education. This is a collective deduction up to Rs 1.5 Lakhs a year.
TDS under Section 80D: This is a tax deduction for premiums paid towards health insurance.
TDS under Section 80TTA: Interest on savings bank account and post office savings scheme enjoy Section 80TTA benefit up to Rs 10,000 a year.
TDS under Section 80U and Section 80DD: This is a deduction for physical disability of tax payer and dependents.
TDS under Section 80DDB: This deals with expenses related to certain specified diseases.
As per Section 201(A) for the deposit of TDS after due date, you must pay interest. This interest is at the rate of 1.5% a month. This is from the date TDS is deducted, till the actual date of deposit. This is calculated on monthly basis and not on number of days.
Let’s say you had to pay a TDS amount of Rs 10,000 and the date of deduction was 15th January. You pay TDS on 21st May. The interest you owe is Rs 10,000 * 1.5% * 5 months = Rs 750.
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