Six Things To Know About Tax Deducted At Source
Tax deducted at source is one of the modes of collecting Income-tax from the assess in India. Such collection of tax is effected at the source when income arises or accrues. Hence where any specified type of income arises or accrues to any one. The following are the points regarding the tax deducted at source:
- TDS is the tax paid by individuals on certain types of incomes. The person, or the deductor paying the income, deducts the tax and pays the balance to the deductee, or the one receiving the income.
- The types of income which invite TDS include salary paid to employees, interest on bank deposits and bonds, winnings from lotteries and horse races, etc.
- TDS is deductible at various rates specified by the government. There may be a threshold listed for different types of incomes, and TDS may be levied only above this limit.
- The deductor issues a TDS certificate to the deductee, giving details of the tax cut. It is treated as tax paid by the deductee on income earned, and adjusted against income tax payable for the year while filing the return.
- The responsibility of deducting tax at source and depositing it with the government lies with the deductor. The TDS should be deposited within a week of the end of the month in which the deduction is made.
- The returns for the TDS must be filed by all deductors every quarter on the prescribed forms. The respective due dates for filing of returns are 15 July, 15 October, 15 January and 15 May.
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