Tax Deducted at Source, as the name suggests, is the tax deducted at the time the income is received by or credited to the “person” so that collection of tax is preponed and there is consistent flow of taxes to the government. TDS is deducted on various types of income sources such as salary, interest on bank deposits and bonds, winnings from lotteries and horse races, payment to contractors and sub-contractors, insurance commission, commission or brokerage, rent, fees for professional and technical services, etc.
A 10-digit Tax Deduction Number (TAN) is also mandatory to be obtained by the deductor for the purpose of deducting and depositing TDS to the credit of the Central Government. TDS Returns should be also be filed within due dates prescribed by the Income Tax Act, 1961. Deductor must issue TDS certificate giving details of income and corresponding tax deducted on same. This amount deducted is adjustable against income tax payable for the year by the deductee.
Non-Compliance with any of the provisions of TDS under the Income Tax Act may result in interests and other penalties. At Patron Accounting, experts will take care of your Income Tax issues including TDS and save you from penalties due to non-compliance.
Income Tax Department issues 10 character alpha-numeric code called TAN for persons responsible for deducting or collecting tax at source. All the required documents and other information will be collected, and registration application will be filed on TDS portal.
TDS is deducted under various sections of Income Tax Act depending upon the nature of income such as salary, rent, interest, professional services etc. The rates of tax and on how much income on which tax will be deducted are different under different sections.
One TDS is deducted, it’s a duty of deductor to deposit amount into central government portal. Failure to to do so will attract penalty equal to the amount of tax deductible along with interest @ 1% per month. There is provision in income tax act for various other rigorous penalties for non-deposit, short deposit or late deposit.
TDS must be deposited every month within 7th day of the following month. TDS Returns are to be filed quarterly within 15th day of the month following the quarter for which the return is being filed. Only return for the quarter ended March of the current financial year is filed by the 15th of May of succeeding financial year.