Posts tagged ‘TDS’

WHAT IS TDS?

TDS stands for Tax deducted at source. Normally payment providers withhold some amount of tax from payments such as salary, commission etc, before the payment and remit such tax to the government. If an asssesee’s income is below the taxable limit and if payment provider insists on tax deduction, then the assesee can file the necessary forms and avoid the tax liability.
The tax deducted at source should be remitted by the deductor to the Government within the time period allowed. To pay the tax deducted into the Government account, a separate Tax Deduction Account Number (TAN) needs to be obtained by the deductor.
Non remittance or misuse of the tax deducted at source is an offence. It may be punishable by imprisonment up to 7 years. The person who deducts tax is liable to issue TDS certificate in form 16 or 16A to the assessee, who can include the same during his tax payment.
Some of the incomes which are liable for tax deducted at source include Salaries, Interest on securities, Dividends, winnings from lotteries or cross puzzle or horse race, Payment to contractors and sub-contractors, Insurance commission, Payments to non resident or sports association, Deposits under NSS, Payments on account of repurchase of units by mutual fund or UTI, Commission on the sale of lottery tickets, Commission or brokerage, Rent, Fee for professional or technical services, etc.