Money Guru: Know what is TDS and why it is deducted from your salary
Tax Deductible at Source or commonly known as TDS is a kind of tax levied on payments. Whenever there is a discussion on tax, TDS hold an important place among various other taxes.
Tax Deductible at Source or commonly known as TDS is a kind of tax levied on payments. Whenever there is a discussion on tax, TDS hold an important place among various other taxes. So what is TDS and why TDS is deducted from your salary? Tax Expert, Manish Gupta, told Zee Business TV, "TDS is an advance tax deducted by the government as most of the people find it difficult to pay tax at the end of the year. However, TDS is deducted by employers and they transfer the deduction to employees. Sometimes TDS helps you save on interest on late tax payments. It acts as a powerful tool to curb tax evasion also."
As per the Income Tax department website, the concept of TDS was introduced with an aim to collect tax from the very source of income. An individual or a company (deductor), liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and deposit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get a credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
TDS is deducted and paid to the government on the following types of payments:
Assembly Elections 2023 Exit Polls: Check when and where to view result predictions for Rajasthan, Madhya Pradesh, Chhattisgarh, Telangana, Mizoram election
Loan Against LIC Policy: If high interest rate and poor Cibil score bother you for taking personal loan; try out this LIC option
India vs Australia 4th T20I Free Live Streaming: When and Where to watch IND VS AUS T20I series Match LIVE on Mobile Apps, TV, Laptop, Online
Rajasthan Assembly Election Exit Polls Results 2023 LIVE: BJP holds edge in close fight with Congress in Rajasthan — Check BJP, Congress seat projection
Telangana Assembly election 2023: Will BRS retain its power for a third time? Check latest voting updates, date of counting, results announcement of 119 Assembly seats
Madhya Pradesh Election Exit Polls Results 2023 Live: Congress and BJP neck and neck in Madhya Pradesh; Check BJP, Congress seats
2. Interest payments by banks
3. Commission payments
4. Rent payments
5. Consultation fee
Watch this Zee Business TV video to know more about TDS:
6. Professional fees
7. Contest or lottery prizes
How TDS works?
Individual or entity making a payment (which is subject to TDS) deducts a certain percentage of the amount paid as tax and pays the balance to the recipient. The recipient also gets a certificate from the deductor, consisting of the amount of TDS deducted. However, the deductee can claim his/her TDS amount as tax paid by him (i.e. the deductee) for the financial year in which it is deducted.
How to avoid TDS
If a person expects that his total income in a financial year will be below the exemption limit, he can ask the payer not to deduct TDS by submitting Form 15G/15H. While receiving payment which is subject to TDS, deductee is required to provide his PAN details to avoid tax deduction at the higher rates.