Basic Terms of TDS Part-I

Hello Friends, 

My this blog is related to tell you about Basic Terms of TDS. 

TDS stands for Tax Deducted at Source. 

As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department. 

Source of Income on which TDS has been deducted. These are:

• Salary
• Rent
• Insurance Commission
• Interest on Securities
• Income from Lotteries
• Interest 
• Professional Fees etc. 

TAN (Tax Deduction and Collection Account Number: It's a 10 digit alphanumeric number issued by the Income Tax Department. TAN has to be obtained by all the people who are responsible for deducting tax at source (TDS) or the person who is responsible to collect tax at source (TCS)

Deductor:  The company or person that makes the payment after deducting TDS is called a deductor. 

Duties of Deductor:

• Deduct Tax at Correct Rate of TDS and 

• Deposit in Central Government Account

• Timely Issue of TDS certificate (Form 16 and Form 16A) to all deductees  

• File TDS Return/Quarterly Statement (Form No. 26Q and Form No. 24Q)

Deductee: The company or person receiving the payment is called the deductee. It is the deductor's responsibility to deduct TDS before making the payment and deposit the same with the government.

Rights of the Deductee:

• Ask to deductor for TDS Certificate (Form 16/ Form 16A)

• Get the claim of Deducted TDS

• If there is any difference between the deducted TDS or in TDS certificate then ask from the deductor for the same.

For example: 

• If an employer pay the salary to his employee after deducting TDS and deposited it to the Government. So in this case Employer is a Deductor and Employee is a Deductee. 

• A Tenant makes a payment of Rent after deduction of TDS to the Landlord and deposited to the Government. So in this case Tenant is called Deductor and Landlord is called deductee.

How to claim TDS by Deductee ?

A Deductee can claim deducted TDS after filling its Income Tax Return (ITR) of the respective period. 

For example:

• If Income Tax (Rs. 25000) < Deducted TDS (Rs.28000) then a person can claim refund of Rs. 3000.

• If Income Tax (Rs. 25000) > Deducted TDS (Rs.23000) then a person have to pay tax of Rs. 2000.

• If Income Tax (Rs. 25000) = Deducted TDS (Rs.25000) then there is no tax no refund.

I hope it will be helpful to you. 

Thanks and Regards

Kulvinder Kaur

B.Com(H), MBA(Finance)

9871580806,8826566751

rightsteptoinvest@gmail.com