TAX DEDUCTED AT SOURCE (TDS)

What is TDS?

• TDS stands for Tax Deducted at Source.
• It is a means of collecting income tax in INDIA governed under the Income Tax Act 1961
• It is managed by Central Board for Direct Taxes (CBDT).
• TDS means tax deducted by the employer from the income of employee and transferred to the tax authority by the employer.
• This system is designed to improve tax administration,simplify filing of return,reduce compliance cost.
• Moreover this system is more transparent
• No tax evasion under this system. 

TDS certificate?

The certification from the deductor, for the deduction and payment of respective TDS amount to the bank, issued to the deductee is a TDS certificate.
The amount of TDS can be clearly obtained in form 26AS.
26AS clearly shows what amount of tax deducted....?? who is the deductor....??? TAN of the deductor.....??? etc....
In brief.......look at this image........

Uses of TDS certificate:

The deduct-or should produce the details of this certificate during the time of regular assessment of income tax,to adjust the amount of TDS against the tax payable by the deductee(assessee).

It is mandatory for all the deductors to issue "Certificate of Tax Deducted" to the respective deductee.

Types of TDS Certificates:

1.Salaries: In case of salaries certificate should be given by the employer in Form 16 containing the details of tax deducted and payment made to the employee.

2.Non-Salaries: In case of non-salaries certificate should b given in Form 16A containing the details of tax deducted and amount paid. Separate  certificates should be prepared for nature of payment.

Procedure to pay TDS:

1. Obtain TAN (Tax Deduction Account Number),which is a ten digit alpha numeric number.
2. Deduct the tax from the liable payments.
3. Deposit TDS amount in Challan 281.
4. Time limit for depositing TDS amount.

• Government- Same Day.
• Others- within 7 days from the month ending. 

    5.Quarterly statements should be filed within the specified time.

The above said procedure should be followed in order to avoid the consequences of default.

TDS Rates on Payments other than Salary and Wages to Residents for Financial Year 2013-14 (Including Domestic Companies)

Section	On Payments     Exceeding	Individual/ HUF	Others
193	RS. 5000	10%	10%
194	No Minimum	10%	10%
194 A	RS. 10,000(Banks)	10%	10%
194 A	RS. 5000(Others)	10%	10%
194 B	RS. 10,000	30%	30%
194 BB	RS. 5000	30%	30%
194 C	RS. 30,000 for single payment RS. 75,000 for aggregate payment in Financial Year.	1%	2%
194 D	RS. 20,000	10%	10%
194 EE	RS. 2500	20%	NA
194 F	RS. 1000	20%	20%
194 G	RS. 1000	10%	10%
194 H	RS. 5000	10%	10%
194 I	RS. 1,80,000 (LAND,BUILDING AND FURNITURE)	10%	10%
	RS. 1,80,000 (PLANT&MACHINERY)	2%	2%
194 J	RS. 30,000	10%	10%
194 L	RS. 1,00,000	10%	10%
194 LA	RS. 2,00,000	10%	10%

These are some important sections and payments relevant to those sections

Section	For Payment of-
193	Interest on Debentures
194	Deemed Dividend
194 A	Interest other than on securities by Banks
194 A	Interest other than on securities by others
194 B	Winnings from Lotteries/Puzzles/ Games
194 BB	Winnings from Horse Race
194 C	Payment to Contractor/ Sub-contractor
194 D	Payment of Insurance Commission
194 EE	Payment of NSS Deposits
194 F	Repurchase of units by Mutual Funds/ UTI
194 G	Commission on sale of Lottery tickets
194 H	Commission or brokerage
194 I	Rent of Land, Building or Furniture
194 IA	Transfer of immovable property
194 J	Payment of Professional/ Technical services
194 L	Compensation on acquisition of Capital Asset
194 LA	Compensation on acquisition of certain immovable property

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