The necessity for TDS (Tax Deducted at Source)!
Posted on: 31/Dec/2019 2:27:55 PM
All of us would have heard or read the term ‘TDS’ (Tax Deducted at Source) on various pretexts! If you are a monthly-salaried employee in any concern, you would have noted that while receiving the concerned payment, the employer would have deducted a specific amount marked as TDS!
This is a central government initiative and instruction to employers to ensure that a part of the Income Tax due to the employees is recovered due to reasons - the first, receipt of a part of the due Income Tax at the Financial year-end and the second, this system would relieve the burden of the concerned employee to make a heavy payment at one stroke by the financial yearend which would be heavy burden.
This TDS (Tax Deduction at Source) becomes essential in most of the financial transactions such as monthly salaries paid by the employer concerns, dividends on interest, rent, commission, purchase of Fixed Assets, and contract payment amounts.
If these paying sources fail to either deduct TDS or deducting a lesser TDS than specified, this expenditure would not be considered as such for the payer. They would be constrained to pay the Tax incurred due to this failure to deduct proper TDS!
In a concerned follow-up, the TDS deducted as above must be paid to the Income Tax Department on time. Failure to do this is deemed an offence! The main reason for this is that the moment this TDS is made, the concerned amount belongs to the government from that moment!
In this regard, as compared to the crime not making TDS is considered as less offensive as compared to not paying the tax deducted to the government on time! As such, the Income Tax Officials have the authority to impose heavy penalties or even imprisonment on the offending parties!
Duties of the Tax Deductors
Deducting the necessary tax as per the specified percentages
This tax deducted must be paid to the Government as on specified time period as per Income Tax Act 30 - for example, the tax deducted for a specific month should be paid to the government before the 7th of the next month - Taxes deducted in the month of March must be paid to the government before 30th April.
The details of deducting Tax at source on a quarterly basis must be submitted online on the website: www.tin-nsdl.com OR www.tdscpc.gov.in in the specified form.
The process of deduction
The Taxes will be ducted as per the tax payer’s PAN (Permanent Account Number). Later, they would be paid to the government within the stipulated period. Now, a question may be raised whether there is no need for TDSDS if there is no PAN, the answer is a strict, ‘No! No!’!
A 20% amount has to be deducted from payments made to those who do not have Permanent Account Number (PAN) for Income Tax or those who failed to procure the same!
