TDS, short for Tax deductible at source, is a way of indirect tax collection by government according to Indian tax act, 1961. It is adjusted against the total tax liability of an assesee a percentage of the overall payment is withheld by the source that is making the payments. The source is then responsible to pay the tax to government on behalf of the assesee.
Income from the following sources is in the subjected to TDS:
- Interest in securities
- Other interests
- Winnings from horse races, lotteries etc
- Payments to nonresident sports association or sports man
- Payment in respect of rent
- Insurance commission
- Deposits under national saving scheme
- Payment of compensation on acquisition of certain immovable property.
- Payment of fee for professional or technical services.
- Payment to contractors and sub-contractors
- Payment to offshore fund
- Payment of NSS, etc
Calculation of TDS on salary:
If the employee don’t hold PAN, he is liable to pay tax as per Slab or at 20%, whichever is higher. Filling e-TDS return online is compulsorily for companies and government as per section 206 of Income tax law. Documents required for filing TDS:
- TAN: Tax Deduction Account Number.
You should hold a valid TAN. TAN is an alphanumeric number that is issued to individuals for tax deductions on the tax payment made by them according to Indian Tax Act,1961.To register for TAN, you need to fill form number 49B.
- Valid PAN: Permanent Account Number.
- TDS statement prepared using RPU (Return Preparation Utility) and validated using FVU (File Validation Utility).
The following tables shows at what percentage is tds charged on income subjected to tds other than salaries.
|Calculate salary income||****|
|Add: any other income declared by employee to employer||****|
|Deductions under section 80C to 80U||***|
|Tax using Slab rate||****|
|TDS per month- Tax calculated/12||****|
|Under Section||Categories||Rate of tds(in%)|
|Section 193||Interest on securities||10|
|Section 194||Dividend other than dividends reffered in section 115-O||10|
|Section194A||Interest other than interest on securities||10|
|194B& 194BB||Wiinings from lotteries, horse races,card games etc||30|
|194C||Payment tp contartcor/sub contractor|
|194D||Insurance commission||5 (10% for AY 2016-17)|
|194EE||Payment for deposites in national saving schemes||10 (20 for AY 2016-17)|
|194G||Commission, etc on sale of lottery tickets||5 (10% for AY 2016-17)|
Land, building or furniture
|194J||Sum paid by way of professional or technical fee or royalty||10|
|194F||Re purchase of units by UTI/Mutual funds||20|
Common Errors While Filing TDS Return:
- Incorrect Personal Information: This is the most common mistake that people do. They fill wrong information in the form. Incorrect information like Name, Address, Bank Account Number etc., may lead to cancellation of form.
- Mistakes in claiming deductions: section 80C-80U of Tax Act, 1961 provides for several deductions in tax. Many times employer makes mistakes while claiming these deductions.
- Failure to provide total income information: Assessee often omits incomes from other sources like interest on Fix deposits, income of Minor Child etc.