Tax Deduction at Source (TDS) - Introduction
Tax deduction at source is one
of the modes of collecting income tax from the taxpayers. Such collection of tax is affected at the
source when income arises or accrues.
Hence where any specified type of income arises or accrues to any one,
the Income Tax Act enjoins the prayer of such income to deduct a stipulated
percentage of such income by way of income tax and pay only the balance amount
to the receiver of such income.
The tax so deducted at source
by the payer has to be deposited in the Government treasury to the credit of
central government within the specified time.
The tax so deducted from the income of the receiver is deemed the
payment of Income tax by the receiver at the time of his assessment. Income from several sources is subjected to
tax deduction at source.
Presently this concept of TDS
is also used as an instrument in enlarging the tax base. Some of such incomes subjected to TDS are
salary, interest, dividend, interest on securities, winnings from lottery,
horse races, commission and brokerage, rent, fees for professional and
technical services, payments to non-residents, etc.
The deductor files the TDS
returns containing the details of the deductee and the bank, where the TDS
amount is deposited to the Income Tax Department (ITD). The deductor also provides Form 16A to the
deductee.
The Income Tax Department has
prescribe the formats for filling these returns electronically, which the
deductor has to submit on a CD/floppy.
Filling of e-TDS is must for companies and not for others; however, they
can also optionally file the returns electronically.
For additional details,
visit the Income Tax Website at http:// www.incometaxindia.gov.in
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