Monday, April 30, 2012

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://


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