TDS means “Tax Deducted at Source”. It was introduced by Indian Government to collect tax at the source from where the income generate. It is best tool to avoid tax evasion by getting some or full tax in advance. TDS is applicable on various payments and separate rates of TDS as well as limits have been prescribed by Government. TDS also depends on the residential status of any person. The person who is making the payment is responsible for deducting the tax and depositing the same with government. This person is known as ‘deductor’. On the other hand, the person who receives the payment after the tax deduction is called ‘deductee’. Form26AS is a statement which shows the amount of tax deducted and deposited in a person’s name/PAN in a particular financial year. The entity making a payment (which is subject to TDS) deducts a certain percentage of the amount paid as tax and pays the balance to the recipient. The recipient also gets a certificate from the deductor stating the amount of TDS. The deductee can claim this TDS amount as tax paid by him (i.e. the deductee) for the financial year in which it is deducted.
If a person expects that his total income in a financial year will be below the exemption limit, he can ask the payer not to deduct TDS by submitting Form 15G/15H.
While receiving payment which is subject to TDS, deductee is required to provide his PAN details to avoid tax deduction at the higher rates.
TDS is a major compliance for any Businessman, because non deduction of TDS may attract penalty, interest, disallowance of expenditure in business and even prosecution.
The main difference between TDS- “Tax Deducted at Source” and TCS- “Tax Collected at Source” is that TDS is the tax deduced by deductee from payment need to pay to other. Whereas the TCS mean the collection of tax by the person who is liable to receive money. E.g. TDS has been deducted by employer paying salary to employee, whereas TCS is collected by car dealer while selling cars.
Services Provided by "Accurico"
- TAN (Tax Deduction/Collection Account No) application.
- TDS/TCS calculation.
- Challan preparation and deposit.
- TDS/TCS Returns.
- Form 16 & 16 A Preparation
- Day to day TDS Consultancy.