What Is TDS
Tax Deducted And Source (TDS) is a very simple and smart way to prevent evasion of income tax, which is used by the government of the country and is also used by the Income Tax Department in India.
What is TDS, why TDS is levied and under what conditions TDS is levied and how much TDS is levied.
What do you have to do after TDS is deducted and if TDS has been deducted from your payment then can it be refunded and if it can be taken then how to get it refunded
What is TDS With Example?
What is TDS, then basically if you look at it, then TDS is a part of your income. Any person who has income i.e. the person who gets the payment has to pay tax, but this is not in case of TDS. What Is TDS
Whenever one person makes a payment to another person, now this payment can be anything.
Any kind of specified payment. We will talk about them further, such as an employer paid salary to his employee or it could be that a tenant paid rent to his landlord, it could also happen or a bank itself gave its customer on FD or savings account.
If interest is given, that too is only a type of payment. There can be any kind of payment, whatever you pay, the Income Tax Department says that you do not complete this payment, deduct some percentage on it and deposit it with the customer’s PAN card.
Now what happens in this, whatever your salary or whatever income you have, you do not get the full amount. Out of that, some percent gets ALL ready cut by the Income Tax Department and that amount is TDS for you.What Is TDS
Why TDS is introduced ??
Why TDS is levied, then see, you will also have some kind of income from your salary, from business, dividend in any way, so imagine if TDS is not there, then how will the Income Tax Department know that this person has so much income.
so that it paid tax, how will the Income Tax Department know whether it has paid tax or not. To keep track of all these TDS was introduced and this record is now maintained automatically due to TDS.
When TDS is deducted ?
Under which conditions TDS is deducted and how much percentage TDS is deducted from your payment, then see in that there are many different types of transactions.
Inside TDS, there are some main important transactions. Let us know once on which TDS is charged and how much is it.What Is TDS
Payment of salary or pension
Payment of salary and pension which comes under section 192, here your employer is told that whoever is paying you salary, at what rate you have to deduct TDS from your salary, he has not decided.
He has clearly said over there that the basic exemption limit has to be kept in mind, keeping in mind the rebate of 87A, keeping in mind the standard deduction, after considering all these things, whatever amount you have to pay on your salary.
Tax is created, that much TDS is to be deducted from your salary every month on an estimated basis.
Premature Withdrawal from EPF
If you have contributed in EPF. There will be an automatic deduct from your salary. If you withdraw that money before its pre-mature i.e. five years, then your TDS is also charged on it. What Is TDS
If the amount is more than ₹ 50,000, then there is a flat TDS of 10% of yours. If there is no PAN card, then TDS in that condition almost doubles in many cases.
PAYMENT OF DIVIDEND
If you have invested in any share, have invested in any mutual fund, your TDS is also deducted on whatever dividend you get from there and if the dividend amount is more than ₹ 5,000 then only TDS on you Looks like flat 10% off
INTEREST INCOME FROM BANK POST OFFICE
Interest Income Fund got interested from FD of Other Securities Bank, got FD done in post office. If you get interest from there, then if your interest is more than ₹ 40,000, then your flat 10% TDS is charged on it. What Is TDS
For senior citizens, the same limit is ₹50,000. His TDS will be deducted only if the interest is more than 50,000
INTEREST FROM FRIEND OR RELATIVE
Interest income fund friend or relative, if you have given loan to any friend or relative. TDS should also be levied on the interest income you earn from there.
But friend people do not follow this among themselves.
WINNING FROM LOTTERY CARD GAME
TDS of flat 30% is applicable on winning form lottery card game or any different type of game, What Is TDS
if you have gambling or earned money from anywhere and if that amount is more than ₹ 10,000 then 30% Along with health and education cess is also levied of 4%, so here your flat 30% TDS is levied.
INCOME FROM HORSE RACE WINNING
Income from Horse Race Winning, separate section of Horse Race Winning was created. This is also similar to gambling in a way. Horse races are also conducted in many states.
If you win any amount from there, then your flat TDS of 30% is deducted on that too. If that amount is more than ₹10,000
PAYMENT TO CONTRACTOR
If you have hired any contractor. There, you pay it or you are a contractor and you get payment from somewhere, then TDS will also be deducted on the payment that comes to you. What Is TDS
TDS of 1% is deducted in case of individual and TDS of 2% is deducted in case of non-individual. If its limit is up to ₹ 30,000 for a single transaction, then TDS will not be charged in it and even if the entire payment is within ₹ 1 lakh in a year,
TDS will not be charged. If this limit is exceeded, then TDS will definitely be charged.
If you are an insurance agent somewhere and your payment is more than ₹ 15,000, then TDS of 5% is also applicable on that.
Apart from insurance, if your commission comes from somewhere else or if you have any brokerage income, then you also get TDS of 5% on that too. If that amount exceeds ₹15,000 What Is TDS
TDS ON RENT OF LAND
If you live somewhere on rent or if you get rent from somewhere, then it is the duty of your tenant, if the rent amount for a year is more than ₹ 2,40,000, then they deduct TDS or you also pay rent somewhere.
If the rent for one year exceeds ₹ 2,40,000 then you should deduct TDS to whomever you are making the rent payment. Here the rate remains 10%
TDS ON PROFESIONAL FEES
Provides any professional service. Whatever payment he receives, TDS is also levied on it. If this amount exceeds ₹30,000, then TDS of flat 10% is deducted.
CASH WITHDRAWAL FROM BANK ACCOUNT
After this, now there are some new sections which have been inserted within the last one or two years, so that is cash withdrawal from bank account,
if you withdraw money from your bank account, then TDS is also charged on that. It has some limit etc. What Is TDS
Interest on pension income
Apart from that, there is a senior citizen who is above the age of 75, his only two sources of income are pension and interest from bank FD, if these two sources are of his income.
He does not need to file income tax return and the bank has to deduct his TDS, then your TDS can be deducted here too.
VIRTUAL DIGITAL ASSETS
Another last which is the main important section that we are talking about is TDS on those Virtual Digital Asset Crypto Currency NEFT TDS which was just newly introduced, TDS of one percent will be levied. If your transaction exceeds ₹50,000
List Of transactions
So on which other transactions TDS is levied. If you want to see the list of all the transactions or to know what is the rate on them, then you will get the list HERE.
HOW TO AVOID TDS
See, there is only one way to avoid TD, from where you are getting payment, salary can be paid to the bank from anywhere. He will have to tell you that our income is less than the income tax limit. What Is TDS
That is, if our income is less than the basic exemption limit, then you will have to give a declaration for that.
There is a form, Form 15G or Form 15H for senior citizens, this is a form which you have to fill and submit, inside which you have to tell that the income for the whole year is less than the basic exemption limit,
then you have to Whatever payment is made by the bank from the salary from anywhere, then your TDS should not be deducted in it and if your income is more than the basic exemption limit then there is no option to avoid TDS.
How TDS Calculate ?
Average Income tax rate = Income tax payable (calculated through slab rates) divided by employee’s estimated income for the financial year.
Who Fill TDS Return ?
Employers and organisations with a valid TAN are qualified for filing TDS returns. Individuals whose accounts are audited under Section 44AB.
Why Is TDS Important?
Government Uses TDS As A Tool To Collect Tax, TDS is applicable on various incomes such as salaries, interest received, commission received, dividends etc.
Whem TDS Deduct ?
TDS deducted in the month of March can be deposited till 30th April.
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