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What is tds and who is liable to deduct tds
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Answer / h.r. sreepada bhagi
TDS - Tax Deduction at Source.
A Company, Firm or other entity which pays or is liable to
pay income to any other Company/Party/Person is liable to
deduct tax at Source, while paying such income or crediting
such income to the account of the payee.
The Scope & rates & applicability of TDS are mentioned in
Sections 192, 194, 195, etc., of the Income Tax Act, 1961.
PAN is a must for both the parties & TAN is a must for the
party deducting tax at source, who is liable to remit the
amount to the Central Government A/c & to file the necessary
Returns with the Income Tax Department.
For more and updated information refer Income Tax Act, Ready
Reckoner, Income Tax Department or other websites. This
answer is related to Indian Tax Law only.
| Is This Answer Correct ? | 49 Yes | 9 No |
Answer / ashok verma
ONLY HOLDING TAN DOES NOT MEAN THAT THE PERSON (INDIVIDUAL)
HAS TO DEDUCT TAX ALWAYS. IN THE CASE OF INDIVIDUAL WHOSE
CASE SECTION 44AB APLIES ARE ONLY LIABLE TO DEDUCT THE TAX.
| Is This Answer Correct ? | 19 Yes | 0 No |
Answer / yash chauhan
individual and huf is not liable to deduct tds if they were not required to get their accounts audited under section 44AB.in last financial year.
They need to get their accounts audited if their grss turnover exceeds 1 crore.
other entities are required to deduct TDS as per section:
192: for salary payment.
193: for interest on securities.
194: for dividend.
| Is This Answer Correct ? | 6 Yes | 0 No |
Answer / ca. animesh kumar jain
The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government. The following illustration will explain the TDS mechanism.
Illustration
Mr. Raja has made a fixed deposit with XYZ Bank. Annual interest on the deposit is Rs. 8,40,000. Will the bank be liable to deduct any tax from the interest paid to Mr. Raja?
**
Interest on fixed deposit is covered under the TDS mechanism and, hence, the bank has to deduct tax from interest and has to pay the net interest to Mr. Raja.
The rate of TDS on interest is 10% and, hence, the bank will deduct tax of Rs. 84,000 from the interest and will pay the net interest of Rs. 7,56,000 (i.e., Rs. 8,40,000 – Rs. 84,000) to Mr. Raja.
The TDS of Rs. 84,000 will be paid by the bank to the Government and Rs. 84,000 will be treated as prepaid tax of Mr. Raja and he can claim tax credit of Rs. 84,000 just like advance tax at the time of filing his return of income.
The above mechanism of deducting the tax at the point of generation of income is called TDS mechanism.
| Is This Answer Correct ? | 0 Yes | 0 No |
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