What is TDS?
TDS is one of the technique of collection of taxes in which a person making or crediting payment to someone has to deduct a certain percentage of amount from that amount. TDS is like a prepaid tax which is paid to govt. in advance. TDS amount is deposited by the Deductors to govt. account by the 7th of following month in which such amount is deducted. Since TDS is deposited by the Deductors to govt. accountant on regular interval, it ensures regular inflow of cash resources to the Government.
Who is liable to deduct Tax at Source (TDS)?
Income Tax Act requires specified persons to deduct tax on particular types of payments being made by them. The list of such persons requiring making TDS is incorporated in TDS provision listed here. The following are the specified person who is liable to deduct TDS.
- An Individuals or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are enforce to be audited u/s 44AB, in the immediately preceding financial year.
- A person is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 1 Core (Rs.60 Lacs for A.Y.2012-13) in case of a business, or Rs. 25 Lacs (Rs. 15 Lacs for A.Y. 2012-2013) in case of a profession.
TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER (TAN)
TAN is an alpha numeric 10 digits number. Every person who is accountable to deduct tax at source must obtain TAN no. from the department in form no. 49B within one month from end of the month in which tax was deducted. TAN is needed to be mention on every transaction related to TDS. There is a penalty of Rs. 10000 on failure to apply TAN
Procedure to pay TDS
Due Date of deposit of Challan 281 and filling quarterly return of TDS
Every person who is accountable to deduct TDS shall deposit the TDS deducted by him by 7th of following month in which TDS is deducted however Due date of deposit of TDS for the month of March is 30th April
Due date of filling quarterly TDS return is 15th of the following month of each quarter however this date is 15th may in case of quarter ended march 20XX.