Tax Deduction at Source - TDS

 Tax Deduction at Source - TDS

-Dr. Lalit Kumar*

The income tax is sometimes deducted at source, by the person who is making payment to another person for whom, it is an income. The payer deducts the tax and then deposit into the Income Tax Department and it is known as Tax Deducted at Source. This system is incorporated by Income Tax Department to reduce the theft of tax. In Income Tax Department, all types of payments on which it is required to deduct the TDS, are detailed and accordingly the person making payment (known as Deductor), required to deduct the TDS and remit the same in Income Tax Department. The payments include salaries, interests, commissions, brokerages, professional fees, royalties etc.​

Registration as Tax Deductor in Income Tax Department:

The persons who are required to deduct the TDS, also required to firstly take the Tax Deduction Account Number i.e. TAN which is of 10 characters. 3 characters of Jurisdiction code, 4^th for initial of the name of person followed by 6 characters generated by system including 5 numeric and 1 alphabet.

The TAN number can be obtained by applying on the website of NSDL-TIN. It’s fee is only Rs. 55 plus GST as processing fee.

Quoting of TAN:

Whenever a deductor deducts the TDS, it is required to be deposited in the Income Tax Department quoting the TAN Number. Thereafter, a return is required to be filed by the deductors, quoting the TAN number and details of challans through which the payments were made. It is also required to generate TDS Certificate and provide it to the person on whose income, the TDS was deducted and deposited in the Income Tax Department.

Penalty for not realizing TAN or not quoting accurate TAN Number:

Rs. 10,000 penalty is imposed upon a person who have not applied for TAN and making the payments without deducting TDS or if the person has obtained TAN but not quoting the same accurately in the TDS returns and certificates.

*This article is contributed by Dr. Lalit Kumar, an Expert on Financial Management accessible on https://wa.me/919416382720 

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