Tax Deducted at Source
Encyclopedia
TDS or best known Tax Deducted at Source is one of the modes of collecting Income-tax from the assessees in India
. This is governed under Indian Income Tax Act, 1961, by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS), Ministry of Finance, Govt. of India.
or TAN is a unique identification number for person deducting the tax. The person who is liable to deduct the Tax should obtain a TAN before deducting such Tax. TAN should applied through Form No 49B (prescribed under Income Tax Law). Such form can be submitted online at website. OR can also be submitted at Tax Information Network Facilitation Center (TIN-FC). These centers are established by NSDL (which is an appointed intermediary by the Government) across India.
TAN Application should accompany a 'proof of identity' and a 'proof of address' (photocopies) of the deductor. In case, the application is made online, these documents need to be sent over mail (post/courier) to NSDL - TAN Application division.
Once NSDL receives the TAN application along with said documents (either through TIN FC / Online), the details are verified and then sent to Income Tax Department. Once approved, Income Tax Department will allocate a unique number, and indicate the applicant through NSDL.
TAN will be a 10-character alphanumeric string composed of four alphabetic, five numeric, then one alphabetic character. E.g.: "BLRR02933A". The first three characters are an Income Tax Region Code (BLR => Bangalore) and the fourth digit is the first character of the deductor name (R => is denote to the deductee.that which is individual or Companey if individuality denote =P and Company Denote =C Remaining characters form a unique combination to get identified at Income Tax Department.
The deductee should produce the details of this certificate, during the regular assessment of income tax, to adjust the amount of TDS against the Tax payable by the Deductee [assessee].
Non-salaries - Form 16A: In case of Non-Salaries, the certificate should be issued in FORM 16A containing the Tax deducted & Paid details. Separate certificates should be prepared for each Section [nature of payment]. This refers to the details submitted over Form 26Q and 27Q.
TCS Certificates - Form 27D: There is a separate certificate Form 27D, which is falling under Tax Collected at Source(TCS).
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
. This is governed under Indian Income Tax Act, 1961, by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS), Ministry of Finance, Govt. of India.
Overview
In simple terms, TDS is the tax getting deducted from the person the amount (Employee/Deductee) by the person paying (Employer/Deductor)Tax Deduction Account Number
Tax Deduction Account NumberTax Deduction Account Number
Tax Deduction Account Number is an alphanumeric number issued to individuals who are required to deduct tax on payments made by them under the Indian Income Tax Act, 1961.-Significance:* An Assessee cannot obtain a TAN number without having a PAN....
or TAN is a unique identification number for person deducting the tax. The person who is liable to deduct the Tax should obtain a TAN before deducting such Tax. TAN should applied through Form No 49B (prescribed under Income Tax Law). Such form can be submitted online at website. OR can also be submitted at Tax Information Network Facilitation Center (TIN-FC). These centers are established by NSDL (which is an appointed intermediary by the Government) across India.
TAN Application should accompany a 'proof of identity' and a 'proof of address' (photocopies) of the deductor. In case, the application is made online, these documents need to be sent over mail (post/courier) to NSDL - TAN Application division.
Once NSDL receives the TAN application along with said documents (either through TIN FC / Online), the details are verified and then sent to Income Tax Department. Once approved, Income Tax Department will allocate a unique number, and indicate the applicant through NSDL.
TAN will be a 10-character alphanumeric string composed of four alphabetic, five numeric, then one alphabetic character. E.g.: "BLRR02933A". The first three characters are an Income Tax Region Code (BLR => Bangalore) and the fourth digit is the first character of the deductor name (R => is denote to the deductee.that which is individual or Companey if individuality denote =P and Company Denote =C Remaining characters form a unique combination to get identified at Income Tax Department.
Deductor
Under the process of TDS, Deductor is a person/company who is liable to deduct the Tax at source, from the payment being made to the party. Deductor is also termed as Employer in cases where the payments are under Salaries.Deductee
Deductee is the person, from whom the tax is being deducted or accrued for deduction. Depending on the nature of the deduction being made, deductees and respective submission forms are categorized to 4 types:- Salaries: In case of salaries, the deductee is termed as an Employee. All the information of deductions and payments in this category should be submitted in Form 24Q to the government.
- Non-Salaries - Resident: In case of non-salaries and the payment is made to a resident in India, the deductee is termed as a Deductee or a Party. All the information of deductions and payments in this category should be submitted in Form 26Q to the government.
- Non-Salaries – Nonresident: In case of non-salaries and the payment is made to a non-resident of India, the deductee is termed as a Deductee or a Party. All the information of deductions and payments in this category should be submitted in Form 27Q to the government.
TDS Certificates
A tax deductor is also required to issue TDS certificate to the deductee within specified timed under section 203 of the I T Act. The certification from the deductor, for the deduction and payment of the respective TDS amount to the bank, issued to the deductee is a TDS certificate.The deductee should produce the details of this certificate, during the regular assessment of income tax, to adjust the amount of TDS against the Tax payable by the Deductee [assessee].
Types of TDS certificates
Salaries - Form 16: In case of Salaries, the certificate should be issued in FORM 16 containing the Tax computation details and the Tax deducted & Paid details. This refers to the details submitted over Form 24Q.Non-salaries - Form 16A: In case of Non-Salaries, the certificate should be issued in FORM 16A containing the Tax deducted & Paid details. Separate certificates should be prepared for each Section [nature of payment]. This refers to the details submitted over Form 26Q and 27Q.
TCS Certificates - Form 27D: There is a separate certificate Form 27D, which is falling under Tax Collected at Source(TCS).