What is TDS?
TDS (Tax Deduction at Source) is one of the modes of collecting Income tax from all earning individuals who are liable to pay direct taxes. Such collection of tax is effected at the source when income arises or accrues. Hence where any specified type of income arises or accrues to any one, the Income-tax Act enjoins on the payer of such income to deduct a stipulated percentage of such income by way of Income tax and pay only the balance amount to the recipient. The tax so deducted at source by the payer, has to be deposited in the Government treasury to the credit of Central Govt. within the specified time. The tax deducted from the income of the recipient is deemed to be payment of Income tax by the recipient at the time of his assessment.
Income from several sources is subjected to tax deduction at source, one of which is salary. The annual budget of India stipulates the tax slabs that serve to identify the income groups that are supposed to pay taxes in a year. However, these income groups are entitled to receive tax deductions in India on fulfilling requisite conditions defined under many sections. Amount invested in various funds, amount donated to relief bonds or charity, loan amounts etc are exempted from tax and are called Tax Deductions.
A tax deduction represents an expense incurred by a taxpayer. They are variable amounts that can be subtracted, or deducted, from assessee’s gross income. It is subtracted from gross income when the taxpayer computes his or her income taxes. As a result, the tax deduction will lower overall taxable income and thus lower the amount of tax paid.
The exact amount of tax savings is dependent on the tax rate and can be complicated to determine. Nothing is as tangled and knotty as the TDS provisions. The funds, returns, limits, sections, rates and rules make TDS much tedious to sort out.
To ease you off the burden Lenvica has developed an Income Tax module, a complete TDS management module, designed specifically for India.
Income Tax Module – Features
How does it work?
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