One of the many tax aspects that is not fully understood is Tax Deducted at Source, known in short as TDS.

We at PersonalFN would like to help you understand this aspect of taxation better by answering some Frequently Asked Questions…

 

Let’s start with the basics.

 

Frequently Asked Questions
(Click on the question to go to the answer)

 

1. What is TDS?
    
2. Is TDS relevant for businessmen?
    
3. Who is required to deduct tax at source while making payments of the nature referred to in above?
    
4. What are the consequences of not deducting tax at source?
    
5. I have made some deposits with a bank on which annual interest is around Rs.15000. My income is below taxable limit. The banker wants to deduct tax. What do I do?
    
6. I have let out a property for Rs.20,000 per month. The tenant is deducting tax that is more than my tax liability. What can I do under this circumstance?
    
7. I have deducted tax from payments disbursed but used the same for some urgent financial needs. What are the consequences?
    
8. What can I do if I am unable to get the TDS certificate [form-16 or 16A]?
    
9. I have not received TDS certificate from my employer. Can I claim TDS deducted from my salary?
    
10. If the employer does not deduct tax and employee also does not pay his due tax, who will be held responsible for tax payment?
     
11. I am buying a property in India from a owner residing in USA. Should I deduct tax while making payment?
     
12. Can I use PAN to pay the TDS deducted into government account?
     
13. In case the deductee comes back stating that the original TDS certificate is lost, whether a duplicate certificate can be issued?
    
    
    
     

1. What is TDS?
   
   It is the amount with held from payments of various kinds such as salary, contract payment, commission, professional fees, etc. This withheld amount can be adjusted against your tax due. It is primarily for better tax administration that taxes are deducted at the time of payment to the recipient of taxable income.
   
   They are similar to prepaid taxes, credit for which can be claimed while filing Return of Income.

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2. Is TDS relevant for businessmen?
   
   Yes. Payments in consideration for goods sold or services rendered by you may be made to you after deducting taxes. You can adjust this against your final tax liability.

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3. Who is required to deduct tax at source while making payments of the nature referred to in above?
   
   In case of Companies and Partnership Firms, tax is required to deduct at source on every payments on which TDS is applicable. Individuals carrying out any business or profession are required to deduct at source on every payments on which TDS is applicable only when during previous financial year they were supposed to get their accounts audited under Income Tax law.

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4. What are the consequences of not deducting tax at source?
   
   You are required to withhold taxes at appropriate rates while making certain payment of expenses such as advertisement expenses, payment of salary to employees, etc. Failure to do so will result in the entire of expenditure being disallowed as your business expenditure resulting in higher profits being charged to income tax.

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5. I have made some deposits with a bank on which annual interest is around Rs.15000. My income is below taxable limit. The banker wants to deduct tax. What do I do?
   
   You can file a self-declaration to the banker in form 15H stating that your income is below taxable limit. The form is available with your banker, the local Income-Tax office and can also be downloaded from the website http://www.incometaxindia.gov.in/. This form should be filed before the interest income begin to accrue in the fixed deposit account, since the declaration has no retrospective effect i.e., prior to the date from which the bank is required to deduct taxes from interest income accruing to you.

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6. I have let out a property for Rs.20,000 per month. The tenant is deducting tax that is more than my tax liability. What can I do under this circumstance?
   
   The Income Tax Act specifies fixed rate at which taxes are required to be deducted from certain payments made. As stated earlier TDS is prepaid taxes which are ultimately adjusted against the tax liability of the recipient of income.
   
   Where the recipient (in the present case you who has let out property) determines that the tax liability is lower than the tax being deducted, under the provisions of the Income Tax Act, he may approach his assessing officer by filing Form 13 indicating that the actual tax liability is lower than the rate of tax applied by the tenant. He will issue a certificate directing the tenant to deduct taxes at a lesser rate. This form is available with the local Income tax office or can be downloaded from the website http://www.incometaxindia.gov.in/.

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7. I have deducted tax from payments disbursed but used the same for some urgent financial needs. What are the consequences?
   
   It is an offence to misuse the tax deducted at source. It should have been remitted to government account within the time allowed. The failure attracts tax, interest, penalty and also rigorous imprisonment up to seven years

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8. What can I do if I am unable to get the TDS certificate [form-16 or 16A]?
   
   It is the duty of every person deducting tax to issue TDS certificate. In spite of your asking if you are denied the certificate then there is a chance that the tax deducted has not been deposited by the deductor to the government account. Please inform the department [PRO or TDS section] which will then do the needful.

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9. I have not received TDS certificate from my employer. Can I claim TDS deducted from my salary?
   
   Yes. The claim can be made in your return. However, there is a possibility that the revenue authorities may not grant credit for taxes deducted in absence of the TDS certificates. Where credit for taxes deducted is not granted, demand for taxes remaining unpaid maybe raised on the payer i.e., the employer since liability to deduct lies with him. However this does not preclude the revenue authorities from issuing demand to the employee. To avoid such a situation it is advisable to follow up with your employer for the TDS certificates,

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10. If the employer does not deduct tax and employee also does not pay his due tax, who will be held responsible for tax payment?
    
    The ultimate responsibility to pay tax rests on the person who has earned income. Thus, ultimately the employee is responsible to pay the taxes and interest for delay in such payment (if any). However, the employer will be liable for interest and penalty for failure to deduct tax.

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11. I am buying a property in India from a owner residing in USA. Should I deduct tax while making payment?
    
    Yes, under the provisions of the Income Tax Act, where any payment is made to Non Resident for a sum which is taxable in India, such payment cannot be made without deducting taxes. In case you have any doubt regarding the amount on which TDS is to be made, you may file an application with the officer handling non-resident taxation who will pass an order determining the TDS to be made. Alternatively, if the recipient feels that the TDS is more he may file an application with his Assessing officer for lower deduction.

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12. Can I use PAN to pay the TDS deducted into government account?
    
    No. You are required to take a separate Tax Deduction Account Number [TAN] by making an application in form 49B with the Tin facilitation center of NSDL.

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13. In case the deductee comes back stating that the original TDS certificate is lost, whether a duplicate certificate can be issued?
    
    Yes. The deductor will have to issue the certificate in a plain paper giving necessary details of deduction and remittance.

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Remember, taxation is one aspect of an overall Financial Plan. It is important to look at your finances holistically to make the most of your wealth!

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Comments
neginhal@gmail.com May 08, 2019 I want to get TDS certificate from IDFC Bank they have deducted the tax but it is not showing in 26 a form they have only given interest certificate which my CA is not ready to accept and the TDS cut is shown in the statement I am invested only during last two quarters ease respond immediately I will be filing my taxes this week

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