TDS taxation issue
shantanu dekhane
(Querist) 24 January 2010
This query is : Resolved
What do you mean by TDS is it really a tax and what is purpose cutting the TDS from salary of the employee.
A V Vishal
(Expert) 24 January 2010
Tax deducted at source is one of the modes of collecting Income-tax from the assessees in India. 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 of such income. 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 so 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. Presently this concept of T.D.S. is also used as an instrument in enlarging the tax base. Some of such income subjected to T.D.S. are salary, interest, dividend, interest on securities, winnings from lottery, horse races, commission and brokerage, rent, fees for professional and technical services, payments to non-residents etc.It is always considered as an Advance tax which is paid to the government when we are being paid for provision made by us in the form of products or services.
soumitra basu
(Expert) 24 January 2010
I do agree fully with Mr. Vishal. Only things I would like to add that TDS is a tax collected by Government knowing fully well that 50% of such amount will neither be adjusted nor have to be refunded. This money can be consumed by the Government. Moreover there is a hidden profit of the government i.e. interest portion of the tax deducted.
