As per the applicable law/ notifications/ circulars, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government.
The deductee from whose income tax has been deducted at source would be entitled to get the credit of the amount so deducted based on Form 26AS or TDS certificate (Form 16/ 16A) issued by the deductor.
TDS must be made when the amount of the payment exceeds the specified threshold limit.
by the people making such payments.
The government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you. The recipient of income receives the net amount (after reducing TDS).
The recipient will add the gross amount to his income and adjust the amount of TDS against his final tax liability. The recipient takes credit for the amount already deducted and paid on his behalf.
In other words, TDS, as the name implies, aims to imply a method of "Pay as you earn" and "collect as it is being earned”.
TDS shall be deducted at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act. However, in the case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements shall also be considered.
As soon as a Tax deduction at source (TDS) is made, an entire process-chain of the following events start:
If a deductor/collector fails to collect the tax at source, the whole of such expenses can be disallowed from the computation of total profits by the income tax assessing officer under section 40(A)(3) of the Income Tax Act, 1961
In case the tax at source is deducted after a day or few days of making the payment of income, then simple interest at the rate of 1% per month on the amount of tax deducted at source will be levied.
As mentioned above, there is a monthly due date for depositing the TDS so collected, to the government. If the deductor fails to do so, they have to pay simple interest on the amount deducted as tax at the rate of 1.5% per month.
If the deductor fails to furnish the TDS return on or before the specified due date, he shall be liable to pay a penalty of ₹ 200 per day till the date of default. Please note that the total amount of such a penalty cannot exceed the total amount of tax deducted at the source.
If the deductor fails to file a TDS return within the due date, then the assessing officer may charge a penalty ranging from ₹ 10,000 to ₹ 1 lakh.
Once you have opted for SSI’s TDS compliance package, a highly experienced professional, from our team is allotted to you, who in turn takes care of the following:
Documents To Be Submitted