TAX DEDUCTED AT SOURCE
15.2 TDS on Salary
15.3 TDS on interest on securities
15.4 TDS on dividend
15.5 TDS on Winning
15.6 TDS on contractors
15.7 TDS on Professional Fees
15.8 TDS on Rent
15.9 Let us Sum Up
15.11 Self Assessment Exercise
Assessee pays tax in the assessment year on the income earned in previous year. Due to this rule the tax collection is delayed till the completion of the previous year. Even sometimes people conceal there income and the tax is not paid at all. In order to overcome these problems, government started deducted some amount of tax from the amount which is receivable by the assessee. The amount of tax so deducted is called as “Tax Deducted at Source”, i.e., TDS. 15.1 OBJECTIVE
After going through this lesson you will be ale to understand what is the scheme of tax deduction at source. How tax is deducted from salary income, interest and dividend income, winning from lottery, crossword puzzle, races including horse races, gambling, betting etc., and payments of Rent, contractors and Professional fees.
15.2 TDS ON SALARY
TDS on salaries [Sec 192]
Any person responsible for paying Salaries (i.e. employer) is required to deduct tax on the salaries payable by him. Tax is to be deducted at the prescribed rate applicable for P.Y.
TDS is deducted after considering the following
1. If salary exceeds minimum non-taxable limit (Rs 1,00,000/Rs. 1,35,000/Rs. 1,85,000)
2. Value of perk is to be included in salary.
3. Employee can claim deduction u/s 80C, 80CCC, 80CCD, 80D,
80DD, 80DDB, 80E, 80G, 80GG and 80U.
4. Salary shall be rounded off in multiple of Rs 10 and tax in multiple of Rs 1
5. Income from any other heads if disclosed by assesses shall be considered
6. If employee was earlier employed somewhere else during the P.Y. then the present employer should consider the amount of income & TDS on that for computing the TDS on total income of employee
7. TDS shall be deducted on monthly basis.
15.3 TDS ON INTEREST ON SECURITIES
TDS on Interest on securities [sec 193]
Any person responsible for paying interest on securities shall deduct interest at the prescribed rates. Tax is to be deducted at the time of:- 1. Payment of interest or
2. Making interest due; which ever is earlier
No TDS on following: -
(a) 4 ½ % National Defence bonds
(b) National development bonds
(c) 7 yrs National Saving Certificates
(d) 6 ½ % or 7% Gold Bonds
(e) National Development Bonds
(f) Debentures of Co-operative society
No TDS on interest on debentures issued by a listed public company if following conditions are satisfied: -
1. Interest is paid by A/c payee cheque
2. Interest is paid to an resident Individual and
3. If interest is less then Rs.2, 500 p.a.
4. Debentures are listed in a stock exchange
The rate of T.D.S is:
• 10% plus surcharge plus education cess - for Listed Debentures • 20% plus surcharge plus education cess - for Non- Listed Debentures
15.4 TDS ON DIVIDEND
TDS on Dividends [Sec 194]
The principal officer is required to deduct tax at prescribed rates on dividend (including Deemed dividend) payment to a resident individual shareholder (both preference & equity)
No TDS on dividend paid by a Co in which public is substantially interested i.e. a public company, if following conditions are satisfied: - 1. Dividend is paid by an A/c payee cheque
2. Dividend is paid to a resident Individual
3. Dividend is less than Rs 5000 p.a.
However from 1.6.97 no TDS is required in case of dividend paid by a domestic company. Thus this section is now relevant only for non-Indian company declaring dividend in India and domestic company declaring deemed dividend
Now Indian Companies are required to pay corporate dividend tax @ 10% on dividends paid or declared u/s 115-O.
The rate of T.D.S is 10% plus surcharge plus education cess. 15.5 TDS ON WINNING
TDS on winning from lottery or...
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