How is TDS calculated in India?

Ritin Agarwal

Ritin Agarwal, Consultant Director, 5 quest's consulting

Répondu il y a 65w · L'auteur dispose de réponses 225 et de vues de réponses 260.1k

Réponse d'origine: How can we calculate TDS in India?

That is a very basic question but damn lengthy answer.

There are two ways to answer to this

  1. I can write the act & tell you - which most people did.
  2. Simplistic way / Generalised Way

I will answer in 2nd way, as i can see 1st way has been adopted my many.

So, let’s start…

TDS or Tax Deducted at Source is a mode of payment of tax liability to government.

Basically, what government did is they said at the time of resuming income the payer will deduct some part and deposit that to government on your behalf, which you can show as already paid tax to government while filing the return.

Now, the question arises what percentage and what payments, for this, government made around 15 or so sections, covering different type of payments like Rent, Professional Income, Commission, Interest, Salary, Payment to Non Residents etc.

Each section has there own rate of deduction of TDS & also a criteria that defines when or on which payments the TDS will have to be deducted, hence, not all payments are subject to TDS.

There are also few other factors determining the calculation of TDS like “Availability of PAN etc.”

I hope most have understood, because to understand more it’s hell lot of task and not possible in writing, because this calculation for each section is like a 50 page chapter atleast.

Hope it helps…

P.s. - Any specific queries or doubts are welcome in comments.

Anurag Uppal

Anurag Uppal, Ca Finalist

Répondu il y a 65w · L'auteur dispose de réponses 52 et de vues de réponses 146.3k

Réponse d'origine: How can we calculate TDS in India?

TDS or Tax Deducted at Source, is a means of direct tax collection by Indian authorities according to the Income Tax Act, 1961. TDS is managed by the Central Board of Direct taxes (CBDT), which comes under the Indian Revenue Services (IRS).

TDS is collected as a means to keep a stable revenue source for the government throughout the year, while desisting people from avoiding taxes.

What is TDS?

Tax Deducted at Source or TDS is a type of tax that is deducted from an individual’s income on a periodical or occasional basis. TDS can be applicable for income that are regular as well as irregular in nature. Income Tax Act, 1961 regulates TDS in India through Central Board of Direct taxes (CBDT) under the Indian Revenue Services (IRS). TDS rule directs the payee or employer to deduct a certain amount of tax before making full payment to the receiver. TDS is applicable for salary, commission, professional fees, interest, rent, etc.

TDS Calculation

Payments such as salaries, interest payment, commission, fees to lawyers and freelancers etc. are subject to TDS. For salaries, the percentage of TDS will be based on income slabs rates. Similarly, each type of income has its own percentage of tax that is calculated when the amount meets certain limit.

Since TDS is collected at source without the calculation of investment that is eligible for tax deductions, hence, an individual can declare and submit his investment proof in order to file a return and claim for the TDS refund.

TDS Deduction

If an individual has paid excess TDS when compared to the liable tax amount, the deducted or payee can file a claim for a refund of the excess amount. The TDS deductions are calculated based on various factors for individuals from different types of income categories.

How is TDS Deducted?

Income and expenditure such as salary, lotteries, interests from banks, payment of commissions, rent payment, payments to freelancers, etc. fall under the ambit of TDS. When making payments under these segments, a percentage of the overall payment is withheld by the source that is making the payments. This source, which can be a person or an organization, is known as the Deductor. The person whose payment is getting deducted is called the Deductee. For instance, a deductor is the employer paying salary to an employee (the deductee).

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TDS Return

An individual is required to file TDS return in order to receive TDS refunds and to maintain a healthy financial record. The TDS return can be carried out over the internet by visiting the website - http://www.incometaxindia.gov.in/

The individual will need to sign onto the website by using the existing credential or by registering for the services. There are specific deadlines that an individual will require to follow to ensure the TDS returns are filed within the due time. Depending on the income category, the individual will need to fill up the necessary form and provide required documents for the refund process to begin.

Once the individual has registered and submitted the return, he/she will need to validate the TDS Return File. The validation can be done by using the free software provided by the Income Tax Department.

If you are wondering about the possibilities of receiving a refund for the excess TDS paid, you will need to file the claim through TDS return to receive a refund for the excess amount.

Challan for TDS Payment

Challan ITNS 281 is the Challan form for payment of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). Challan No. 281 is applicable for Tax Deducted at Source / Tax Collected at Source (TDS/TCS) from corporates as well as non-corporates.

Challan TDS 281

The challan no. 281 is used for deposits of TDS/TCS. By using the form, you will need to mention the correct 10-digit Tax Deduction Account Number (TAN), name, and address of the deductor on each challan used for depositing tax. You can verify the TAN details from Income Tax Department website prior to depositing TDS/TCS. As a taxpayer, you will require using separate challans to deposit tax deducted under each section and indicate the correct nature of payment code in the relevant column in the challan.

e-Filing of TDS Return

  • Follow the instruction below for the e-filing of TDS return:
  • Choose the appropriate file format.
  • The file should be in a clean text ASCII format with 'txt' as the filename extension. You can also download the free software to prepare the return file using the Return Preparation Utility provided by NSDL or any other third party software.
  • Once the file is prepared, validate the file using the File Validation Utility (FVU) provided by NSDL.
  • Rectify the errors, if found by FVU.
  • Generated .fvu file can either be submitted at TIN-FC or uploaded at TIN website

e-Payment of TDS

The Income Tax Department provides an online option to Pay Taxes Online. The e-Payment service facilitates payment of direct taxes online. The taxpayer will require having the net-banking services from any of the authorized banks.

Penalty for Late Filing of TDS Return

If an individual fails to file the TDS Return within due time, he/she will need to pay a fine of Rs.200 per day until the return is filed. The fee is applicable for every day until the fine amount is equal to the total liable TDS amount.

If the taxpayer exceeds one-year time limit to file the TDS return or furnishes incorrect details of PAN, TDS amount, he/she will need to pay a penalty of minimum Rs.10,000 to Rs.1 lakh.

Jagdish Handa

Jagdish Handa

Répondu il y a 65w · L'auteur dispose de réponses 455 et de vues de réponses 295.9k

Réponse d'origine: How can we calculate TDS in India?

The Income tax Act, 1961 prescribes different rates of T.D.S. for different types of payments The liability is cast upon the payer of the income to deduct tax at source and deposit it with the government.

TDS Rates Applicable for Persons Resident in India

Renseignements

TDS Rate (%)

Section 192: Payment of salary Normal Slab Rate

Section 193: Interest on securitiesa) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;c) any security of the Central or State Government;d) interest on any other security - 10%

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Section 194: Dividend other than the dividend as referred to in Section 115-O-10%

Section 194A: Income by way of interest other than “Interest on securities”-10%

Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort. - 30%

Section 194BB: Income by way of winnings from horse races. - 30

Section 194C: Payment to contractor/sub-contractors.

a) HUF/Individuals. - 1%

b) Others. - 2%

Section 194D: Insurance commission. 5% ( w.e.f 01.06.2016)

(10% from 01.04.2015 to 31.05.2016

Section 194DA: Payment in respect of life insurance policy.- 1%

( w.e.f 01.06.2016) (2% from 01.04.2015 to 31.05.2016)

Section 194EE: Payment in respect of deposit under National Savings scheme -10%. (w.e.f 01.06.2016) (20% from 01.04.2015 to 31.05.2016)

Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India. - 20%

Section 194G: Commission, etc., on sale of lottery tickets. - 5% (w.e.f 01.06.2016)

(10 % from 01.04.2015 to 31.05.2016)

Section 194H: Commission or brokerage. - 5% (w.e.f 01.06.2016)

(10 % from 01.04.2015 to 31.05.2016)

Section 194-I: Rent on a) Plant & Machinery. - 2%

b) Land or building or furniture or fitting - 10%

Section 194-IA: Payment on transfer of certain immovable property other than agricultural land. - 1%.

Section 194 -IB : Rent payable by an individual or HUF not covered u/s. 194I (w.e.f from 01.06.2017). - 5%.

Section 194J: Any sum paid by way of:a) Fee for professional services b) Fee for technical services c) Royalty d) Remuneration/fee/commission to a director ore) For not carrying out any activity in relation to any businessf) For not sharing any know-how, patent, copyright etc. - 10%.

Section 194LA: Payment of compensation on acquisition of certain immovable property10

Section 194LBA: Certain income distributed by a business trust to its unit holder. - 10%.

Any Other Income. 10%.

Hetal M Kukadiya

Hetal M Kukadiya, Experience in Income Tax ,International Taxation,Accounting etc...

Répondu il y a 64w · L'auteur dispose de réponses 1k et de vues de réponses 3.5m

As for understanding your salary components, below is my two cents. Hope this makes sense to you.

1. Basic Salary - The fixed component of your salary

Your basic salary component is usually the largest portion of your total salary and forms the basis of other proportions of your salary. Your HRA and PF both are calculated as percentages of this basic salary.

2. House Rent Allowance - The tax exemption allowed if you pay rent

If you are living in a rented accommodation, you can claim HRA to lower your tax liability. Your company will offer HRA for all expenses related to rented accommodation and is partially or completely exempt from tax.

3. Transport Allowance - The tax exemption allowed for travel between home and office

For your travel expense between home and office, you can claim transport allowance upto Rs. 19,200 per annum, starting FY 2015-16.

4. Medical Reimbursements - The tax exemption allowed towards medical expenses

If your salary payslip states medical reimbursements, you can claim this by submitting medical bills to your employer. But, these expenses should only include fees like doctor consultation charges, medicine bills, medical tests, etc.

5. Employee Contribution to Provident Fund - Tax Exempt Component

A 12% of your basic salary is contributed by your employer as PF on your behalf, every month. And you receive an 8.5% interest on it.

6. Bonus - The fully taxable part of your salary income

Some of us also receive performance incentives or bonus once or twice a year. Bonuses are again 100% taxable income.

7. Special Allowance - The fully taxable part of your salary income

The leftover component of your salary is categorized as special allowance. And the special allowance is also the fully taxable income of your salary. Hence, this is the chunk that you need to invest for to save on taxes.

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8. Leave Travel Allowance - The tax exemption allowed for travel within India

You are given a Leave Travel Allowance or LTA for trips within India and you can claim this allowance for trips taken with your better half, children or parents only. This allowance is not listed in your payslip because it is an actual expense. Which means, unless you actually take the trip and incur such expenses, you won’t be able to claim.

Up to Rs 250000 Lac: No Tax

Rs 250001 to Rs 5 Lac: 10 percent

Between Rs 500001 to Rs 10 Lac: 20 percent

Above Rs 10 Lac: 30 percent

Over and above the total tax amount, you also need to pay CESS at 3% on the tax amount.

Below are the link for Tax Calculator

Income and Tax Calculator

Soyez pacifique !!!

Nikhil Mittal

Nikhil Mittal, a vécu en Inde

Répondu il y a 109w · L'auteur dispose de réponses 130 et de vues de réponses 628k

In india the TDS is calculated on percentage basis

But before that it is important to know that what exactly is TDS ?

TDS or Tax Deducted at Source, is a means of indirect tax collection by Indian authorities according to the Income Tax Act, 1961. TDS is managed by the Central Board of Direct taxes (CBDT), which comes under the Indian Revenue Services (IRS).

How is TDS calculated in India?

TDS is collected as a means to keep a stable revenue source for the government throughout the year, while desisting people from avoiding taxes.

It is very easy to calculate TDS if you have knowledge of rates of tds and the source of income on which such tds is deducated

How is TDS calculated in India?

Let us try to understand this by a example

Let there is a firm named XYZ Ltd. who makes a payment of Rs 50,000/- towards professional fees to Mr. ABC (on which a TDS is deducatable at the rate of 10℅ of total payment) then XYZ Ltd shall deduct a tax of Rs 5,000/- and make a net payment of Rs 45,000/- (50,000/- deducted by Rs 5,000/-) to Mr. ABC. The amount of 5,000/- deducted by XYZ Ltd will be directly deposited by XYZ Ltd to the credit of the government.

Merci

Singh Sahab

Singh Sahab, vit à Mumbai, Maharashtra, Inde

Répondu il y a 30w · L'auteur dispose de réponses 153 et de vues de réponses 213.9k

TDS is simply Tax Deducted at Source. As per the Income Tax Act – persons responsible for making payments are required to deduct tax at source at prescribed rates. Instead of receiving tax on your income from you at a later date, the govt wants the payers to deduct tax before hand and deposit it with the govt.

What is the rate of TDS for Professional & Technical Fees (Section 19J)

Issue of TDS certificate

The Person who deducting TDS he also need to issue Form 16A & 16B issued on quarterly basis. The Details for TDS Deposited can be view by person whose TDS has been deducted by checking Form 26AS.

The certificate is to be issued by following dates click here to know more

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