What does TDS in income tax mean? How is it calculated. If we submit declarations for IT and reduce the limit below tax slab, will our income be still taxable.
Hello Rashmitha! TDS is Tax Deducted at Source. It means the Income Tax of a particular income is deducted at the source itself on certain transactions specified under Income Tax Laws. Lets discuss the same in detail- Suppose Mr. A pays Salary to Mr. B, in this case, Mr. A is providing income to Mr. B. We can also say that Mr. A is source of Income of Mr. B. However the Income belongs to Mr. B and Income Tax on this income should be paid by Mr. B himself. But in this case, Income Tax Act directs Mr. A (being the source of Income) to deduct the Tax from the Income of Mr. B and pay the same to Govt of India on behalf of Mr. B. This concept of TDS was introduced to trace the transactions between two persons. Because many times, many persons used to claim expense by showing a payment to other person and it was difficult to trace that the other person has declared the income in his Income Tax Return or not. To mitigate all these loopholes, Finance Ministry introduced concept of TDS in India. **Calculations** It is calculated by using the provisions of Income Tax provided in the sections from Section 192 to Section 197. It is a fixed percentage of total income which varies from nature of the income. For Example- for deducting tds on payment of salary, slab rate for the Financial Year is used. For computing TDS on Professional Services, 10% TDS is deducted on the amount if the amount exceeds Rs. 30,000/-. Our Taxability of Income can never by decided by any declaration to Income Tax Department. It is always taxable if the Gross Total Income before any deductions exceeds the slab rate limit. Only TDS Liability can be mitigated by providing declaration to I T Department.
-TDS stands for Tax Deducted at Source. -That is deducted at the source of income -that is the receiver of income gets net amount after tax deduction the left over amount Sec.194 lays down how and when tax is required to be deducted. It would be good for u if u now go through the section and if further if u have any doubt specific like TDS from salary or contractors or brokers etc then u can ask topic seperately.
Hie Rashmita, **Defination of TDS** Tax Deducted at Source" is the tax amount deducted from the amount payable/ paid to the income receiver, and he will deposit the amount with the Govt. and the Income receiver can claim this TDS at the time of filing of tax returns.TDS is calculated on the amount paid or payable to the income receiver whichever is earlier @ specified rates. TDS is calculated as per the rates given by IT Department. You can search rates on google. If you have tax to pay but you have deducted TDS more than the amount of tax then you will get a refund of your TDS Amount.