TAX DEDUCTED AT SOURCE

What is TDS?
Tax deduction at source or best known as TDS is one of the
modes of collecting income tax.

In simple terms, TDS is the tax getting deducted from the

person receiving the amount (employee/ deductee) by the
person paying such amount (employer/ deductor).

The tax so deducted at source by the payer, has to be

deposited in the Govt treasury to the credit of
Central Govt. within the specified time.
Presently this concept of TDS is also used as an instrument
in enlarging the tax base.

It is always considered as an advance tax which is paid to

the Govt.

Who shall deduct tax at source?

Every person responsible for making payment of nature
covered by TDS provisions of Income Tax Act shall be
responsible to deduct tax.

TAN (Tax Deduction Account No.): unique identification

number for person deducting the tax. 10 digit alpha numeric
character.

No TDS on any sum paid to:

1. The GOVT.
2. The RBI
3. Corporations established by or under a Central AcT which is
exempt from income tax.
4. Mutual fund specified under Sec 10(23D)
 Nature of Payment Made To Thresho Individual Note:
Residents ld(Rs.) / HUF
TDS Rate
Salaries Slab Slab rate
rates applicable to
employees
Interest on securities 10
Dividends 10 No TDS on
dividend
exempt u/s
115-O
Interest other than interest on securities 5000 10
- Others (or Rs
10,000
in case
of
banks)
Winning from Lotteries 10000 30
Winnings from Horse Race 5000 30
Payment to Contractor - Single 30000 1 No TDS if
Transaction payment iS
Payment to Contractor - Annual 75000 1 for personal
Aggregate During the F.Y. purpose

Insurance Commission 20000 10

Commission - Lottery 1000 10
Commission / Brokerage 5000 10
Rent - Land and Building, 180000 10
Rent- plant & machinery 180000 2
Professional Fees, technical service or 30000 10
royalty
Immovable Property 1,00,000 10
Surcharge & Education cess:
In case of Resident Assessee

Payee Applicability of surcharge

Companies No surcharge or EDu Cess
Any other assessee No surcharge or EDu Cess. However Edu
Cess to be added to TDS on salary.

How this scheme practically works?

1. The person deducting tax shall furnish periodic
statement of TDS to IT Authority.
2. The above authority after verifying the details enter
the details of TDS on centralized computer system.
3. The AO shall send the details of TDS to the deductee.
4. The deductor is also required to send the certificate
to deductee.
5. The deductee shall claim credit of his return of TDS in
his return.
6. The AO after verifying the details shall give credit of
TDS