When and how much tax is deducted at source?

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Publication: The Times Of India Mumbai; Date:2012 May 14; Section:Personal Finance; Page Number
16

When and how much tax is deducted at

source?
Find out about the different sources of income that invite TDS and
how you can reduce your tax outgo
Khyati Dharamsi

   The tax deducted at source, or TDS, is applicable on earnings from various

financial instruments. Here’s a guide to help you know when TDS is
applicable.

When is tax deducted at source?

There is no uniform rate for TDS. It can range from 1% for sale proceeds
from selling a house, to 30% for winnings from a horse race. Here’s a look
at how much TDS is cut from your earnings.

Salary

At the beginning of the financial year, or when you join a new organisation,
your employer will ask you to fill an investment declaration form. This will
include the maximum tax deductions allowed under Sections 80C, 80D and
other tax-saving instruments. If, despite all these deductions, your salary is
above the exemption limit, TDS will be cut from it every month.

Lottery winnings

Money won in a lottery, puzzle competition or a horse race is subject to the

highest TDS rate of 30%. The TDS is applicable even on non-cash winnings.

Bank accounts

If the interest you have earned from your bank FD is above 10,000, you will
receive it after the bank deducts tax. This exemption limit also applies to
interest earned from a bank savings account.

Property

Whether it is rental income or the money that you get after selling a house,
you will receive the final amount only after tax is deducted. However, you
can avail of exemptions in both cases.

Superannuation fund and debentures

If you withdraw money from a superannuation fund, it is added to the

income and if your income is above the taxable limit, TDS will be applicable.
In the case of debentures, interest income up to 2,500 is exempt from tax
deduction.

Gold and silver

The finance minister recently announced that from July onwards, cash used
to buy gold and silver jewellery worth more than 5 lakh will have to pay
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When and how much tax is deducted at source? Page 2 of 2

taxes upfront

How to save on TDS

No TDS is applicable on the interest earned from a re curring deposit.

However, once you receive the matu rity amount, it will be added to your
income and you will have to pay tax on it. If your income is below the
taxable limit, but the interest earned from your deposits is above 10,000,
you can submit form 15 G/H to the bank at the beginning of the financial
year to not cut TDS.

What to watch out for

When you file your return, calculate the total income and the tax bracket
you fall under, to determine the bal ance tax to be paid. If your income is
taxable, you will have to pay the differential tax. Don’t think you can avoid
paying taxes by not declaring your permanent account number. All the taxes
that are cut on your behalf by a bank, an individual or an organisation are
listed in Form 26 AS, which is also called the annual tax statement.

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