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Tax collected at source -- TDS -- brief idea

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TAX COLLECTED AT SOURCE (TCS)


What is TCS?

The seller has to collect tax from the payer who has purchased the following items :
  • Alcoholic liquor for human consumption
  • Tendu leaves
  • Timber obtained under a forest lease
  • Timber obtained by any mode other than under a forest lease
  • Any other forest produce not being timber or tendu leaves
  • Scrap
  • Parking lot
  • Toll plaza
  • Mining and quarrying
The TCS on the above mentioned items vary from 1% to 5%
Deposit of TCS amount- within seven days of the following month.
Issue of TCS certificate- within in one month of collection /debit(form 27D)

The rates of TCS for representative purpose (Financial Year 2010-11):

TCS Rates2.png
 SOURCE:


TAX DEDUCTED AT SOURCE:

TDS or best known Tax Deducted at Source is one of the modes of collecting income tax from the assessees in India. This is governed under Indian Income Tax Act, 1961, by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS)Ministry of FinanceGovt. of India.

Overview

In simple terms, TDS is the amount of tax getting deducted from the person (Employee/Deductee) by the person paying (Employer/Deductor). National Securities Depository Ltd. (NSDL) after having modernized the settlement system in the Indian Capital Market by pioneering scripless settlement is now in the process of establishing a nationwide Tax Information Network (TIN) on behalf of the Income Tax Department (ITD). This is designed to make the tax administration more effective, furnishing of returns convenient, reduce compliance cost and bring greater transparency.
NSDL will be the primary agency respoNsible for the design, implementation and maintenance of TIN as per the requirements of ITD.

[edit]Deductor

Under the process of TDS, Deductor is a person/company who is liable to deduct the Tax at source, from the payment being made to the party. Deductor is also termed as Employer in cases where the payments are under Salaries.[1]

[edit]Deductee

Deductee is the person, from whom the tax is being deducted or accrued for deduction. Depending on the nature of the deduction being made, deductees and respective submission forms are categorized to 3 types:
  1. Salaries: In case of salaries, the deductee is termed as an Employee. All the information of deductions and payments in this category should be submitted in Form 24Q to the government.
  2. Non-Salaries - Resident: In case of non-salaries and the payment is made to a resident in India, the deductee is termed as a Deductee or a Party. All the information of deductions and payments in this category should be submitted in Form 26Q to the government.
  3. Non-Salaries – Nonresident: In case of non-salaries and the payment is made to a non-resident of India, the deductee is termed as a Deductee or a Party. All the information of deductions and payments in this category should be submitted in Form 27Q to the government....

[edit]TDS Certificates

A tax deductor is also required to issue TDS certificate to the deductee within specified timed under section 203 of the I T Act. The con from the deductor, for the deduction and payment of the respective TDS amount to the bank, issued to the deductee is a TDS certificate.[2]
The deductee should produce the details of this certificate, during the regular assessment of income tax, to adjust the amount of TDS against the Tax payable by the Deductee [assessee].

[edit]Types of TDS certificatesalaries — Form 16: In case of Salaries, the certificate should be issued in FORM 16 containing the Tax computation details and the Tax deducted & Paid details. This refers to the details submitted over Form 24Q.on-salaries — Form 16A: In case of Non-Salaries, the certificate should be issued in FORM 16A containing the Tax deducted & Paid details. Separate certificates should be prepared for each Section [nature of payment]. This refers to the details submitted over Form 26Q and 27Q.

TDS Certificates Form 16A for Financial Year 2011-12 For the following categories of deductors, it is mandatory to download Form 16A from TIN Web Site and issue such downloaded certificates to deductees
  1. Companies
  2. Banks
  3. Co-operative society engaged in banking business
For other deductors, it is optional to download Form 16A from TIN Web site. Such downloaded TDS certificate will have a unique TDS Certificate Number This procedure is applicable for all deductions made on or after 01-04-2011
SOURCE:



Tax collected at source -- TDS -- brief idea Reviewed by sambasivan srinivasan on 8:46:00 PM Rating: 5

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