TDS, or tax deducted at source, is tax cut from your income before it is paid to you. TDS is deducted from almost everything you are paid.
Believe it or not, the government actually loves TDS. When tax is deducted at source it helps them bring more and more people under the tax net. So the Income Tax Department takes TDS deduction and defaults very seriously! That makes TDS a very important thing to be aware of.
Here are five facts that everyone should know about TDS.
1. Provide your PAN wherever TDS is applicable
Usually, TDS deductions are compulsory from payments made to you. A deductor such as your employer or a bank may have to do this for thousands of people. That's why TDS is mapped to your PAN, so there is are proper track records of how much of your total taxes are already deducted and deposited with the government. Always, always, provide your PAN number when you know TDS will apply.
2. Each and every TDS deduction is listed in one single document
Yes, you heard that right. While it may be hard to put together all your earnings, there is a document that brings all your TDS deductions together in one place--it's called the Form 26AS. If an employer deducted TDS from your salary, you'll find details in Form 26AS. If a bank has deducted TDS on fixed deposit interest, you'll find it here. LIC receipts have TDS, you'll find that here too.
3. It's very important to review this document
The Tax Department relies heavily on this document. When you are submitting your returns, TDS is adjusted from your tax dues. If excess TDS is deducted, you'll get a refund. If TDS falls short of your total tax dues, you'll have to pay the remaining tax. That makes Form 26AS a very important document. Find a nice quiet hour and look at each and every entry in your Form 26AS. Make sure, you can see TDS deductions made by your employer. You can also try to sum those up from your payslip or do a rough check of how much should be deducted. Check your bank statements for FD interest credit and its TDS, then trace it back to the Form 26AS.
4. Sometimes the deductor may make a mistake
Mistakes do happen. The deductor may not have deposited the TDS. Or they may have put an incorrect PAN against your deduction. How, then, will one claim such TDS in the tax return? The Income Tax Department has instructed its officers to not raise tax demands on taxpayers in such cases since it's a default by the deductor. But you must maintain proof of TDS deduction such as payslips, bank statements, emails with the deductor any other document that supports that TDS was deducted.
5. It may so happen that you become a deductor yourself
If you pay salary, you are bound by law to deduct TDS. Buyers of property also have to deduct TDS before making payment to the seller. So yes, tables turn sometimes. Deductors must deposit TDS on time and also submit a TDS return to the government that establishes that TDS was duly deducted and deposited.
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Believe it or not, the government actually loves TDS. When tax is deducted at source it helps them bring more and more people under the tax net. So the Income Tax Department takes TDS deduction and defaults very seriously! That makes TDS a very important thing to be aware of.
Here are five facts that everyone should know about TDS.
1. Provide your PAN wherever TDS is applicable
Usually, TDS deductions are compulsory from payments made to you. A deductor such as your employer or a bank may have to do this for thousands of people. That's why TDS is mapped to your PAN, so there is are proper track records of how much of your total taxes are already deducted and deposited with the government. Always, always, provide your PAN number when you know TDS will apply.
While it may be hard to put together all your earnings, there is a document that brings all your TDS deductions together in one place--Form 26AS.
2. Each and every TDS deduction is listed in one single document
Yes, you heard that right. While it may be hard to put together all your earnings, there is a document that brings all your TDS deductions together in one place--it's called the Form 26AS. If an employer deducted TDS from your salary, you'll find details in Form 26AS. If a bank has deducted TDS on fixed deposit interest, you'll find it here. LIC receipts have TDS, you'll find that here too.
3. It's very important to review this document
The Tax Department relies heavily on this document. When you are submitting your returns, TDS is adjusted from your tax dues. If excess TDS is deducted, you'll get a refund. If TDS falls short of your total tax dues, you'll have to pay the remaining tax. That makes Form 26AS a very important document. Find a nice quiet hour and look at each and every entry in your Form 26AS. Make sure, you can see TDS deductions made by your employer. You can also try to sum those up from your payslip or do a rough check of how much should be deducted. Check your bank statements for FD interest credit and its TDS, then trace it back to the Form 26AS.
4. Sometimes the deductor may make a mistake
Mistakes do happen. The deductor may not have deposited the TDS. Or they may have put an incorrect PAN against your deduction. How, then, will one claim such TDS in the tax return? The Income Tax Department has instructed its officers to not raise tax demands on taxpayers in such cases since it's a default by the deductor. But you must maintain proof of TDS deduction such as payslips, bank statements, emails with the deductor any other document that supports that TDS was deducted.
5. It may so happen that you become a deductor yourself
If you pay salary, you are bound by law to deduct TDS. Buyers of property also have to deduct TDS before making payment to the seller. So yes, tables turn sometimes. Deductors must deposit TDS on time and also submit a TDS return to the government that establishes that TDS was duly deducted and deposited.
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