Before distinct income sources Tax deducted at source (TDS) is applicable along with the salaries, business income, property sales, and interest on bank deposits. The payer necessarily withholds a part tax liability on deducting the TDS from your income. The same amount deducted is nextly credited to your tax account and is required to be shown on filing your tax return.
There might be a chance that the same TDS credit is not available in your tax records immediately. As of distinct causes the same might take place such as non-deposit of TDS to the Government by the counterparty, due to a mismatch in details or any other reason.
What Do You Understand About the Tax Deducted at Source(TDS)?
A Tax Deducted at Source (TDS) is a tax system that the government of India employs for collecting income tax from the income source. It is a method of reducing tax evasion and ensuring payment of taxes timely. The TDS applies to different payment types such as commission, rent, interest, professional fees, salary, and several others. It means that whenever you have received any income, the person making the tax payment is responsible for deducting some tax percentage and depositing it into the government.
The rate of TDS varies depending on the payment type and the amount associated. The system will help the govt to ensure that income tax is collected in an efficient and timely to reduce taxpayers’ burden by allowing them to pay taxes in instalments rather than a lump sum at the year-end.
When a person receives income, they usually get the net amount after the TDS deduction. The recipient is then required to add the gross amount to their income and the TDS amount which is adjusted according to the final tax liability. In this way, the recipient can take credit for the payment already deducted and paid on their behalf. The process is used to help the government to collect advance tax and effectively track transactions. By deducting TDS, the govt can collect tax revenue and comply with tax laws.
What is the Process to Deposit TDS?
When it comes to TDS, it is very important to know that the process of depositing must be done through the I-T Portal using your TAN login. The facility of direct tax payments has been migrated with OLTAS’s ‘e-payment: Pay Taxes Online’ to the e-Pay Tax facility of the ITR e-filing portal.
It means if you want to make direct tax payments including TDS, you need to click on the option of ‘e-Pay Tax’ of the ITD at https://www.incometax.gov.in/. Through this, you can easily and efficiently make your income tax payments without any hassle.
Read Also: New Vs Old Tax Regimes: Most Effective Strategies for Avoiding Higher TDS on Salary
What is the TDS Rate on Salary?
As per the act of I-T 1961, every employer must deduct their TDS from the salary paid to their employees. The Tax Deducted at Source (TDS) is calculated based on the average income tax rate appropriate to the employee for the year. This rate is computed by dividing the employee’s predicted income for the assessment year by the income tax liability arrived at, by applying the slab rates to the employee’s income. It is an essential legal compliance requirement that ensures that the government receives its due share of taxes from salaried individuals.
Reclaiming Tax Credit Cases and Methods
- A genuine taxpayer must not lose his/ her hard-earned money, irrespective of reason. If an individual loses to deposit the TDS deducted then he will be punishable with strict imprisonment for not less than 3 months which may extend to 7 years and with a fine, stated as per section 276B. The deductee must approach their Jurisdictional Assessing Officer (JAO) and apply to regard initiation of proceedings u/s 276B against the defaulting deductor. The deductor shall be initiated to correct the error if action is started via JAO, even though the deductor has committed some mistakes in filing his TDS return.
- There might be a case where the TDS Credit is not permitted in the assessment under section 143(1) by the Government. In these matters, the taxpayer must simultaneously file a rectification application under section 154 and appeal u/s 246A. Simultaneously the taxpayer is qualified for both the reliefs.
- We face certain matters in which there may be circumstances in which the TDS deductor had deducted the TDS in the ongoing fiscal year and the deductee has declared the income in the subsequent Financial year. In these circumstances, the deductee is required to be cautious not to claim the TDS credit in the present financial year however continue the same forward to the subsequent FY. For the current year, the same carry-forward must be proceeded in the ITR. In the income tax return of the subsequent year, these credits should be claimed and brought forward.
- A reverse situation may be there in which any income has been included in the ITR that the taxpayer filed for the current AY and TDS on such income has been deducted and paid to the Government in the following Fiscal year. For the case, from October 2023 the taxpayer can file Form 71 to claim TDS credit. Form No. 71 will get issued electronically as per a DSC if ITR is required to get furnished under a digital signature; or through an electronic verification code.
Requirement to Re-check the TDS Claim
For the deductees, a caution word is that a person must match the TDS with his/her income statement and must not opt for all the TDS credit without validating whether the subsequent income is theirs or not. Circumstances might take place in which a deductor by blunder reveals the PAN no of the taxpayer related to the TDS deducted when the transactions do not take place with such deductee. In these matters, a person should deny the TDS credit in the statement of the AIS available on the portal of income tax.
The government has given multiple procedures for taxpayers which they can adopt while claiming TDS credit. One effective way is to claim with TDS credit and form 26AS using SAGInfotech Popular Gen TDS software, which streamlines the process of filing TDS/TCS returns. This software is known for its efficiency and accuracy, making it a useful choice amongst taxpayers. Excess credit could be dangerous to the taxpayer and diligence is needed to be maintained at the time of TDS claiming.
