Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits. Assessee is also required to file quarterly return to CBDT. Returns states the TDS deducted & paid to government during the Quarter to which it relates.
TDS (Tax Deducted at Source) is an indirect system of deduction of tax by Indian authorities according to the Income Tax Act, 1961 at the point of generation of income tax. Tax is deducted by the payer and is remitted to the government by the payer, on behalf of the payee. A TDS Return is a quarterly statement which has to be submitted to the Income Tax Department of India. Submitting TDS Return is mandatory if you are a deductor. It has details of TDS deducted and deposited by you.
Advantages of TDS
The amount deducted as the TDS depends on the amount you earn. TDS starts getting deducted after you start earning. Both the government and the Tax-payers get benefitted from TDS. When you make payments through cash, cheque or credit card, a certain amount of tax is deducted, which gets deposited to the central agencies. It prevents people from evading taxes.It ensures a steady source of revenue for the Government.The Tax Collection base is widened.The burden of responsibility of the Tax Collection Agencies and the Deductor are lessened.It is convenient for the deductee as Tax is automatically deducted.
Process Of TDS Returns:
One can also submit the TDS statements and related paperwork at any of the designated TIN-Facilitation Centers managed by NSDL, details of which are available on the website. These FCs are available at prominent cities and towns at various states in the country. Upon submission of the forms, the representative will issue a provisional receipt as an acknowledgement for the TDS/TCS returns filed. In case of rejection due to some reason, a memo would be provided with the reason for non-acceptance.