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Tax Deduction at Source

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TAX DEDUCTION AT SOURCE

I NTRODUCTI ON AND OVERVI EW

1

What is TDS? Why TDS? TDS

is one of the modes of collection of taxes, by which a certain

percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payments to the other person and deducted amount is remitted to the Government account oncept #t

of !pay as you earn"

facilitates sharing of responsibility of tax collection between the

deductor and the tax administration$ #t

ensures regular inflow of cash resources to the Government$

#t

acts as a powerful instrument to prevent tax evasion as well as

expands the tax net$

Income Tax Department Law

Enforcer

Law

Implementer

Facilitator

Initiatives to accomplish the objectives from TDS front & e-TDS &  TIN &  TRACES

'

MAJOR PLAYERSI N THE TDS MECHANI SM



De duc t o r



De duc t e e



De par t me nt



Ot her s -NSDL -UTII TASL -Spe c i alPe r s o nne li nCo r po r at e s / Banks -Out s o ur c e dpe r s o ns

5

Who shall deduct tax at source? )very

person responsible for making payment of nature covered by TDS

provisions of #ncome Tax *ct shall be responsible to deduct tax$ These

persons are mainly:

+ rincipal -fficer of a company for TDS purpose including the employer in case of private employment or an employee making payment on behalf of the employer$ + DD- .Drawing  Disbursing -fficer0, #n case of Govt$ -ffice any officer designated as such$ + #n the case of !interest on securities! other than payments made by or on behalf of the entral govt$ or the State Government, it is the local authority, corporation or company, including the rincipal -fficer thereof$ Such

person is called Deductor while the person from whom the tax is

deducted is called Deductee Tax

must be deducted at the time of payment in cash or che1ue or credit to

the payees account whichever is earlier .)3)T#-4 5 S*6*780$ redit

to payable account or suspense account is also considered to be

credit to payees account and TDS must be made at the time of such credit$

Emplo$ee

not 'n%er an obli)ation to f'rnish %etails of

income 'n%er other hea%s If

he f'rnishes the %etails of income an% TDS thereon(

the emplo$er is 'n%er an obli)ation to ta!e them into acco'nt* Loss

'n%er an$ hea%( ecept ho'se propert$( cannot be

ta!en into acco'nt +artic'lars

of other income and TDS on the same(

ecept 'n%er ,o'se propert$( cannot re%'ce the amo'nt of ta which was otherwise %e%'ctible 10

11

12

31

CASELAW 

Hi ndus t anCoc aCol aBe ve r agesLt d.VsCI T



( 293I TR226)Supr e meCo ur t( 2007)



Madhumi l anSynt e xLt d.vs .Uni onofI ndi a( 290I TR 199)Supr e meCourt( 2007)

  V e c t o rShi ppi ngSe r vi c e s357I TR642( Al l )( 2013)



P. M. S.Di es el sVs .CI T374I TR562( P& H) . 2015 32

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