The provisions of theIncome Tax Act relating to"Tax Deduction at source (TDS)" are of very important in the present scenario when TDS collectionscontribute almost 39% of total collectionof Direct Taxes. The Income Tax Actalso provides for penalty & prosecution for any default in respect of deduction of tax at source or deposit of the deducted amount in the Government account. Thus, the Tax Deductors need to be well conversant with the provisions relating to Tax Deduction at Source as provided in sections 192 to 198 of the Income Tax Act.
The Indian Income Tax Act provides for chargeability of tax on the total income of a person on an annual basis. The quantum of tax determined as per the statutory provisions is payable as:
a) Advance Tax
b) Self Assessment Tax
c) Tax Deducted at Source (TDS)
d) Tax Collected at Source (TCS)
Tax deducted at source (TDS), as name imply aims at collection of revenue at the very source of income. It is an indirect method of collecting tax with the concepts of "collect as it is being earned." Its significance to the government lies in the fact that it pre-pones the collection of tax & to ensures a regular source of revenue.
The concept of TDS requires that the person on whom responsibility has been cast, is to deduct tax at the appropriate rates, from payments of specific nature which are being made to a specified recipient. The deducted sum is required to be deposited to the credit of the Central Government. The recipient from whose income, tax has been deducted at source, gets the credit of the amount deducted in his personal assessment.
This presentation is an attempt to put forth the various provisions on the subject in a lucid yet precise manner.
Regards,
Pawan Singla
BA (Hon's), LLB
Audit Officer
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