Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: list of goods taxed at 4% :: VAT Audit :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: VAT RATES :: cpt :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: TDS :: ACCOUNTING STANDARDS :: articles on VAT and GST in India
« Service Tax »
 Income tax returns (ITR) filing: Not filed returns for 2 years? Beware! Deadline nearing
 All you want to know about HRA: When you can claim and how it is calculated?
 Income Tax Saving: 6 ways to save tax without investing before March 31 tax deadline
 Unnable to file your tax return? Take help of these portals
 Do you know which 80C instruments can help you save tax and carry no future tax liability?
 E-way relief, for now, to e-commerce, courier firms sending small orders
 Where to invest for saving more on taxes
 A simpler GST can become a registry of all invoices, says iSPIRT’s Sharad Sharma
  Income Tax department may defend CPC in returns fraud case
 One GST rate not possible, next reform after compliance improves,
  Communication to the Central Excise/Service Tax Taxpayers on migration to GST

Link between TDS and actually saving tax on investments
November, 06th 2013

Arnav Pandya There is often a lot of confusion in the minds of the investor about savings of tax and the way to go about it. One area where this leads to a lot of problems is that of Tax Deducted at Source (TDS) and it needs to be clarified so that the individual does not end up being a defaulter on the final amount of tax that he has to actually pay. Here is a closer look at the nature of the tax deducted at source and its link to the actual taxation.

Tax deducted at source The TDS represents the amount that is actually deducted by the person making a payment to someone else and then making the net payment. The amount that is deducted is paid to the government as the tax. For example take a situation where there is a fixed deposit kept with a bank.

If the bank pays an interest of say Rs 20,000 then it would have to deduct tax on the payment and assuming that 10 percent is deducted (without considering cess for ease of understanding) then the bank will pay the net interest of Rs 18,000 to the individual. The Rs 2,000 that it has deducted from this figure will be deposited with the government against the name of the depositor so it will reflect as it the person has paid the required amount of tax on the earnings made. Conditions

There are certain conditions that need to be fulfilled for the TDS to come into action so for example the base would start with the fact that the income crosses a certain limit. This is done to ensure that the TDS is done only for certain items where the income is high. Continuing with the previous example, the limit for enacting TDS in fixed deposits is Rs 10,000 per bank per branch. Hence, the bank will deduct the figure only when the income of the individual has crossed this figure. Often individuals undertake a lot of effort to ensure that they fall outside the TDS net but in effect this is a pointless exercise unless the person has a zero rate of tax to be paid.

Actual liability The reason why trying to save oneself from TDS is pointless is due to the fact that this does not alter the actual nature of taxation on the individual. This means that the actual taxability of the income of the individual is a separate matter and has no link with the TDS so saving some amounts on TDS will not reduce the overall tax liability for the individual.

The only exception is where the final rate of tax is zero so saving TDS will not have any net impact. The final tax liability remains and the TDS has to be seen as a means of fulfilling the total tax liability. In the case of the fixed deposits the income earned from the deposit is taxed right from the first rupee. The rate applicable for the tax would be the rate under which the income will fall for the individual. So if the person is already in the 30 per cent slab then the added income from the fixed deposit will be taxed at that particular rate.

The good thing in the case of the total tax liability and the TDS is that the latter is counted as part of the tax paid. When the final calculation is made, it is only the net figure that remains to be paid. The individual thus has to be very careful when they look at the position and they must ensure that their total tax obligation is met. Not suffering any TDS does not mean that the actual liability goes away as this will remain till it is fulfilled.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Enterprise Resource Planning Solutions ERP Solutions Enterprise Resource Planning Software Solutions ERP Software Solutions Supply Chain Management Solutions SCM Solutions Supply Chain Management Software Solutions SCM Software Solutions Enterprise Resource Planning Solutions India ERP Solutions India Enterprise Resource Planning Software Solutions India ERP Software Solutions India Supply Chain Management Solutions India SCM Solutions India Supply Chain Management Software Solutions India SCM Software Solutions India

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions