YOU NEED TO KNOW WHY I AM STILL REQUIRED TO PAY TAX EVEN AFTER TDS WAS TAKEN OUT OF MY EARNING?
The concept of taxation is a fundamental aspect of any modern society, as it is the means by which governments collect revenue to finance public services and infrastructure. One common method of tax collection is through the process of Tax Deducted at Source (TDS), which involves deducting a portion of an individual’s or entity’s income at the source itself. While TDS plays a crucial role in facilitating tax collection, it doesn’t always exempt you from the obligation of paying taxes entirely. In this essay, we will explore the reasons why you may still be required to pay taxes even after TDS has been deducted from your earnings.Visitofficialwebsite
Understanding Tax Deducted at Source (TDS):
Before delving into the reasons behind the continued obligation to pay taxes, it’s essential to understand what TDS is and how it operates.
- What is TDS?
Tax Deducted at Source (TDS) is a mechanism used by governments to ensure a regular inflow of revenue by collecting taxes at the time of income generation. The deductor, typically an employer or a financial institution, deducts a certain percentage of an individual’s income as specified by the tax laws and remits it to the government on their behalf. Common types of income subject to TDS include salary, interest, rent, and professional fees.
- Purpose of TDS:
The primary purpose of TDS is to prevent tax evasion and ensure a steady cash flow for the government. By deducting tax at the source, the government reduces the risk of taxpayers failing to pay their taxes or underreporting their income.
Reasons for Obligation to Pay Taxes Despite TDS:
While TDS significantly simplifies the tax collection process, it does not completely eliminate the obligation to pay taxes. Several factors contribute to this continued requirement, which we will explore in detail.
- Variability in Tax Liability:
TDS is calculated based on standard rates provided by the tax laws, which may not always accurately reflect an individual’s or entity’s actual tax liability. Different taxpayers have different financial situations, deductions, and exemptions that impact their final tax liability. TDS is a one-size-fits-all approach and does not account for these individual variations.
- Eligibility for Deductions and Exemptions:
Tax laws often provide for various deductions and exemptions that can significantly reduce an individual’s tax liability. These deductions may be related to investments, expenses, or specific tax-saving instruments. TDS, however, does not consider these factors, and individuals must claim such deductions during the annual tax return filing process to receive their benefits.
- Multiple Income Sources:
Many individuals have multiple sources of income, such as salary, rental income, business income, and investments. TDS is generally applied separately to each income source, and the total tax liability is calculated when filing the annual tax return. This can lead to discrepancies, as TDS may not account for the taxpayer’s aggregate income and the applicable tax slabs.
- Non-Inclusion of Other Taxes:
TDS typically covers only the deduction of income tax. However, other types of taxes, such as the Goods and Services Tax (GST), capital gains tax, and property tax, may also be applicable depending on the specific circumstances. These taxes are not deducted at source and must be paid separately by the taxpayer.
- Tax Credits and Refunds:
TDS is a prepayment of taxes to the government. If the amount deducted as TDS exceeds an individual’s actual tax liability, they may be eligible for a tax refund. To claim such refunds, taxpayers need to file their tax returns accurately and in a timely manner.
- Tax Slabs and Progressive Taxation:
Taxation systems in most countries are progressive, meaning that the tax rate increases as income levels rise. TDS, however, often uses a flat rate or a fixed percentage. Taxpayers who fall into higher tax slabs based on their overall income may find that the TDS deducted was not sufficient to cover their entire tax liability.
Do I need to pay additional tax if TDS has been deducted
You haven’t provided complete information regarding this question. So I have to make certain assumptions.
Assuming that the TDS you’re speaking of, is either on salary or FDs.
- Have you considered all sources of income, ie. salary, House Property, Capital Gains (Shares, Property etc.), Savings Interest, FD Interest, Business/Profession etc.?
- Usually, TDS on FDs is deducted at 10%, and TDS on salary is deducted at slab rate. So, when all incomes are clubbed together for tax calculation, at time of return filing, your FD Interest income actually ends up (in the usual) on a higher slab rate, making the TDS insufficient to pay off your tax dues.
That was one such example. Please compute your total tax liabilities, including that from capital gains etc., deduct TDS from the same, to find out if you have to pay more taxes or not.
How can I pay tax if TDS deducted is less than actual
You can pay tax while you are filing your income tax returns of that particular year.
You cannot submit your income tax return to the Income Tax Department unless you have paid tax dues in full. Sometimes, you may see tax payable at the time of filing your return. This tax is called Self Assessment Tax, which you can pay online to ensure successful e-filing.
Steps to Pay Income Tax Due
- Step 1: Select Challan 280. Go to the tax information network of the Income Tax Department and click on ‘Proceed’ under Challan 280 option.
- Step 2: Enter Personal Information. For individuals paying tax: …
- Step 3: Double check Information. …
- Step 4: Check Receipt (Challan 280)
What are the basics of TDS returns for a salaried person
Every year our friendly accountant filed my returns till date, but, this time U need to do that and I am very much confused so please guide me with basic things by answering following questions.
I was working in an IT company so I want to file return and claim TDS.
- Shall we select assessment year 2016–2017 or 2017–2018?
1.1 If it is 2016–2017, then while i am submitting online form, why is it showing me error that due date is over.
1.2 If it is 2017–2018, then what about the TDS which will be deducted in upcoming months till next ITR filling?
2. Also, If it is 2017–2018, till which month TDS details would be there? Asking this because I’m working remotely for a company, the deducted TDS of May-June is not reflected in the Form 26A. Do I need to add that explicitly? or can I claim that TDS next year while filling in 2018–2019?
Please excuse me if all these questions sounds silly and naive, but I’m seriously confused and clueless about this. Online articles don’t have this ground level details so please help me with more details. If possible, share additional information which a 1st time tax payer should be knowing.
What are TDS return filing services
Tax Deducted at Source or TDS is the process wherein tax deduction takes place at the time of payment or when the payee’s account is credited with the money.
TDS return is a statement submitted to the Income Tax Department quarterly. Every deductor should mandatorily file the TDS return on time.
To file a TDS return, one must be thorough with the application procedure and the eligibility criteria. We present this article on how to file a TDS return to go over each segment thoroughly.
How to file an online TDS return?
While filing TDS returns online, an individual should carry some of the essential documents. The list of documents are as follows:
- PAN Card of the deductee and the deductor
- Tax amount paid to the government
- Details on TDS challan
- Other paperwork, if needed
Now let us see the step-by-step procedure on how to file TDS returns online.
Steps to follow to file TDS returns
Here is the step-by-step procedure to file the TDS returns online.
Step 1: Firstly, Form 27 A containing multiple columns has to be filled and in case of the hard copy of the Form, it has to be verified along with the E-TDS return that has been filed electronically.
Step 2: In the next step, the tax that is deducted at the source and the total amount that has been paid needs to be correctly filled as well as tallied.
Step 3: The TAN of the organizations is to be mentioned on Form 27 A. There will be difficulties in the process of verification if the mentioned TAN is incorrect.
Step 4: While filing the TDS returns the appropriate challan number, the mode of the payment, and the tax details have to be mentioned. In case of the incorrect challan number or the incorrect date of the payment, there will be a mismatch and the TDS returns also need to be filed again.
Step 5: To bring consistency the basic Form used for Filing the e-TDS must be used. The 7 Digit BSR has to be entered for easing the tallying process.
Step 6: Physical TDS returns are to be submitted at the TIN FC, which is managed by NSDL. In case of the online filing, they can be submitted on the official website of the NSDL TIN.
Step 7: If the provided information is correct then a token number or a provisional receipt is received. This is a proof that TDS return has been filed.
Step 8: In case of rejection, a non-acceptance memo along with the reason for the rejection is issued and the returns have to be filed again.
Eligibility criteria for TDS returns
Besides knowing how to file TDS returns in a step-by-step process, it is vital for an employee or an organisation to fulfill the eligibility for Tax Deducted at Source returns. To that end, availing valid TAN (Tax Collection and Deduction Account Number) is a must before filing for a TDS return.
An individual making a transaction under the Income Tax Act needs to deduct tax at the source and deposit the same within an allotted time. Some payments for which one needs to file TDS return are as follows:
- Salary payments
- Income earned by winning lotteries, puzzles, etc.
- Income generated from securities
- Accruing income from competing in horse races and winning
- Insurance commission
- Rent payment
- Interest earnings
- Sale/purchase of immovable property
- Any payments concerning National Saving Scheme and other schemes
Legal Requirements and Compliance:
Another critical aspect to consider is that compliance with tax laws is mandatory, and failure to meet these obligations can lead to legal consequences and penalties. Here’s why it is important to fulfill your tax obligations even when TDS has been deducted:
- Legal Responsibility:
Individuals and entities have a legal responsibility to report their income, calculate their tax liability accurately, and pay any outstanding taxes. TDS is only a method of collecting taxes at the source; it is not a replacement for the taxpayer’s legal obligations.
- Filing of Income Tax Returns:
Tax laws in most countries require individuals to file annual income tax returns. These returns provide taxpayers with an opportunity to declare their total income, claim eligible deductions, and calculate their final tax liability. Failure to file an income tax return, even if TDS has been deducted, can result in legal consequences.
- Assessing Officer’s Role:
Tax authorities often conduct assessments to ensure that taxpayers have correctly calculated and paid their taxes. The Assessing Officer has the authority to scrutinize income, deductions, and exemptions to determine if TDS is consistent with the taxpayer’s actual liability. In cases where discrepancies are found, additional taxes may be levied.
- Penalties and Interest:
Failure to pay the balance of taxes owed, even if TDS has been deducted, can lead to penalties and interest charges. These penalties can accumulate over time, making it financially detrimental to delay or avoid tax payments.
How do I pay my taxes
1: Navigating to ‘e-Pay Tax’ Section.
2: Enter PAN/TAN and Mobile Number.
3: Select the correct Assessment Year.
4: Enter Tax Payment Details.
5: Select the Payment Method.
6: Verify Payment Information.
7: Submit the Payment.
8: Receive Payment Confirmation.
How do I apply for TDS return
Tax Deducted at Source (TDS) is a Tax in which certain amount of percentage is deducted by a Payer before making actual payment to the Receiver. Then Payer deposits the respective amount which he has already deducted with Government within certain period of time. When Payer deducts the TDS more than required, then Receiver is eligible to claim TDS Refund.
What is meant by TDS Refund?
TDS Refund occurs when tax amount deducted is higher than the actual tax payable. One can claim TDS Refund according to the type of TDS which is deducted from its income. TDS is of various types so as the procedure to get TDS Refund is also quite different.
Following are the various types of Payments in which one can claim TDS Refund:
1]How to Claim TDS Refund on Salary when Employer deducts excess TDS?
When Employer deducts TDS more than applicable, then you can follow below basic steps to claim TDS Refund:
– You need to file ITR. While filing ITR, you need to ensure that the TDS amount is more than Tax payable and you’re eligible for refund amount.
– While filing ITR, it will prompt you to submit respective bank details such as Bank Account Number, Name of the Bank, Indian Financial System Code (IFSC). Basically, this makes it easier for the IT department to refund you the excess tax paid.
– In case you do not have taxable income, you can apply for a lower or NIL TDS certificate from your jurisdictional Income Tax Officer in Form 13 as per Section 197. You can submit the nil deduction order passed under section 197 to the TDS Deductor.
2]How to Claim TDS refund on Fixed Deposit Interest?
There are few ways in which you can claim TDS Refund on Fixed Deposit which are based on different scenarios:
Ø Bank has already deducted tax on your Fixed Deposit Interest considering that you fall under the respective tax bracket.
– In this case, you need to declare it in your IT Return. The interest amount and TDS can be identified from Form 26AS as well (This is available in your Income Tax Portal)
– Then Income Tax Department will automatically compute the refund and will directly credit it into your account
To know more click on the link given below;
Hope this helps!
Claiming TDS Credits and Refunds:
In many cases, the TDS deducted can be claimed as a tax credit when filing income tax returns. This process is essential in ensuring that you don’t pay taxes twice on the same income. Here’s how it works:
- Form 26AS:
Taxpayers can verify the TDS deducted on their income by checking Form 26AS. It is a consolidated statement that reflects all the TDS entries made against the taxpayer’s PAN (Permanent Account Number). This form can be accessed online through the official income tax department website.
- Claiming TDS Credits:
When filing your annual income tax return, you can claim the TDS credits that have been deducted from your income. These credits reduce your final tax liability. If the TDS exceeds your actual tax liability, you may be eligible for a refund.
- Accuracy and Documentation:
It is essential to maintain accurate records of TDS deductions, such as TDS certificates issued by the deductor. This documentation can serve as evidence while filing your tax return and claiming TDS credits.
Conclusion and Recommendations:
In conclusion, while Tax Deducted at Source (TDS) plays a vital role in collecting taxes efficiently, it does not completely eliminate the obligation to pay taxes. The factors that contribute to this ongoing requirement include the variability in tax liability, eligibility for deductions and exemptions, multiple income sources, non-inclusion of other taxes, and the progressive nature of tax slabs. Legal compliance, the responsibility to file income tax returns, and the role of Assessing Officers also emphasize the need for taxpayers to fulfill their tax obligations.
how auriga accounting help you to define tDS
Auriga Accounting is a hypothetical company or service that can help you with various financial and accounting needs. When it comes to Tax Deducted at Source (TDS), Auriga Accounting can play a crucial role in helping you define and manage your TDS obligations. Here’s how Auriga Accounting can assist you with TDS:
TDS Consultation: Auriga Accounting can provide you with expert guidance on TDS regulations and compliance. They can help you understand the TDS provisions that apply to your specific financial situation, ensuring that you correctly interpret and implement the TDS rules.
TDS Calculation: Calculating the correct TDS amount can be challenging, as it involves various rates, thresholds, and exemptions. Auriga Accounting can assist in accurately calculating the TDS amount based on your income sources, deductions, and exemptions.
TDS Filing: TDS filings involve submitting TDS returns to the tax authorities on time, along with necessary documentation. Auriga Accounting can help you prepare and file these returns accurately, reducing the risk of penalties and ensuring compliance with all regulatory requirements.
TDS Record Keeping: Maintaining proper records of TDS deductions is essential for tax compliance. Auriga Accounting can help you establish an efficient record-keeping system to track TDS deductions and ensure that you have all the necessary documentation in place.
TDS Credit Management: To optimize your tax situation, you need to claim TDS credits when filing your income tax returns. Auriga Accounting can guide you through the process of claiming TDS credits, ensuring that you don’t pay more taxes than you owe and that you receive any refunds you are entitled to.
TDS Compliance Checks: Auriga Accounting can conduct periodic checks and audits of your financial records to ensure TDS compliance. This includes reviewing your TDS certificates, confirming that deductions match your tax liability, and identifying any discrepancies that need correction.
TDS Advisory Services: If you have complex financial arrangements or multiple sources of income, Auriga Accounting can offer advisory services to help you navigate TDS compliance more efficiently. They can provide personalized advice on how to minimize your TDS burden legally and strategically.
Updates on TDS Regulations: Tax laws and TDS regulations can change over time. Auriga Accounting can keep you updated on the latest developments in tax law to ensure that you are always in compliance with the most current rules and regulations.
Penalty Avoidance: Late or inaccurate TDS filings can result in penalties. Auriga Accounting can help you avoid penalties by ensuring that all filings are submitted correctly and on time.