TDS which generally stands for tax deducted at source. The tax is apparently deducted at sources where an individual earns salary, incomes and interest or commission received. The process of TDS is introduced in order to reduce the count of tax evasion in the country. When we talk about the part where TDS is applicable for salaried individuals, it is not necessary that tax deduction happens in cases of all the salaried individuals.
Only certain sections of the society who earn money have to pay tax and all sorts of transactions doesn’t include TDS. It is a very important segment of the financial scenario of any individual. There are many more exemptions that are available on TDS and it is important to have proper knowledge on this entire section.
There are certain payments on which the tax needs to be deducted before making that payment. Below mentioned are the payments on which the tax needs to be deducted and they are-
- Professional Fee
- Commission and brokerage
- Consultation fee
- Interest payments made by the bank
The concept behind TDS is that the appropriate percent of tax will be deducted for certain individuals who make different kinds of payments and who earn certain amount of salary. This amount of tax which is deducted, will apparently be deposited in the government’s account. This individual whose tax is deducted is known as deductor. The individual who receives the amount after deduction of tax is known as deductee.
The tax is deducted every financial year. The percentage of tax for every entity is different and it is decided very much in prior before the person becomes eligible for TDS. It is compulsory for depositing certain amount of money with the government. The amount of taxes which are paid by each individual is mentioned in the records and also the receipts are provided to them. It should be clearly understood that TDS is applicable only for those who are earning salary amount which is higher than the threshold level that is set by the government.
The PAN details are one of the most mandatory information that should be provided while filing for tax. Before filing tax from the salary that you earn, it is important that you go for TAN registration. The TAN number is 10-digit number which is required to track your TDS deduction by the Income Tax Department. The tax exemption has been allowed by the government under Section 80C and Section 80D. Likewise if you are paying premium for medical insurance, in that case also there is exemption from tax filing.