Friday, December 9, 2011

TDS rate doubles if you fail to mention your PAN

If you run a glance through your pay slip, you will come across something called TDS, which is tax deduction at source. In most cases, the employer deducts this amount at the time of payment of salary itself and pays the total tax amount to the government on behalf of all the employees. If you are a self- employed or practising professionals, you have to pay this amount yourself.

Tax deducted at source is one of the modes of income tax collection by the government. Under the income-tax laws, income tax at specified rates is required to be deducted while making certain payments.

The rate of deduction of tax at source on interest and rent payment is 10%. For salary payments, the employers deduct income tax at source on a monthly basis after computing income tax liability on estimated annual taxable income of the employee. Tax benefits on housing loan, investments, etc are considered while estimating annual taxable income.

If the PAN card number is not furnished to the person making payment, the rate of deduction of tax increases to 20%. However, if the actual rate of deduction on salary is higher than 20%, then the tax on salary deducted at source is at such higher rate.

The deductor issues a certificate in Form No 16 or 16A to the payee, which forms a basis for claiming credit for tax deducted while filing income tax return. One should also check his Form 26AS (which can be accessed from NSDL’s website) to cross-check if the TDS amount as mentioned in Form 16 or Form 16A is tallying (tying) up with the TDS amount against the PAN card as per the income tax department’s records.

If the total amount of TDS for a year is higher than your actual tax liability, a refund of excess tax deducted can be claimed by filing a return of income.

One can furnish a declaration in form 15G for non-deduction of income tax at source on interest income. Only those who expect their taxable income of the year to be below the basic exemption limit are eligible to furnish Form 15G. Non-residents cannot furnish form 15G. Senior citizens can furnish Form 15H instead of form 15G.

In other cases, an application is made to the income tax officer (in Form No 13) to issue a certificate of non-deduction of tax (or for deduction of income tax at a rate lower than the prescribed rate).

If PAN card no is not furnished, then rate of TDS doubles to 20% from 10%.

No comments:

Post a Comment

4.5 out of 5 stars Reviewer:adminFebruary 05, 2021