What is Tax Deducted at Source?
There are certain thresholds under the Income Tax Act after which every payor must deduct a certain percentage from the payment as part of income tax liability of the payee and pay the same directly to the IT Department along with filing the required returns. Basically, TDS is that part of your income tax which is deducted at the very source of your income. You must have seen that banks sometimes pay interest to its customers only after deducting a fix percentage, this deduction is the tax deducted at source.
Why is it necessary to Deduct and File TDS Return?
A business entity incurs several business expenditures in its day to day operations. The one thing that they are not aware of is that every corporate entity (including startups) and individuals (covered under audit) are under obligation to deduct TDS at different rates while incurring certain business expenditures above specified thresholds. These expenses include -
- Any expenditure of contractual nature, including advertisements
- Professional fees; etc.
Entrepreneurs are expected to be aware of such provisions and deduct, deposit and file TDS as and when required.
How to file TDS Return?
- Obtain a TAN
- Deposit the TDS every month.
- File TDS return every quarter.
Consequences of not filng TDS?
The Income Tax Act prescribes for interest and penal provisions in case of late deduction, payment and filing of TDS returns. Another reason to deduct and file your TDS is that such expenditure will not be deducted from your taxable profits causing you pay higher taxes to the government.
How can we help you?
We at Finology believe that an entrepreneur should focus on his business and creativity, rather than waste his time and talent on compliances. We will take care of all your compliances, including informing you about the necessary provisions, filing your returns accurately so that you can avoid penalties and interests.
What do we want from you?
All we need you to do is to get in touch with our team and explain the nature of your expenditures so we can let you know the provisions you have to be careful about.
Apart from this, for payment and return filing, we would require -
- TAN and PAN details
- A statement of details showing -
- PAN of deductees
- Nature of deduction
- Amount of actual expenditures