• Details about TDS, TCS, TAN Indian Govt

    Tax Deduction at Source (TDS)

    Tax deduction at source means the tax required to be paid by the assesses, is deducted by the person paying the income to him. Thus, the tax is deducted at the source of income itself. The income tax act enjoins on the payer of such income to deduct the given percentage of income as income tax and pay the balance amount to the recipient of such income. The tax so deducted at source by the payer is to be deposited in the income tax department account. The tax so deducted from the income of the recipient is deemed to be payment of income tax by the recipient at the time of his assessment.

    For example, person responsible for paying any income which is chargeable to tax under the head 'Salaries' is required to compute the tax liability in respect of such income and deduct tax at source at the time of payment.If the employee has any other income,he needs to inform the employer so that employer can take that income into consideration while computing his tax liability but he will not take into account losses except loss from house property.

    Similarly, person responsible for paying any income by way of 'interest on securities' or any other interests are required to deduct tax at source at the prescribed rates at the time of credit of such income to the account of the payee or at the time of payment,whichever is earlier.

    The income from the following sources is subjected to tax deduction at source

    Salary and all other positive incomes under any head on income( Section 192 )

    Interest on securities ( Section 193 )

    Interest other than interest on securities( Section 194A )

    Payments to contractors and sub-contractors( Section 194C )

    Winnings from Lottery or crossword puzzles( Section 194B )

    Winnings from horse races( Section 194BB )

    Insurance Commission covering all payments for procuring Insurance business( Section 194D )

    Any interest other than interest on securities payable to non-residents not being a company or to a foreign company( Section 195 )

    Payment to non-resident sportsman including athlete or sports association/institution.In case of non-resident sportsman,payments in respect of advertisements as well as articles on any game/sports in India in newspapers,magazines,etc. is included( Section 194E )

    Payment in respect of deposits under NSS[National Savings Scheme]( Section 194EE )

    Payment on account of repurchase of Units by Mutual Fund or UTI( Section 194F )

    Payment for Commission or brokerage( Section 194H )

    Payment of rent( Section 194I )

    Payment of fees for professional or technical services( Section 194J )

    Commission to Stockist,distributors,buyers and sellers of Lottery tickets including remuneration or prize on such tickets( Section 194G )

    Income from Units purchased in foreign currency or long-term capital gain arising from the transfer of such Units purchased in foreign currency ( Section196B )

    Payment of any income to non-residents in respect of interest or dividend on bonds and shares( Section 196C )etc.

    Tax Collection at Source (TCS)

    Tax collection at source arises on the part of the seller of goods. Here, tax is collected at the source of income itself. It is to be collected at source from the buyer, by the seller at the point of sale. Such tax collection is to be made by the seller at the time of debiting the amount payable to the buyer to the account of the buyer or at the time of receipt of such amount from the buyer, whichever is earlier. A person collecting tax shall furnish a certificate specifying whether tax has been collected or not,what sum has been collected,the rate of tax applied on it and other such particulars as may be prescribed. It shall be furnished within 10 days from the date of debit or receipt of the amount furnished to the buyer to whose account such amount is debited or from whom such payment is received. The taxes collected must be remitted into the income tax department's account. Every person collecting tax shall, within such time as may be prescribed, apply to the Assessing Officer for the allotment of a tax-collection account number.

    The following goods when sold must be subjected to tax collection at source :-

    Alcoholic liquor for human consumption (other than Indian made foreign liquor).

    Timber obtained under a forest lease.

    Timber obtained by any mode other than under a forest lease.

    Any other forest produce not being timber.

    Tax Deduction and Collection Account Number (TAN)

    TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. All those persons who are required to deduct tax at source or collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN. TAN is allotted by the Income Tax Department on the basis of the application submitted to TIN Facilitation Centres managed by National Securities Depository Limited ( NSDL ). NSDL will intimate the TAN which will be required to be mentioned in all future correspondence relating to TDS/TCS. An application for allotment of TAN is to be filled in Form 49B and submitted at any of the TIN facilitation centres meant for receipt of e-TDS returns. The income tax act makes it mandatory for TAN to be quoted in all TDS/TCS returns, all TDS/TCS payment challans and all TDS/TCS certificates to be issued. Failure to apply for TAN or comply with any of the other provisions of the Act attracts a penalty. TDS/TCS returns will not be received if TAN is not quoted and challans for TDS/TCS payments will not be accepted by banks.

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