Tax deducted at Source:
TDS means Tax Deducted at Source. The concept of TDS was introduced in the Income Tax Act, 1961, with the objective of deducting the tax on an income, at the source of income. It is one of the methods of collecting Income Tax, which ensures regular flow of revenue to the Government.
Steps in TDS Process:
- Deductee (Seller) provides Services and Bill to the Deductor (Buyer).
- Deductor makes the payment after deducting TDS.
- Deductor remits the TDS amount into Bank (Treasury).
- Bank (Treasury) remit the amount to the Government Account.
- Deductor Files TDS return on 26Q and 24Q.
- Deductor Issues Form 16A to Deductee for the TDS amount deducted.
- NSDL uploads the e-TDS information to Income Tax Department.
- Deductee files Income Tax return.If no income tax liability, TDS is refunded and if there is tax liability TDS is reduced from income tax liability and balance is paid.