Tax Deducted At Source - What is TDS & Why is it Deducted

1
Tax Deducted at Source What is TDS Why is it
Deducted
(C) Axis Bank Ltd.
2
What Is TDS?

• TAX DEDUCTED AT SOURCE (TDS)
• Tax Deducted at Source or TDS is one of the modes
  of collecting tax in India
• TDS is deducted in case of employee salary, rent,
  and payment for professional or contractual
  services by the deductor and remitted to the
  Government account
• The most common and relatable example of TDS is
  the monthly deduction from your salary. Based on
  your income and IDF (Investment Declaration Form)
  submitted to your company, the TDS is calculated
  as per the prescribed income tax slab and gets
  deducted equitably every month from your account

(C) Axis Bank Ltd.
3
SECTION CODES DEFINED FOR TDS
TDS is governed by the Central Board of Direct
Taxes (CBDT) under the Income Tax Act, 1961. CBDT
is a part of the Indian Revenue Services which
come under direct jurisdiction of the Ministry of
Finance in India. Some of the important section
codes under which deduction of TDS is defined are
Section Code Type of Payment Threshold Limit (Rs.) Tax Rate ()
192 Salary to a resident/NRI - As per the prescribed tax slab for a financial year
193 Interest on securities - 10
194 Dividends earned - 10
194A Interest (other than interest earned on securities) 5000 10
194C Contracts and sub-contracts 30,000 1
194D Insurance commission 20,000 10
194EE Payments for deposits under National Service Scheme 2500 20
194F Payment for repurchase of units of Unit Trust of India or mutual funds 1000 20
194H Brokerage commission 5000 10
(C) Axis Bank Ltd.
4
WHY IS TDS DEDUCTED?

• The reasons for deducting TDS can be perceived in
  the form of benefits that TDS offers. Some of the
  benefits of deducting TDS are as follows
• It promotes the sharing of the responsibilities
  of tax collection between the Government and
  Deductors (companies or individuals)
• It helps prevent the malpractice of evading tax
• It acts as an effective mode of capital inflow
  required by the Government to function

(C) Axis Bank Ltd.
5
SUMMARY
It is clear how TDS plays a crucial role in
keeping tax evasion in check while financially
strengthening the Government to function properly
and implement developmental work for the growth
of the country. Learn more about Tax Deducted
At Source or TDS at Its All About Money.
(C) Axis Bank Ltd.
6
THANK YOU
Visit www.itsallaboutmoney.com to know more.
(C) Axis Bank Ltd.