TDS on Salaries

 TDS on Salaries  Tax Deducted at Source (TDS), TDS on Salaries, Uncategorized
Nov 292012
 

TDS on Salaries

If a person is running his own business firm and have a regular staff on his payroll, it is mandatory under section 192 of the Income Tax Act  1962 to make tax deduction from the income of his employee, if the employee comes under the taxable limit.

An employer is supposed to make tax deduction at source from the payment made to the employees. If he has paid some advance salary or arrears thereon, he has to take such payment into consideration for tax deduction.

The computation of tax deduction also called as TDS projection must be done at the start of the Financial Year. If employee has got some other income source it has also to be considered. Through careful consideration of exemptions, deductions, investments under section 80C etc. Employee’s tax liability needs to be calculated and the tax rates imposed there-upon should be in force in the respective financial year. Every month 1/12th of the net tax liability has to be deducted.

Rates of Income Tax for the FY 2012-13.

Male Citizen Female Citizen Rate of Tax
The Total Income is less than Rs. 2,00,000/-. The Total Income is less than Rs. 2,00,000/-. Nil
The Total Income is between Rs. 2,00,000/- and Rs. 5,00,000/- The Total Income is between Rs. 2,00,000/- and Rs. 5,00,000/- 10 per cent, of the amount by which the total income exceeds Rs. 2,00,000/-
The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/-. The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/-. Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
The Total Income exceeds Rs. 10,00,000/-. The Total Income exceeds Rs. 10,00,000/-. Rs. 130,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-.

 

Sr. Citizens between 60years and 80 years Rate of Tax
The Total Income is less than Rs.2,50,000/-. Nil
The Total Income is between Rs. 2,50,000/- and Rs. 5,00,000/- 10 per cent, of the amount by which the total income exceeds Rs. 2,50,000/-
The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/- Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-.
The Total Income exceeds Rs. 10,00,000/-. Rs. 125,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-

TDS Deposit

After the TDS has been deducted from the salary of the employee, the deducted tax has to be deposited to the government online using challan 281. The tax has to be deposited within 7 days from the end of the month in which tax gets deducted. Except tax deducted in the month of March, should be deposited before 30th of April.

Due date for submitting Quarterly TDS return

  • By July 15th after the end of the first quarter. [April, May and June (Q1)]
  • By 15th October after the end of the second quarter.[ July, August and September (Q2)]
  • By 15th January after the end of the third quarter [October, November and December (Q3)]
  • By 15th May after the end of the fourth quarter [January, February and March (Q4)]

Issuance of TDS certificate

The deductor has to issue a certificate which comes in Form 16  containing name of the employer, salary details, exemptions, investment details, tax deduction and payment details like  BSR code, date of TDS deposit, serial no. of challan and tax amount . The due date for furnishing TDS certificate to the employee or deductee is May 31st

There are penalties for default of TDS for not deducting TDS or not depositing TDS into Central Government Account in the prescribed manner. Along with penalties, the person can be prosecuted. So being familiar with the provisions concerning with Tax deduction at source is very important.

Tax Collected at Source (TCS)

 Tax Collected at Source (TCS)  Tax Collected at Source (TCS)
Oct 302012
 
Tax Collected at Source (TCS)
TCS is the tax collected by the Seller from the Buyer of goods at the time of debiting of amount payable by buyer to the account of the buyer or at the time of receipt of such amount from the said buyer by way of cash, cheque, demand draft or any other mode whichever is earlier for the sales of prescribed goods as per Section 206C (1) for business purposes and not for personal use.
The goods which are covered under TCS are listed along with their rates.

Nature of Goods

Rates

Alcoholic Liquor for human consumption

1

Tendu Leaves

5

Timber obtained under a forest lease

2.5

Timber obtained by any mode other than under a forest lease

2.5

Any other forest produce not
being Timber or Tendu Leaves

2.5

Scrap

1

Seller
Following persons are covered as mentioned,
  1. State & Central Government,
  2. Local Authority or Corporation,
  3. Company, Firm or Society
  4. Individual or Hindu Undivided Family (HUF),  if covered under Sec 44AB (Mandatory Audit)

Buyer

Buyer means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the above table or the right to receive any such goods.

but does not include,

  1. A Public Sector Company
  2. The Central Government
  3. A State Government
  4. A Embassy, a High Commission, Legation, Commission, Consulate and the Trade representation, of a Foreign State and a club; or
  5. A Buyer in the retail sale of such goods purchased by him for personal consumption

Tax Collected at Lower Rate

  1. A Buyer can apply to his Assessing Officer for Tax Collection at lower rate.
  2. On receiving such application by the Buyer, Assessing Office , if satisfied can give him a certificate for collection of tax at lower rate. This rate is a for specific seller, whose name is mentioned in the certificate & not applicable to any seller for the purchase of goods specified above.

Exemption

TCS is exempted in following scenarios,

  1. If goods are bought for personal consumption.
  2. The buyer who buys specified goods for manufacturing, processing or production and not for the purpose of trading, no tax would be collected, in such case the buyer submits declaration in Form 27C  to Seller

Deposits & Certificates

The Seller deposits the TCS Amount in Challan 281 within 7 days from the last day of the month in which tax is collected. TCS Certificate in Form 27D is issued to Buyer. It should contain the name of the Seller & Buyer, TAN, and PAN, what sum of tax collected by seller, date of collection, the rate of tax applied on it & other such particulars as may be prescribed.

Quarterly Return

The Seller who has collected and deposited the TCS Amount, Quarterly Return has to be filed in Form 27EQ in Electronic Format in the NSDL format.

Due date for Filing TCS Return

            Return

                  Due Date

First Quarter

On or before 15th July

Second Quarter

On or before 15th October

Third Quarter

On or before 15th January

Fourth Quarter

On or before  30th April