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Tds deduction on salary...
TDS – Practical Guide with Examples
What is TDS?
TDS stands for Tax Deducted Source.
Who is liable to deduct tds
In TDS system, persons responsible for making payment for specified services such as commission, brokerage, professional consultancy etc are required to deduct a fixed percentage from the amount.
Such deducted amount (which is called TDS) have to be deposited to the Government by the Deductor (person who is deducting tax) on behalf of deductee (person who is providing services) which deductee can claim as Income Tax Paid at the time of filing his Income Tax Return.
For example, ABC Pvt Ltd have to make payment of Rs 1,00,000 to Mr.
XYZ for professional fee. TDS rate specified on professional fee is 10%.
TDS required to be deducted = 10% on Rs 1,00,000 = Rs 10,000
Net payment to Mr. XYZ = Gross Amount – TDS Deducted = Rs 1,00,000 – Rs 10,000 = Rs 90,000
TDS to be deposited to Government by ABC Pvt Ltd = Rs 10,000
TDS is also deductible on salary.
Calculation of tax deductible is different in case of salary as TDS is not deductible as fixed percentage but as per specified method under sect
- when should a company deduct tds
- when tds to be deducted