TDS on Salaries E-Book

The Indian Income Tax Act
provides for chargeability of tax on the total income of a person on an annual
basis. The quantum of tax determined as per the statutory provisions is payable
as :
a) Advance Tax
b) Self Assessment Tax
c) Tax Deducted at Source (TDS)
d) Tax Collected at Source
e) Tax on Regular Assessment
Tax deducted at source (TDS), as
the very name implies aims at collection of revenue at the very source of
income. It is essentially an indirect method of collecting tax which combines the
concepts of “pay as you earn” and “collect as it is being earned.” Its
significance to the government lies in the fact that it prepones the collection
of tax, ensures a regular source of revenue, provides for a greater reach and
wider base for tax. At the same time, to the tax payer, it distributes the
incidence of tax and provides for a simple and convenient mode of payment. The
concept of TDS requires that the person on whom responsibility has been cast,
is to deduct tax at the appropriate rates, from payments of specific nature
which are being made to a specified recipient. The deducted sum is required to
be deposited to the credit of the Central Government. The recipient from whose
income tax has been deducted at source, gets the credit of the amount deducted
in his personal assessment on the basis of the certificate issued by the
While the statute provides for
deduction of tax at source on a variety of payments of different nature, in
this booklet, an attempt is being made to discuss various provisions relevant
only to the salaried class of taxpayers.

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