Question

State any three points of ‘Tax Deducted at Source’ (TDS) paid to the government.

Hint:

Think about when, how and with what proof the deducted tax is paid to the government, and who gets the credit.

Answer 1

Step 1: Understanding the Concept:
Tax Deducted at Source (TDS) means the payer cuts a part of a payment as tax before paying the rest to the receiver. The payer is called the deductor. The receiver is called the deductee. The deductor must then pass this tax to the government.

Step 2: Point 1, Deposit within the due date:
The deductor must deposit the tax deducted into the Central Government account on time. Usually the due date is the 7th day of the next month. For tax deducted in March, the due date is 30th April. Late deposit attracts interest.

Step 3: Point 2, Deposit by challan with TAN:
The tax is paid through challan ITNS 281 at an authorised bank or online. The deductor quotes the Tax Deduction Account Number (TAN) on it. The deductor also files a quarterly TDS return showing the amounts deducted and deposited.

Step 4: Point 3, Credit to the deductee:
The tax deposited is credited to the PAN of the deductee. It shows in Form 26AS and the Annual Information Statement. The deductor gives the deductee a TDS certificate (Form 16 or 16A). The deductee adjusts the TDS against his final tax.

Final Answer:
TDS must be deposited with the government by the due date, through a challan quoting TAN, and then credited to the deductee against his tax liability.