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Tax Deducted at Source

Tax Deducted at Source

Tax Deducted at Source is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits. Assesse is also required to file quarterly return to CBDT. Returns states the TDS deducted & paid to government during the Quarter to which it relates.

1) To enable the salaried people to pay the tax as they earn every month. This helps the salaried persons in paying the tax in easy installments and avoids the burden of a lump sum payment.

2) To collect the tax at the time of payment of income to various assesses such as contractors, professionals etc.

3) Government requires funds throughout the year. Hence, advance tax and tax deducted at source help the government to get funds throughout the year and run the government smoothly.

A detector is required to issue a TDS certificate called form 16 for salaried employees and form 16A for non-salaried employees within a specified time.
He has to issue TDS Certificates within two month of the next financial year.

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