TDS Full Form and Everything Else You Need to Know Before Filing Tax Returns
What is TDS? Things you should know
Highlights:
- TDS and its Full Form
- How to file Tax Returns?
- Important things to know
Salaried employees and people who run a business pay taxes to the Government of India. With the help of these taxes, the Government provides us with facilities such as law and order, gas, electricity, water, upgradation and advancement of technology, etc. Here is everything you need to know about TDS.
Talking about paying taxes, most of us do not have in-depth knowledge about the same and find it a troublesome task. However, while paying taxes, we must have heard of the term TDS, but we often do not know the TDS full form, its meaning, how we can claim our TDS Refund or the current TDS interest rate, or how can we check the TDS return status online. It is important to have proper knowledge about TDS to save you from any discrepancies in the future.
In this article, we will look at everything you should know about TDS and TDS interest rates. Let us start by understanding what TDS is.
What is TDS?
- TDS full form is Tax Deduction at Source. TDS or Tax Deduction at Source.
- The Government introduced the concept of TDS as a means of collecting taxes.
- Tax Deduction at Source is basically a certain amount of money deducted by the employer or any person responsible for making payments such as salary, educational fees, rents, education, and more.
- TDS refund arises when TDS is higher than the actual tax amount that was calculated in a particular financial year.
- The TDS returns rates of the current financial year are given in the Income Tax Act, 1961. The taxpayer should check the TDS interest rates in advance to avoid any discrepancies.
Now that you know the TDS full form and its meaning let us now understand TDS in a detailed way with the help of an example.
Example of Tax Deduction at Source (TDS)
- Suresh owns a shop and has given it to Ram for rent. Ram pays an amount of Rs. 40,00 per month as rent.
- The Tax Deduction at Source or TDS amount that is deducted on rent per month is 10%.
- The Tax Deduction at Source amount that will be deducted on a monthly basis will be Rs. 4000.
- Out of Rs. 40,000, the amount remaining is Rs. 36000 that Ram will be paying to Suresh after the TDS deduction.
- Ram will add Rs. 40,000 as rent paid to Suresh. Ram can take the credit of Rs. 4,000 as a tax that the Government will deduct under the TDS returns
After having a comprehensive understanding of TDS with an example, let us look at some of the benefits of Tax Deduction at Source or TDS.
Benefits of Tax Deducted at Source or TDS Returns
Tax Deducted at Source (TDS) Ensures Transparency
- Tax Deduction at Source (TDS) ensures 100% transparency between the Government and the taxpayer. TDS ensures that there are no chances of discrepancies while the taxpayers pay their taxes or file the TDS returns.
- TDS also makes it seamless for the Government to keep a check on the tax being paid and ensure that no one can escape or make any discrepancies when it comes to paying taxes.
TDS Provides Government with Revenue
- TDS returns that the taxpayers pay are one of the best sources of how Government earns revenue.
- With this, the Government provides the citizens with facilities such as the salary of the Government employees, water, public transport, electricity, enforcement of law and order, etc.
Let us now look at how you can claim the Tax Deduction at Source or TDS Returns.
How Can the Taxpayer Claim the TDS Returns?
- If the taxpayer’s tax deducted is more than the tax he pays, the taxpayer can file for an Income Tax Return (ITR) and claim a refund on the remaining amount.
- If the taxpayer has filed for the Income Tax Return (ITR), he will be asked for the bank name and IFSC code to refund the TDS amount.
- In case the income of an individual is not taxable, then they can submit a form to their bank and inform them that their income does not fall in the bracket of tax deduction.
Wrapping Up
You now know the TDS full form, the benefits, and how you can claim TDS returns. If you wish to know more about TDS and other tax-related concerns, you can visit Investment Simplified to get the right information.
