Save yourself from paying excess TDS

“Is there a way to spend money on our betterment and save TDS at the same time?” The answer is YES. There is a way to do so through planning. As the law requires you to pay TDS, it also gives you opportunities to save it as well. If your total income is not taxable, you need to plan wisely so as to avoid paying redundant TDS. All it takes is investing in the right areas such as buying a house, planning for retirement, getting family insurance, etc.

For planning, you need to manage the nature and source of income and the investments and evaluate the expected total income for the financial year in order to save TDS. If you are expecting your total income to remain below the taxable limit then, in that case, you can avoid paying redundant TDS on income.

For eg. Rohit’s total income for the financial year, 2015-16 is Rs. 3,45,000 (Including interest income of Rs. 12,000 from tax saving FD). His total deductions under section 80C are Rs. 1,02,000 so his taxable income for FY 2015-16 will be Rs. 2,43,000 which is below basic exemption limit. The Banks will deduct TDS on interest incomes if the amount of interest exceeds Rs. 10,000. Here, although Rohit’s total taxable income is below the basic exemption limit, the banks will deduct TDS since the interest income is greater than Rs. 10,000. In such a situation, Rohit can use form 15G to save TDS payment by avoiding paying redundant TDS from the interest income.

How Does TDS Payment work?

TDS is ‘pay as you earn’ method of taxation. Basically, it’s the payer who deducts the TDS directly from your income and remits to the government on behalf of the payee. TDS is applicable to several incomes such as salary, interest, rent, brokerage, commission, professional fees, and others. Hence, the Income Tax Department deducts TDS at a prescribed rate. The Income Tax Act provides a threshold limit of each source of income after which TDS is applicable. If you have a rental income than under section 194-I of the Act, up to Rs.1,80,000 in a year is exempt from TDS.

Sometimes when you have more than one source of income during the financial year, you need to take into consideration your total income from all the sources of income to assess the tax liability and then decide if you need to do something to stay away from TDS. You can consider all the deductions and exemptions available while calculating tax liability.

TDS Calculator
TDS (Tax Deducted at Source) is a part of Income Tax. TDS should be dedcuted by a person for specific payments made.
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TDS Calculator
TDS (Tax Deducted at Source) is a part of Income Tax. TDS should be dedcuted by a person for specific payments made.
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How to avoid TDS?

If the estimated total income of an individual for a financial year is less than the basic exemption limit than TDS can be avoided. In the case of a salaried individual, you can declare your other income and investments and expenditure that qualifies for tax deductions and exemptions to the employer. Depending on your declaration, the employer deducts TDS.

However, in the case of non-salary incomes, you need to fill out certain forms to avoid TDS.

  1. Form 15G/15H are self-declaration forms for interest income on securities or dividends or interest on other securities or income in respect of units under section 197A. For example: If you are receiving interest on fixed deposits, and you submit form 15G to the bank, the bank will not deduct TDS from your interest income. Please note that Form 15H is for senior citizens (Age 60 years or more)
    • The provisions to use these forms has now extended to include rental income as well from 1st June 2016.
    • It is a good practice to file form 15G/15H at the beginning of a financial year to avoid unnecessary deduction of TDS.
    • You may need to give forms separately for a different source of income. If you have fixed deposits in two banks, you need to give form 15G/15H to each bank.
    • Submit these forms every financial year. Because, even though you will get a final interest only on maturity, TDS will be cut on the accrued interest for each year.
  2. Form 13 needs to be filled out in case of commission income, brokerage income or lottery tickets, etc. This form has to be given to the income tax assessing officer (AO) to get a certificate to deduct tax at a lower rate or not at all as may be appropriate. The assessing officer may issue this certificate if he is convinced that the total income of the applicant justifies lower or no taxation.

Note: This certificate is valid only for the year for which it is given to the taxpayer.

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Expert assisted eTDS return (Form 26Q) for businesses making contractual payments & deducting TDS
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Expert assisted eTDS return (Form 26Q) for businesses making contractual payments & deducting TDS
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Things to keep in mind in TDS Payment

  • Before furnishing forms and certificates to avoid TDS, you need to assess total income carefully. Because there are penal provisions if the tax department finds that the assessee is deliberately avoiding TDS.
  • Once these forms are furnished there is no provision in the income tax act regarding the withdrawal of these forms.
  • If your income for the year is more than your evaluation, you should do self-assessment of tax liability on extra income and pay advance tax on it.
  • The forms are easily available at banks, post office branches and on the tax department website. Nowadays you can also submit for 15G / 15H electronically

FAQs

What is the TDS payment?

TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the Income Tax Department (ITD).

When should TDS be deducted?

The due dates for the payment of the deducted TDS are on or before the 7th of next month. Hence, if the deductor has deducted tax from payments in the month of November, then he has to pay the TDS on or before the 7th of December.

Who can file the TDS return and what are the details required?

TDS Return is a quarterly statement to be given to the Income Tax Department (ITD). It is compulsory for deductors to submit a TDS return on time. The details required to file TDS returns are as follows:
– TAN (Tax Deduction Account Number)
– PAN (Permanent Account Number)
– Transaction details (Party Name, Party PAN, Date of Payment, Section of Payment, Rate of Tax Deduction, Certificates (if any)
Payment Details (Challan Number, Challan Date, Challan BSR Code, Challan Amount)

Got Questions? Ask Away!

  1. Hey @TeamQuicko

    I have LTCG of more than 7 lakhs from the equity for this year. Is there a way to reduce my tax liability? Also, do I have to pay the tax in advance? If I fail to do so, what will be the penalty/interest percentage I have to pay during my tax filing in 2020?

  2. Hi @vivek25,

    You are liable to pay advance tax if your total outstanding tax liability for the financial year after TDS is above INR 10,000.

    To calculate your advance tax liability you need to add your estimated income for the financial year from all sources including - Salary, House Property, Capital Gains, Business & Profession and other sources.
    Next, subtract all eligible deductions, expenses, and Tax Credit available to you.
    Now, if your outstanding tax liability is above INR 10,000, you need to pay advance tax to avoid penalty u/s 234B and 234C.

    Hope this answers your query

    You can also use the advance tax calculator to know your advance tax liability under the old and new tax regime

  3. Hi
    When I pay the advance tax through the ZERODHA-QUICKO platform, does it get saved/stored? For example I have paid for Q1. so when I have to pay for Q2, will this be automatically calculated?
    Thanks

  4. I have paid the Advance tax of Q1, but didn’t received any email from income tax portal! So, Is that normal? I received the Challan No. receipt, but no email from IT portal!

  5. Hey @Gaurav,

    Once you pay the Advance Tax, you have an option to download the challan. In case you missed downloading it, the tax credit for the same will be reflected in your Form 26AS.

  6. Hey Girimon_Vasudevan,

    When you pay advance tax through our tax planner app, you should download the challan and then you
    need to add the it the advance tax toggle under the tax credits in the tax planner tab to see your tax credits reflected in the appropriate quarter.

  7. @Nireka
    Thanks. I have done it for the current year.
    I did not do it for the last year. How can I add it now?

  8. Hi @Girimon_Vasudevan,

    If you missed paying advance tax last year, then the interest penalty may be applicable u/s 234B & 234C.
    You can pay that as along with your self-assessment tax the filing your Income Tax Return

  9. Sorry, I didn’t miss the payment. I missed to add it in the tax credit on your portal. I am unable to add it now.

  10. @Girimon_Vasudevan, once you login to the Tax Planner navigate to Tax Planner > Income Situation > Tax Credits to add the tax credits.

    If you face any issue can write to us at help@quicko.com and our team will be happy to assist you.

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