With the green initiative being taken up by the Indian Government, almost every department is going the e-way. The Income Tax department is no exception and the TDS software is one useful tool in this direction to save paper-save environment.
Tax is deducted at source from the gross amount payable. The receiver seldom has any say in the TDS aspects. However, the onus to pay this amount back to the government lies on the person deducting the tax, but the receiver is not too happy to pay the TDS via the source of income.
Hence, the Finance ministry has given some relaxation to save TDS legally by using certain planning techniques:
1. Taxes are deducted at source by banks on interest on Fixed deposits, when the interest exceeds Rs 10,000/- per annum. It is advisable to diversify the fixed deposit amount into different banks so that one does not receive Rs 10,000/- as interest from a single bank.
2. Salaried employees can save under Chapter VI-A of the Income Tax Act, 1961 upto Rs 1,00,000/- per annum. This reduces the taxable income per year thus reducing the TDS amounts also.
3. For professional services rendered, there is no possible way to save TDS legally. However, a TDS exemption certificate can be obtained from the Assessing officer for professional fee or technical services as per Section 194J of the Income Tax Act, 1961.
4. Professionals and businessmen can also reduce their TDS liability by providing proofs for business expenses. Though this is not considered as a strict method of TDS saving, it can reduce the tax burdens.
5. Also, one can submit form 15G or Form 15H (for senior citizens and citizens below 65 years of age respectively) if they do not have any taxable income in the previous year. The form should be submitted to the concerned person at the source of income (be it a bank or a Company or otherwise) before 31st March of the previous year.
From the above article, one can observe that a proper planning of the income receipts and due submission of relevant papers before 31st March of the previous year will definitely reduce the Tax deduction at source. The tax savings so done is in a legal way. Tax avoidance is illegal whereas tax saving is legal. One can also set aside certain sums of money for long term savings such as savings in the schemes mentioned under chapter VI-A of the Income tax Act, 1961 and also get TDS relief for that particular year. However, the returns of few of those investments are taxable in the year of receipt.
The green initiative as mentioned before has reduced the paper work to a large extent. The TDS software is one such move by the technical guys out there, who have worked extensively on providing a fool-proof electronic method to have complete information on Tax deducted at source. The TDS software is capable of capturing the data from the Tax deducted and calculations as may be required so that there are minimum errors while paying the TDS amounts back to the Government.
