1 – What is the responsibility of the person deducting tax at source?
A person who deducts TDS is responsible for the below:
- Obtain the Tax Deduction Account Number and mention it in all the documents pertaining to TDS.
- Deduct the TDS at the applicable rate.
- Deposit the TDS amount with the Government within the specified due date.
- File TDS returns within the specified due date.
- Issue the TDS certificate to the payee within the specified due date.
2 – At what rate the deductor will deduct TDS if I do not furnish my Permanent Account Number to them?
As per Section 206AA of the Income Tax Act, if you do not furnish your Permanent Account Number to the deductor, then the deductor shall deduct TDS at the higher of the rate prescribed in the relevant provisions of the Act or at 20%.
3 – What is the difference between TAN and PAN?
PAN is a Permanent Account Number and TAN stands for Tax Deduction Account Number.
TAN should be obtained by the person responsible to deduct TDS, i.e., the deductor. The deductor is required to quote TAN in all the documents relating to TDS.
However, there is an exception- in the case of TDS on the purchase of land and building under Section 194-IA, the deductor is not required to obtain TAN and can use PAN for remitting the TDS.
Also, in the case of TDS on rent as per Section 194-IB, and TDS on payment of certain sums by Individuals or HUFs as per Section 194M, the deductor can use PAN instead of TAN for remitting TDS.
4 – What are Sections 206AB and 206CCA?
The Finance Bill, 2021 introduced these provisions for deduction and collection of income tax at source at such higher rates if any sum is paid or payable to a specified person who did not file the IT return. Section 206AB is on TDS and inserted after section 206AA of the IT Act. It allows deduction of TDS at higher rates on those buyers who do not submit the Permanent Account Number (PAN). Likewise, Section 206CCA is on TCS and was inserted after section 206CC of the IT Act, with the same explanation as above. To know more, read our article on “Sections 206AB and 206CCA”.
5 – How many types of TDS are there?
There are several types of TDS defined by the law.
6 – What is the TDS rate on salary?
Every employer must deduct TDS on salary at what is known as the ‘average rate of income tax’ of the employee for the year. It is denoted as Average Income tax rate = Income tax liability (arrived at based on slab rates) divided by the employee’s predictable income for the assessment year.