What is Tax Deduction at Source or TDS?
Tax Deduction at Source refund or TDS return is the amount of income tax reduced by the Government when we pay income taxes for rent, 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 financial year are mentioned in the Income Tax Act, 1961. As a result, while calculating the amount of TDS returns, the taxpayer should check the rates to avoid discrepancies in the future.
Let us have a better understanding of what is TDS with an example.
Example of What is TDS Return.
- Suppose you have taken a shop for rent. You pay a total amount of Rs. 30,000 per month as rent. The TDS amount that is deducted on rent per month is 10%.
- The TDS returns amount deducted monthly will be Rs. 3000. The balance that is left is now Rs. 27000, which you will be paying to the person who has given your his shop on rent after the TDS deduction.
- You will add Rs. 30,000 as rent paid and take credit of Rs. 3,000 as a tax that will be deducted under TDS returns of the Income Tax Act.
With this, you must have had a conclusive understanding of a Tax Deduction at Source Refund.
Let us look at a few benefits of Tax Deduction at Source or TDS.
Benefits of Tax Deducted at Source or TDS Returns
1. Best Medium to Ensure Transparency
There is 100% transparency between the Government and the taxpayer with TDS returns. With TDS returns, the taxpayers can be free of the worry of getting cheated while paying their taxes or filing for the TDS returns. Additionally, it further makes it easier for the Government to keep a check on the taxpayers and be sure of the fact that no one can evade or escape when it comes to paying taxes.
2. Revenue for the Government
TDS returns that are paid by the taxpayers pay is one of the most crucial and best sources of revenue for the Government of India. With this revenue, the Government provides us with various facilities, such as electricity, public transport, law and order, the salary of the Government employees, etc.
3. Makes it Hassle-Free for the taxpayer
While paying taxes, we often face hassle in filing the Income Tax Returns (ITR) or checking the TDS return status. The Government has given the benefits where the TDS returns are automatically deducted. As a result, the taxpayer does not have to constantly keep a check and seamlessly file and pay taxes.
How to Claim TDS Returns?
- If your tax deducted is higher than the amount of tax you have to pay, the taxpayer can then file an Income Tax Return (ITR) and claim a refund on the remaining amount.
- When a taxpayer files for Income Tax Return (ITR), he or she will be asked for the bank name and IFSC code to refund the amount of TDS.
- In case the individual's income is not taxable, he or she can submit a form to your bank of the current financial year and inform you that your income is non-taxable.
- In situations wherein your bank deducts the TDS amount on your non-taxable salary, you can file for Returns and get the refund initiated.
How to Claim TDS Returns Online?
- If you want to claim the TDS Return online, you can visit the official website of the Government's IT Department and fill in your details.
- After registering yourself, fill in your Income Tax Return and put in your TDS returns details.
- After filing for ITR, the taxpayer has to verify himself or herself through e-verification, using e-signature, Aadhar card, PAN Card, banking account details, etc.
How to Check for TDS return status?
- In case the taxpayer has to check for TDS return status, he or she can visit the official income tax website of the Government and use their PAN card details to log in and check.
- Another way is that they will receive a confirmation email from the IT Department of the Government.
Wrapping Up
Tax Deducted at Source or TDS Returns is one of the most common sources of revenue for the Government. Moreover, with TDS, it is easier for the taxpayers to pay the income tax and file for ITR in case it is required.
