When Should TDS be Deducted and Who is Liable to Deduct it?
Close
Close

Buy a life insurance plan in a few clicks

Now you can buy life insurance plans completely online right here.

  • Icon for Kotak Preferred e-Term Plan

    Kotak e-Term Plan

    Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.

  • Kotak E-Invest Plan

    Kotak e-Invest is a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and needs - be it protection; investment; financial security for child or retirement planning.

  • Icon for Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan

    Kotak Guaranteed Savings Plan is a savings and protection plan that helps you achieve long-term financial goals and insurance cover against any eventuality.

  • Icon for Kotak Preferred e-Term Plan

    Kotak Lifetime Income Plan

    Kotak Lifetime Income Plan gives you the assurance of your income continuing throughout your life and in your absence throughout the lifetime of your spouse!

  • Icon for Kotak Preferred e-Term Plan

    Kotak Health Shield

    The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.

Close

Get a Call

Enter your contact details below and we will get in touch with you at the earliest.

  • Select your Query

Thank you

Our representative will get in touch with you at the earliest.

Back

When Should TDS be Deducted and Who is Liable to Deduct it?

Save Tax Now
  • 8th Feb 2022
  • 507

When Should TDS be Deducted and Who is Liable to Deduct it?

TDS was established with the intention of direct taxation straight from the original income. As per this theory, the deductor who is compelled to make a specific type of payment to the deductee must recoup tax at the origin and transfer it to the Central Government’s fund. The deductee whose taxable income has been deducted at origin is eligible for a rebate for the sum so deducted depending on the details filled in the deductor’s Form 26AS or the TDS certificate.

When Is TDS Deducted and Who Is Responsible for It

Individuals who make certain payments, as defined by the Income Tax Act, are required to pay TDS just at the time of transaction. No TDS should be collected if the person making the payment is a person or a HUF whose finances are not required to be audited. Even if the person or HUF is not subject to a financial audit, people and HUFs who pay rent in excess of ₹50,000 per month must pay TDS at the rate of 5%.

People and HUFs who must deduct TDS at a rate of 5% are exempt from applying for TAN (Tax deduction account number). Your corporation deducts TDS at the applicable income tax slab rates. TDS is collected by banks at a rate of 10%. Furthermore, they can collect 20% if they don’t have your PAN credentials.

For most payments, TDS rates are specified in the income tax legislation, and TDS is deducted by the payer based on these rates. You will not have to pay any tax if you provide investment proof (for claiming deductions) to your company, and your total tax payable is less than the tax limitation. As a result, you should not have any TDS deducted from your wages. Similarly, if your total income is substantially below the tax threshold, you can file Form 15G and Form 15H with your bank to avoid TDS being taken from your interest income.

TDS On Insurance Premium

Most insurance plans, whether life insurance or term insurance, do not charge any kind of TDS on premium provided the following conditions are met:

  • TDS on insurance is exempted if the policies were granted on or before March 31, 2012, with an amount assured of at least five times the annual premium paid.
  • The policies, which were issued on or after April 1, 2012, have an amount assured of at least ten times the yearly premium paid.

TDS On Insurance is Applicable Under The Following Conditions

The exemptions under Section 10 (10D) do not apply if the maturity amount from a life insurance payout exceeds ₹1,00,000 in a year. In this case, the maturity amount will be taxable as usual. TDS is deducted from the maturity amount of a life insurance policy in line with Section 194 DA.

TDS Refund Claim

Whenever the tax paid through TDS exceeds the actual tax payable determined for the financial year, a TDS Refund claim is filed. It’s computed by adding together all of your earnings from various sources. As taxpayers, we are all classified into different tax brackets and are required to pay tax in accordance with that.

To conclude, mastering the fundamentals of TDS will make it simpler to manage your money and make smarter investments to increase your wealth over the long term.

- A Consumer Education Initiative series by Kotak Life

Also read

  • What are the tax benefits of Sukanya Samriddhi Yojana

    Sukanya Samriddhi Yojana (SSY) for the parents of a girl child have been initiated to encourage campaigns like ‘Beti Bachao Beti Padhao’. Click he...

    Read more
  • Income Tax Slabs and Rates in India for FY 2021-22/AY 2022-23

    The tax liability of an individual is divided into different slabs depending on the annual earnings. The payable tax rate increases based on the grow...

    Read more
  • Understanding Tax Exemptions in ULIP (Old and New)

    Though ULIP provides tax benefits to individuals, it is important to understand them. Know the amendments from old to new tax exemptions in unit-linke...

    Read more

Related Plans

  • Kotak e-Invest

    Kotak e-Invest

    Kotak e-Invest - a comprehensive Unit Linked Life Insurance Plan that can be customized as per your goals and requirements.

    Know more