In just few months, the current financial year is coming to an end; your company's accounts department should have initiated you to submit your tax-saving proofs to avoid paying surplus tax deducted at source (TDS).
The name TDS implies, aims at collecting revenue at the very source of income. It is necessarily a method of collecting tax which associates with the concepts of pay as you earn and to collect as it is being earned.
Salaries are subject to TDS
As per the Income Tax Act, the salaries are normally subject to TDS. This means that the payer i.e., the employer is obligated by law to deduct tax on the salary at the time of payment and pay the tax so deducted directly to the government. Therefore, the beginning of a financial year, the accounts department of your company starts calculating taxes on your salary established on your predicted taxable income.
How TDS is calculated
Your predicted taxable income will be equal to your gross total income minus the tax-saving deductions expected to be made during the financial year. TDS on full salary is deducted if no expected tax-saving investment is declared.
Furnishing documentary proof
During the financial year, you have made any tax-saving investments or have any expenditure which qualifies for deduction from gross total income as per the Income Tax Act; you require to provide documentary evidence of such investments/expenditures to your employer. Once the original proof is submitted, the accounts department will count the taxes based on proofs of original investments made by you, which will avoid surplus tax from being deducted from your salary.
Not too late to plan tax-saving
You may have just two months till the end of the financial year, but that does not mean that there is no way out for you from paying higher taxes. Even if you have not made any kind of investments yet, it is still not too late. And if you do not have enough money left to make tax-saving investments then you can use the Section 80C and other tax-breaks applicable as per the I-T Act to reduce your tax outgo. Always remember to submit all the right documents on time to your employer.
Tax Assist is a professional income tax consultancy in India for both corporate houses and individual tax payers; the latter comprising Salaried Individuals, Seafarers, Professionals and Non Resident Indians.
With the help of Tax Assist and its team of income tax professionals, taxpayers can minimize their Income Tax liability, maximize their net income and create opportunities to save for current and future needs while maintaining proper accounting standards and income tax returns which are compliant with the Law.