NIL OR LOWER TAX RATE DEDUCTION OF TDS U/S 197 OF INCOME TAX ACT
- Admin
- 28-Sep-2021
- Redvat
(Tax Deducted at Source) was introduced to collect tax at the source from where an individual’s income is generated.
What is TDS?
TDS (Tax Deducted at Source) was introduced to collect tax at the source from where an individual’s income is generated. The government uses TDS as a tool to collect tax in order to minimise the tax evasion by the taxpayers by taxing the income (partially or wholly) at the time it is generated itself.
Purpose and Functioning of TDS
Both the government and the Tax-payers get benefitted from TDS. Few of such advantages are enumerated below:
- No Advance Tax: Getting TDS deducted on the income earned can dispense the assessee from the calculation as well as deposit of Advance Tax.
- No Interest Charge: If a person does not pay Advance Tax within due time, he is levied with interest under section 234B and 24C. However, if the assessee has already got TDS deducted from his income no such interest shall be imposed.
- Benefit to the Government: Imposition of TDS prevents people from evading taxes thus leading to a wider Tax Collection Base. It acts as a steady source of revenue to the Government.
