Taxes need to be witheld on certain specified payments at prescribed rates. We advise on the taxability of the transactions and support with procedural compliances.

Tax Deducted at Source

The Income Tax Act 1961 provides for withholding of taxes on making certain specified payments such as professional fees, technical fees, rent, commission etc. The taxes need to be deducted at prescribed rates while making these payments. The recipient of the income receives income net of taxes.  Once taxes are withheld, these need to be deposited with the government with the prescribed due dates. Non – deduction or short deduction of TDS, non – deposit /short deposit/ late deposit of TDS are defaults as per the Income Tax Act and attract penalties and interest.

Taxes need to be withheld even on international payments in certain cases in line with the provisions of the Income Tax Act 1961 and relevant Double Taxation Avoidance Agreement (DTAA). Correct interpretation of these statutes is essential and incase of non deduction/wrong deduction of taxes due to misinterpretation can invite defaults from the tax authorities.

After the deduction of taxes, e-TDS returns are to be filed on a quarterly basis. Thereafter Form 16A needs to be issued to the dedcutees.

Incase of taxes on salary, the employee needs to be provided with Form 16 at the end of the year.

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