How To Avoid Paying Excess TDS?
Here are some useful tips that will help taxpayers to avoid paying excess TDS
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As the end of the financial year approaches, there arises a sense of urgency among taxpayers for closing accounts. But while we aim to stay updated with all the rules and regulations, hurrying things can lead to a few mistakes and may make us overlook important income tax sections.
The TDS - Tax Deducted at Source is an essential component when it comes to taxes. It is defined as the amount of tax which is deducted by the employer (or deductor) of an assessee and is deposited to the Income Tax Department on behalf of him/her.
Listed below are guidelines that will help taxpayers to avoid paying excess TDS:
- TDS on Interest Income- If the incomeof an assessee does not fall under tax slab with the age of assessee being up to 60 years or less, the assessee can submit Form 15H whereas senior citizens can submit Form 15G to avoid paying TDS on interest income earned from Fixed deposits.
- HRA Exemption- To claim House Rent Allowance exemption, an individual needs to furnishlease or rent agreement whereinthe rent amount should be clearly mentioned with name, address and PAN of the landlord.
- Proof of Investments-Under Section 80C of Income Tax Act, the premium paid on investment plans such as life insurance plans, PPF, ELSS ,NPS, Home Loan EMI are eligible for tax deduction upto Rs 1.5Lakhs per year. To avail this deduction, an assessee needs to submit copies of the investments made.
- MediclaimPremium- UnderSection 80D, an individual can claim tax deduction upto Rs 25,000 for premium paid on health insurance, and if parents of the individual are senior citizens, this deduction can be raised upto Rs 30,000 per year.
- Donations/Charity- Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G. This deduction can be claimed by any taxpayer by showing receipts.
- PAN Card details- Under Section 206AA, any deductor, who is making a TDS eligible payment to a party which has not provided the PANdetails, should make TDS at a higher rate of 20% instead of 10%. Thus, furnishing of PAN details becomes crucial.
- Late Payment Charges- Late payment charges of Rs 200 per day are levied until the TDS is not submitted (from the last day of payment). To avoid this penalty, taxpayers must pay the entire amount as soon as possible. If this default time exceeds 1 year, taxpayers shall be liable for penalty amount between Rs 10,000 - Rs 1 lakh.
Payment of excess TDS can certainly be a burden on one’s pocket. Thus, taxpayers are required to submit and declare their investment proofs in a timely manner, while keeping themselves updated and well-versed with all the tax rules and latest regulations.
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