My Tips Towards Wealthy

Tuesday, October 5, 2010

Did you give the PAN Card number ?


If you haven't given your PAN card number the TDS rates wold be double ie 20% instead of 10%. 

You can find the TDS deductions in your
1. Pay Slip
2. Bank Statement



Tax deducted at source [TDS] is the most popular way by which government may collect from each of us. As per the income-tax laws, when ever our company pay us salary or bank pay us interest some tax need to be cut and deposited to the government. Usually the employer deducts the tax at the time of payment of salary itself and pays the total tax amount to the government on behalf of all the employees on a quarterly or annually basis.

The rate of deduction of tax at source on interest at the bank is 10%. For salary payments, the employers deduct income tax at source based on the tax slabs [10%, 20%, 30%] set by the government for every financial year. Tax benefits on insurance premium, ELSS, housing loan, PPF, EPF etc are considered while calculating the net annual taxable income.

As per the rule if the PAN card number is not furnished the tax deductor may increase the tax rate to 20%. However, if the rate of deduction on salary is more than 20%, then the tax on salary deducted at source is at that higher rate. The deductor issues a Form 16 to the payee, which forms a basis for claiming credit for tax deducted while filing the IT return. If the total amount of TDS for a year is higher than the actual tax liability, a refund of excess tax deducted can be claimed by filing a return of income.

Those who expect their taxable income for the financial year to be below the basic exemption limit are eligible to furnish Form 15G and hence enjoy the benefit of non-deduction of income tax at source on interest income. But this is not allowed for NRIs. Senior citizens can use form 15H instead of form 15G.


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