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Tax Deducted at Source (TDS)
Tax Deducted at Source or best known TDS is one of the modes of collecting Income-tax from the assesses in Nepal. This is governed under Indian Income Tax Act, 2062.
In simple terms, TDS is the tax getting deducted from the person the amount (Employee/Deductee) by the person paying such amount (Employer/Deductor). This is applicable for certain types of payments, as applicable under the Act.
In the process of TDS, deduction of tax is effected at the source when income arises or accrues. Hence where any specified type of income arises or accrues to any one, the Income-tax Act enjoins on the payer of such income to deduct a stipulated percentage of such income by way of Income-tax and pay only the balance amount to the recipient of such income.
The tax so deducted at source by the payer, has to be deposited in the Government treasury within the specified time. The tax so deducted from the income of the recipient is deemed to be payment of Income-tax by the recipient at the time of his assessment.
Income from several sources is subjected to tax deduction at source. Presently this concept of TDS is also used as an instrument in enlarging the tax base. Some of such income subjected to TDS are salary, interest, dividend, interest on securities, winnings from lottery, commission and brokerage, rent, fees for professional and technical services, payments to non-residents etc. It is always considered as an Advance tax which is paid to the government.
Deductor
Under the process of TDS, Deductor is a person/company who is liable to deduct the Tax at source, from the payment being made to the party. Deductor is also termed as Employer in cases where the payments are under Salaries.
Deductee
Deductee is the person, from whom the tax is being deducted or accrued for deduction.[4] Depending on the nature of the deduction being made, deductees and respective submission forms are categorized to 4 types:
1. Salaries: In case of salaries, the deductee is termed as an Employee. All the information of deductions and payments in this category should be submitted in to the government.
2. Non-Salaries - Resident: In case of non-salaries and the payment is made to a resident in Nepal, the deductee is termed as a Deductee or a Party. All the information of deductions and payments in this category should be submittedto the government.
TDS Certificates
A tax deductor is also required to issue TDS certificate to the deductee within specified timed under Act. The certification from the deductor, for the deduction and payment of the respective TDS amount to the bank, issued to the deductee is a TDS certificate.
The deductee should produce the details of this certificate, during the regular assessment of income tax, to adjust the amount of TDS against the Tax payable by the Deductee.
Types of TDS certificates
Salaries - : In case of Salaries, the certificate should be issued in containing the Tax computation details and the Tax deducted & Paid details.
Non-salaries - In case of Non-Salaries, the certificate should be issued in containing the Tax deducted & Paid details. Separate certificates should be prepared for each Section [nature of payment].
If any companies are not doing this TDS properly it means fine and penalty to Income tax office. In order to save the fine penalty and interest. We should follow the said rules issued by the authority.
Now most of the TDS things are going through Internet.
Forms
% of TDS
Areas of Deduction
Submission Time