Tax Deducted At Source (TDS)
Those who have invested your money anywhere and have taken them back, you would be sure that the hands of the “Tax man” has been through you. The procedure is simple for the tax man, most of the time they deduct the tax from your investment and give you back the money. We call this by the name of TDS which means Tax Deducted at Source. The most awkward thing about TDS is that they do not have an exact rate. The amount of tax purely depends on the source of earnings. It can depend from 1% to 30% depending on the activity. Lets see where all do they have them.
Salary is the first target, The investment declaration that you fill up when you join a new company or your present company would have that. This will include the maximum tax deductions allowed under Sections 80C, 80D and other tax-saving instruments. If, despite all these deductions, your salary is above the exemption limit, TDS will be cut from it every month.
Bank Accounts TDS
If the interest you have earned from your bank FD is above Rs 10,000, you will receive it after the bank deducts tax. This exemption limit also applies to interest earned from a bank savings account. Don’t think you can outsmart the taxman by opening accounts or FDs in different branches, since the system works on core banking and all your FD is tagged with your PAN Card you have no other option to escape from the tax man.
Whether it is rental income or the money that you get after selling a house, you will receive the final amount only after tax is deducted. However, you can avail of exemptions in both cases. If the rent you receive is less than Rs1.8 lakh a year, no tax is deducted at source. Beyond this limit, 10% of the income is cut as TDS. However, the advance deposit paid by the tenant is not taken into account for this limit.
It’s possible that there is more than one owner of the flat and that all of them share the rental income. The benefit of the exemption limit will depend on the type of ownership, whether it is joint or co-owned. “In case of co-owners, where the specific share of the property has been decided, the limit of Rs 1.8 lakh can be claimed separately by each owner. If you are selling a property, the tax will be deducted at the rate of 1% if the deal is above Rs 20 lakh in a rural area, while in urban areas, the limit is Rs50 lakh. This will be applicable from October this year.
Money won in a lottery, puzzle competition, reality show or a horse race is subject to the highest TDS rate of 30%.
“If you win Rs 50 lakh in a game show, you will only be able to take home 70% of your winnings or Rs 35 lakh. The TDS is applicable even on non-cash winnings. So, if you have won a car worth Rs 10 lakh, you will only be able to claim it after you pay Rs 3 lakh as tax.