Understanding TDS vs. Income Tax: Can Someone Explain the Key Differences?

Can anyone guide on the difference between TDS and Income tax?

Hi Siva,

Let me clarify. TDS is a part of income tax. Here, the tax is deducted from your income beforehand and is paid to the government by the deductor on your behalf.

Hope this is clear.

Hi Siva,

TDS - Tax Deduction at Source. Income tax can be from various sources (salary, business, commercial buildings, house rent, etc.). However, TDS is deducted at the source. Examples are provided below:

1. If you receive a salary from a company exceeding 1.5 lakhs, after exemptions are considered, taxable income is calculated, and the tax amount is deducted from the salary at the source. This deduction is known as TDS on salary.

2. Similarly, when you send a commercial rent bill, the shop owner or authority will pay the rent after deducting TDS at 20.6% for companies and 15.4% for non-companies.

I hope this gives you a better understanding. Apart from salary, other sources of income such as rent, income from shares, income from fixed deposits, and income from the sale of goods are aggregated. You should then consult with an auditor for income taxation, pay any remaining tax after subtracting the TDS deducted from the company's payment before the 31st of March, and file the returns in May.

That's all for now.

Dear Sanjay,

God bless you.

First, you must understand that any income is taxable as per the rates decided by the government every year in the finance bill. It is irrespective of the type or source of income. It applies to every individual and is to be paid either as advance tax (in the case of an enterprise by the owner) on completion of 6 months and final tax on or before 31 March. The return is to be filed for the financial year before 1 July or the date specified by the government.

TDS (Tax Deducted at Source) is the anticipated amount that an individual has to pay in respect of one's income and is deducted by the payer (who can be an employer or hirer of service or anyone who gives money to an individual as consideration for work) and is deposited into the treasury. It is the responsibility of the employer to deduct and pay the amount of TDS before making payment to the individual. Nowadays, non-recovery and payment of TDS is a punishable offense.

Blessings,

Dr. Ram

Hello,

Can anyone give me details about the taxation benefits as I am designing the salary structure for my company? It should be tax-friendly.

Regards,
Vinod

Hi,

I would like to know if the special allowance has different components or categories.

Regards,
Vinod

Income Tax is your own tax liability, and you are depositing it against your tax liability. While TDS is a tax deducted from income payments to a third person, and you are depositing it against the tax liability of that third person.

Dear All,

Can you shed some more light on this as I am a bit confused? We deduct Professional Tax from our salaries, what is its purpose? Also, could you explain the significance of having a Pan card?

Can you please help me with this query?

Thanks & regards,

Shruti
CMS HR

Dear All,

Can you shed some more light on this as I am a bit confused? In our salary, we pay Professional Tax (PT) - what is that? Also, what is the purpose of the Pan card? Could you please help me clarify my query?

Thanks & regards,
Shruti
CMS HR

Professional tax is the tax payable on salary that goes to the State Government. The maximum amount may be Rs. 200/- per month or Rs. 300/- per month, while Income tax goes to the central government and is a percentage of your total income. The payment of Income tax is controlled through a number allotted through the PAN card.