Individuals
who are looking for investments should consider tax and TDS along with
risk and return of an investment. This is because returns may differ
depending on the taxation of financial instruments. Income earned from
most of the investments are subject to TDS. Say, for example, salary
income, interest earned on debentures attract TDS. So one should be
aware of tax and TDS applicability and how it can be avoided.
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Below mentioned some income and investments where TDS is applicable:
DS on Salary Individuals who have income above the taxable limit will
see the employer deduct TDS on total income, including income other
than salary after considering all deductions and exemptions. TDS is
applicable as per his income slab. The same can be avoided if
investments are made under 80C, 80D of Income Tax Act by providing
investment proof of the same. The company will issue a TDS certificate
also known as Form 16A at the end of the financial year.
TDS on Interest Income Banks deducts TDS on interest income earned above Rs 10,000 in a year. Taxpayers who fall in higher tax bracket need to pay tax as per liability. Individuals with
lower income can claim for the TDS by submitting form 15G or H,
whichever is applicable. Also, one can avoid TDS by opening a fixed
deposit in the different banks where interest earned in a single bank
should not exceed Rs 10,000. Note that the TDS will be applicable on the
complete amount not only of the exceeded amount. TDS is applicable at 10 per cent if PAN is not submitted with the bank, 20 percent TDS will be applied.
TDS
on EPF Withdrawal TDS will be applicable if Employee Provident Fund is
withdrawn before five years of contribution. However, TDS will not be
deducted for an amount below Rs 50,000 from June1, 2016. TDS is not
applicable when individuals transfer Provident Fund from one account to
another Provident Fund Account. TDS will be deducted at 10 per cent if
Form-15G or 15H is not submitted provided PAN is submitted. In absence
of PAN, it is 20 percent of the amount.
