Ten things you need to know about SMS alerts on Salary TDS Deduction
Nov 11, 2016
An SMS alert service was launched on October 24 by the Income Tax Department regarding TDS (tax deducted at source) deduction on salary. Most of you must have received the messages but there are few things which we need to understand about this news service.
Let's read on to understand the intricacies:
1) The tax department has decided to give this SMS alert facility to around 2.5 crore salaried taxpayers. The department is giving a thought to extend this facility to about 4.4 crore non-salaried tax payers.
2) The customers are asked to update their mobile numbers in their tax e-filing accounts so that the facility can be provided to them.
3) Since, the new initiative will being transparency in the system, so most of the experts have appreciated this initiative.
4) And tax experts believe that TDS mismatch is one of the most common reasons for incorrect tax returns being filed by the people.
5) Sandeep Sehgal, director tax and regulatory at Ashok Maheshwary & Associates LLP believes that this initiative will help the employees as earlier they had to wait for a complete year to get the form but now they will be able to do that in real time.
6) As soon as one downloads TDS Form 26AS from the tax department's website, one can easily view the payments and salary deduction.
7) As per the TDS, the tax is deducted by the employer and is remitted to the government on behalf of the employee while from others; it is collected at the origin of income.
8) The deduction of tax at the original income is applicable to salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc.
9) The total salary income payable to an employee during the financial year is computed at the beginning of the fiscal year by the employee. After deductions, tax liability is decided and every month, about, 1/12th of this total tax liability is deducted as part of TDS.
10) The tax deduction is done only when the payment has to be given. So, when an investment are done by the employee, qualifies for deduction and gives the required documents to reduce the liability, the quantum of TDS can be reduced accordingly by the employer. This year onwards, the tax department has come up with a new form - Form 12BB - which will be used by employees to declare their investments and claim tax deductions.