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Did you think that income tax and TDS mean the same thing? Find out how they are different and why you should file ITR religiously.
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Income Tax Means • The tax charged on your personal gross income • There are different slabs with different tax rates, based on income • You are eligible for exemptions on – children’s education, health and life insurance premiums, interest paid on loan against property and charitable donations • Tax is levied when a financial year ends
TDS Means • It is tax deducted at source from your monthly salary by the employer • The employer assumes that your income is taxable • Financial institutions also deduct TDS from periodic interest earned • The government collects taxes efficiently this way
#1 Difference • Income tax - Calculated for every financial year and levied on annual income • TDS - Deducted when salary is paid or interest is earned on investment
#2 Difference • The taxpayer pays income tax directly after calculating annual liability • TDS is deducted or paid by a third party like the government or employer
#3 Difference • Income tax is charged on already-earned income for a financial year, based on slabs • TDS is deducted whether your income is taxable or not and before you receive salary
#4 Difference • Income tax indicates your complete tax contribution • TDS implies partial tax contribution
#5 Difference • Unlike income tax, TDS is levied on: • Rent paid on immovable or movable property above Rs 2.4 lakh • Contractor payment over Rs 1 lakh • Buying immovable property over Rs 25 lakh • Winning prize of over Rs 10,000
Why File Income Tax Return? • It is mandatory, whether your income is taxable or not • It should be filed even if TDS gets deducted • If total annual income is not taxable but TDS (more than what you owe) is deducted, you can file for refund
Both TDS and income tax are related to your income. But they are determined and settled in different ways.
Thank You !Would Love to Hear From You Hero FinCorp Limited 09, Basant Lok, Vasant Vihar, New Delhi - 110057 Tel. 18001024145 Email Id: Corporate.Care@HeroFinCorp.com Website: https://www.herofincorp.com/ Know more- Confused between Income Tax and TDS? Know the Differences!