K. ARAVIND
t is important to understand what TDS is applicable wgile conducting financial transactions. TDS is applicable for asset transactions, withdrawal of deposits and acceptance of interest.
At present, if the price you are buying is above Rs.50 lakh, the buyer has to pay one per cent TDS (Tax Deduction at Source). Until the financial year 2018-19, only the price of the house was considered for TDS. Currently, TDS is levied on club membership, car parking fees, electricity and water bills, along with the house price. The amount withheld from TDS should be paid to the Income Tax Department.
TDS is applicable for cash withdrawals above Rs..1 crore a year from bank, co-operative bank and post office accounts. Two per cent of the amount withdrawn is payable as TDS. The move is aimed at discouraging large cash transactions and encouraging non-cash transactions.
TDS is applicable to amounts above Rs.50 lakh paid by individuals or Hindu Undivided Family to contractors and professionals. TDS is levied at the rate of five per cent. When a contractor or professional pays more than Rs 50 lakh for a house renovation, wedding ceremony or other needs, only the remaining amount can be paid as TDS. This applies to both personal and business needs. At the same time, the person charging TDS does not need a Hindu Undivided Family Tan (Tax Deduction Account Number).
Five per cent TDS will be applicable if the net income earned at the end of the term of the insurance policy is taxable. Net income is calculated by deducting the amount of premium paid till date from the amount received from the insurance company. Earlier, TDS was to be levied as a percentage of the total amount received from the insurance company. TDS is not applicable if the total amount received from the insurance company is less than Rs. 1 lakh.
If the interest on fixed deposits is above Rs.10,000 per annum, the bank will charge 10 per cent TDS. At the same time, the bank does not charge TDS on interest on savings accounts. If the interest on savings accounts is above Rs.10,000 a year, it should be voluntarily taxed along with the income.
