TDS stands for tax deducted at source.

As per the Income Tax Act, any company or person

making a payment is required to deduct tax at source if the payment exceeds certain threshold
limits. TDS has to be deducted at the rates prescribed by the tax department.
The company or person that makes the payment after deducting TDS is called a deductor and the
company or person receiving the payment is called the deductee. It is the deductor’s
responsibility to deduct TDS before making the payment and deposit the same with the
government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is
linked to the PAN of the deductor and deductee.
TDS is deducted on the following types of payments:

 Salaries
 Interest payments by banks
 Commission payments
 Rent payments
 Consultation fees
 Professional fees

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However, individuals are not required to deduct TDS when they make rent payments or pay fees
to professionals like lawyers and doctors.
TDS is one kind of advance tax. It is tax that is to be deposited with the government periodically
and the onus of the doing the same on time lies with the deductor. For the deductee, the deducted
TDS can be claimed in the form of a tax refund after they file their income tax return.
What is TDS return?
A deductor has to deposit the deducted TDS to the government and the details of the same have
to be filed in the form of a TDS return. A TDS return has to be filed quarterly. Different types of
TDS deductions have to be filed using different TDS return forms.
Preparing TDS returns can be done easily using the ClearTDS software. Reach out to us if
you need any help with your TDS returns.

Section 80C
A maximum of Rs.1, 50,000 for tax exemption an employee can declare. The following
investments schemes are considering for exemption under section 80C.

 Investment in mutual funds and equity shares, such as ULIP, Linked Saving
Scheme of a Mutual Fund/UTI
 Life Insurance Premium paid
  Contribution to Statutory PF, 15 years P.P.F., and superannuation funds
 Payments subscription for NSS and Home Loan Account Scheme
 Interest earned through few of the National Savings Certificates are eligible for a
certain amount of tax
 Fixed deposit scheme for a period of minimum 5 years

Clubbing of income
 Clubbing of income means Income of other person included in assessee’s
total income, for example: Income of husband which is shown to be the income
of his wife is clubbed in the income of Husband and is taxable in the hands of the
husband. Under the Income Tax Act a person has to pay taxes on his income.
 A person cannot transfer his income or an asset which is his one of source of his
income to some other person or in other words we can say that a person cannot
divert his income to any other person and says that it is not his income. If he do
so the income shown to be earned by any other person is included in the
assessee’s total income and the assessee has to pay tax on it.
1. Transfer of income without transfer of asset
As per section 60, if a person transfers income from an asset owned by him without
transferring the asset from which the income is generated, then the income from such an
asset is taxed in the hands of the transferor (i.e., person transferring the income). E.g., Mr.
Raj has given a bungalow owned by him on rent. Annual rent of the bungalow is Rs. 84,000.
He transferred entire rental income to his friend Mr. Kumar. However, he did not transfer the
bungalow. In this situation, rent of Rs. 84,000 will be taxed in the hands of Mr. Raj.

2. Revocable transfer
Revocable transfer is generally a transfer in which the transferor directly or indirectly
exercises control/right over the asset transferred or over the income from the asset. As per
section 61, if a transfer is held to be a revocable, then income from the asset covered under
revocable transfer is taxed in the hands of the transferor. The provisions of section 61 will
not apply in case of a transfer by way of trust which is not revocable during the life time of
the beneficiary or a transfer which is not revocable during the lifetime of the transferee.

3. Income from assets transferred to spouse

As per section 64(1)(iv), if an individual transfers (directly or indirectly) his/her asset (other
than house property) to his or her spouse otherwise than for adequate consideration, then
income from such asset will be clubbed with the income of the individual (i.e., transferor).
Income from transfer of house property without adequate consideration will also attract
clubbing provisions, however, in such a case clubbing will be done as per section 27 and
not under section 64(1)(iv).
Introduction and Meaning of Residential Status -
under the 'Income Tax Act.'

Tax is levied on total income of assessee. Under the provisions of Income-tax Act, 1961
the total income of each person is based upon his residential status. Section 6 of the Act
divides the assessable persons into three categories

1. Ordinary Resident;
2. Resident but Not Ordinarily Resident; and
3. Non-Resident.

Residential status is a term coined under Income Tax Act and has nothing to do with
nationality or domicile of a person. An Indian, who is a citizen of India can be non-
resident for Income-tax purposes, whereas an American who is a citizen of America can be
resident of India for Income-tax purposes. Residential status of a person depends upon
the territorial connections of the person with this country, i.e., for how many days he has
physically stayed in India.

The residential status of different types of persons is determined differently. Similarly, the
residential status of the assessee is to be determined each year with reference to the
“previous year”. The residential status of the assessee may change from year to year.
What is essential is the status during the previous year and not in the assessment year.

Important Points

1. Residential Status in a previous year. Residential status is to be determined for each

previous year.

It implies that—

(a) Residential status of assessment year is not important.

(b) A person may be resident in one previous year and a non-resident in India
in another previous year, e.g., Mr. A is resident in India in the previous year 2008-09 and
in the very next year he becomes a non-resident in India.

2. Duty of Assessee. It is assessee’ s duty to place relevent facts, evidence and

material before the Income Tax Authorities supporting the determination of Residential
status.

3. Dual Residential Status is possible. A person may be resident of one or more

countries in a relevant previous year e.g., Mr. X may be resident of India during previous
year 2Ol-14 and he may also be resident/non-resident in England in the same previous
year. The emergence of such a situation depends upon the following

(a) the existence of the Residential status in countries under considerations

(b) the different set of rules having laid down for determination of residential
status.

Determination of Residential status of different ‘Persons’

As we know that Income tax is charged on every person. The term ‘Person’ has been
defined under section 2(31) includes :

(i) An individual

(ii) Hindu Undivided Family

(iii) Firm

(iv) Company

(v) AOP/BOI

(vi) Local authority

(vii) Every other artificial juridical person not falling in preceding six sub-classes.

Therefore, it is essential to determine the residential status of above various types of

persons and now we shall learn the calculation of residential status of each type of person.
Determining whether resident or non-resident

Under the Income-tax Law, an individual will be treated as a resident in India for a
year if he satisfies any of the following conditions (i.e.may satisfy any one or may
satisfy both the conditions):

(1) He is in India for a period of 182 days or more in that year; or

(2) He is in India for a period of 60 days or more in the year and for a period of
365 days or more in 4 years immediately preceding the relevant year.

If an individual does not satisfy any of the above conditions he will be treated as
non-resident in India.

1. Section 80G
Contributions made to certain relief funds and charitable institutions can be claimed as a
deduction under Section 80G of the Income Tax Act.
All donations are not eligible for deduction under section 80G. Only donations made to
prescribed funds qualify as a deduction.
Deduction allowed to all types of tax payers – This deduction can be claimed by any
tax payer -individuals, company, firm or any other person.
Mode of Payment – This deduction can only be claimed when the contribution has
been made via cheque or draft or in cash. But deduction is not allowed for donations
made in cash exceeding Rs 10,000. In-kind contributions such as food material, clothes,
medicines etc do not qualify for deduction under section 80G.
From Financial Year 2017-18 onwards – Any donations made in cash exceeding Rs
2,000 will not be allowed as deduction. Thus the donations above Rs 2,000 should be
made in any mode other than cash to qualify as deduction under section 80G.
Amount of Donation – The various donations specified in section 80G are eligible for
deduction up to either 100% or 50% with or without restriction as provided in section
80G.
How to claim the deduction – To be able to claim this deduction the following details
have to be submitted in your Income Tax Return

 Name of the Donee

 PAN of the Donee
 Address of the Donee
 Amount of Contribution