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Tax Deducted at Source (TDS/ TCS) Interview Questions & Answers - Learning Mode

Tax Deducted at Source (TDS/ TCS) Interview Questions & Answers - Learning Mode

TDS - Tax Deducted at Source. TDS or Tax Deducted at Source, is a means of indirect tax collection by Indian authorities according to the Income Tax Act, 1961. TDS is managed by the Central Board of Direct taxes (CBDT), which comes under the Indian Revenue Services (IRS). TDS is simply Tax Deducted at Source. As per the Income Tax Act ? persons responsible for making payments are required to deduct tax at source at prescribed rates. Instead of receiving tax on your income from you at a later date, the govt wants the payers to deduct tax before hand and deposit it with the govt. Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits. A

Try Tax Deducted at Source (TDS/ TCS) Interview Questions & Answers - Exam Mode


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Tax Deducted at Source (TDS/ TCS) Interview Questions & Answers - Learning Mode
Try Tax Deducted at Source (TDS/ TCS) Interview Questions & Answers - Exam Mode
Question: ​If the payer does not deduct tax at source, will the payee face any adverse consequences by means of action taken by the Income-tax Department?

Answer: It is the duty and responsibility of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee will not have to face any adverse consequences. However, in such a case, the payee will have to discharge his tax liability. Thus, failure of the payer to deduct tax at source will not relieve the payee from payment of tax on his income. Source:
Question: ​What is tax deducted at source?

Answer: For quick and efficient collection of taxes, the Income-tax Law has incorporated a system of deduction of tax at the point of generation of income. This system is called as ?Tax Deducted at Source?, commonly known as TDS. Under this system tax is deducted at the origin of the income. Tax is deducted by the payer and is remitted to the Government by the payer on behalf of the payee.

The provisions of deduction of tax at source are applicable to several payments such as salary, interest, c Source:
Question: ​How can I know the quantum of tax deducted by the Payer?

Answer: To know the quantum of the tax deducted by the Payer, you can ask the payer to furnish you a TDS certificate in respect of tax deducted by him. You can also check Form 26AS from your e-filing account at

You can also use the "View Your Tax Credit" facility available at Source:
Question: ​What to do if the TDS credit is not reflected in Form 26AS?

Answer: ​​Non-reflection of TDS credit in Form 26AS can be due to several reasons like non-filing of TDS statement by the payer, quoting incorrect PAN of the deductee in the TDS statement filed by the payer. Thus, in case of non-reflection of TDS credit in Form 26AS, the payee has to contact the payer for ascertaining the correct reasons for non-reflection of the TDS credit in Form 26AS.​ Source:
Question: ​I do not have PAN. Can I furnish Form 15G/15H for non-deduction of TDS from interest?

Answer: As per section 206AA​​, a declaration in Form No. 15G or Form No. 15H is not a valid declaration, if it does not contain PAN of the person making the declaration. If the declaration is without the PAN, then tax is to be deducted at higher of following rates:-

. At the rate specified in the relevant provision of the Act.

. At the rate or rates in force, i.e., the rate prescribed in the Finance Act.

. At the rate of 20%.​ Source:
Question: ​Can the payee request the payer not to deduct tax at source and to pay the amount without deduction of tax at source?

Answer: ​​​​​​​A payee can approach to the payer for non-deduction of tax at source but for that they have to furnish a declaration in Form No. 15G/15H, as the case may be, to the payer to the effect that the tax on his estimated total income of the previous year after including the income on which tax is to be deducted will be nil.

Form No. 15G is for the individual or a person (other than company or firm) and Form No. 15H is for the senior citizens.
Question: ​At what rate the Payer will deduct tax if PAN Number is not furnished to the Payer?

Answer: As per section 206AA​, if you do not furnish your Permanent Account Number to the payer (i.e., deductor), then the deductor shall deduct tax at the higher of the following rates:-

. At the rate specified in the relevant provision of the Act.

. At the rate or rates in force, i.e., the rate prescribed in the Finance Act.

. At the rate of 20%.​ Source:
Question: Would I face any adverse consequences if instead of depositing TDS in the government's account I use it for my personal needs?

Answer: ​Yes, failure to remit tax deducted by me in the government?s account within stipulated time-limit would attract interest, penalty and rigorous imprisonment of upto seven years. Source:
Question: ​I have not received TDS certificate from the deductor. Can I claim TDS in my return of income?

Answer: ​​Yes, the tax credit in your case will be reflected in your Form 26AS and, hence, you can check Form 26AS and claim the credit of the tax accordingly. However, the claim of TDS to be made in your return of income should be strictly as per the TDS credit being reflected in Form 26AS. If there is any discrepancy in the tax actually deducted and the tax credit being reflected in Form 26AS then you should intimate the same to the deductor and should reconcile the difference. The credit Source:
Question: However, the provisions of section 206AA shall not apply to a non-resident, not being a company, or to a foreign company, in respect of?

Answer: i) payment of interest on long-term bonds as referred to in section 194LC; and

ii) any other payment subject to such conditions as may be prescribed.​ Source:
Question: ​What is the difference between PAN and TAN?

Answer: ​​P​AN stands for Permanent Account Number and TAN stands for Tax Deduction Account Number. TAN is to be obtained by the person responsible to deduct tax, i.e., the deductor. In all the documents relating to TDS and all the correspondence with the Income-tax Department relating to TDS one has to quote his TAN.

PAN cannot be used for TAN, hence, the deductor has to obtain TAN, even if he holds PAN.

However, in case of TDS on purchase of land and building (as per se Source:
Question: ​What are the consequences a deductor would face if he fails to deduct TDS or after deducting the same fails to deposit?

Answer: ​​​A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit

it to the credit of Central Government?s account:-
a) Disallowance of expenditure

As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of ta Source:
Question: ​Under what circumstances a deductor would not be deemed as an assessee-in-default even after he fails to deduct TDS or after deducting the same fails to deposit it to the Government?s account?

Answer: ​​​A deductor who fails to deduct the whole or any part of the tax on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee-in-default in respect of such tax if such resident:?

(i) has furnished his return of income under section 139​;

(ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such ret Source:
Question: ​What are the payments covered under the TDS mechanism and the rates for deduction of tax at source?

Answer: Tax is deductible at source at the rates given in table (infra). If PAN of the deductee is not intimated to the deductor, tax will be deducted at source by virtue of section 206AA either at the rate given in the table or at the rate or rates in force or at the rate of 20 per cent, whichever is higher. Further, under section 94A(5), if payment or credit is made or given to a deductee who is located in a notified jurisdictional area, tax is deductible at the rate given in the table or at the rate Source:
Question: ​What to do if tax is deducted but the ultimate tax liability of the payee is nil or lower than the amount of TDS?

Answer: In such a case, the payee can claim the refund of entire/excess amount of TDS (as the case may be) by filing the return of income.​​ Source:
Question: ​What are the duties of the person deducting tax at source?

Answer: Following are the basic duties of the person who is liable to deduct tax at source:-

. He shall obtain Tax Deduction Account Number and quote the same in all the documents pertaining to TDS.

. He shall deduct the tax at source at the applicable rate.

. He shall pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard*).

. He shall file the periodic TDS statements, i.e., TDS return (by the due date specified in thi Source:
Question: ​Is there any minimum amount upto which tax is not deducted?

Answer: ​​In respect of various items liable to TDS, the Income-tax Law has prescribed a threshold limit. If the expenditure incurred/payment made during the year is below the threshold limit, then there is no requirement to deduct tax at source.

Following list gives the threshold limit in respect of various items covered by TDS provisions:-

S.No. Particular Section Threshold limist
1. No deduction of tax at source from salaries​ 192 If net taxable Source:
Question: ​If I buy any land/building then is there any requirement to deduct tax from the sale proceeds to be paid by me to the seller?

Answer: Yes, Finance Act, 2013 has introduced section 194-IA which provides for deduction of tax at source in case of payment of sale consideration of immovable property (other than rural agricultural land) to a resident. S​ection 194-IA is not applicable if the seller is a non-resident.

Tax is to be deducted @ 1%. No tax is to be deducted if the consideration is below Rs. 50,00,000. If the sale consideration exceeds Rs. 50,00,000, then tax is to be deducted on the entire amount and not on Source:


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