Confused between Income Tax and TDS? Know the Differences!

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• Confused Between Income Tax and TDS? Know the
  Differences!

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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 childrens
  education, health and life insurance premiums,
  interest paid on loan against property and
  charitable donations
• Tax is levied when a financial year ends

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• 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

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• TDS vs. Income Tax

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• 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

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• 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

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• 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

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• 4 Difference
• Income tax indicates your complete tax
  contribution
• TDS implies partial tax contribution

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• 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

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• 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

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• Both TDS and income tax are related to your
  income. But they are determined and settled in
  different ways.

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• Know more- Confused between Income Tax and TDS?
  Know the Differences!