PROS AND CONS OF DEDUCTING TDS FROM INCOME
As the year end is right around the corner the assessee have already started calculating their yearly income and the advance tax deadline has just passed few days ago, where assessee computes his total income of the year and pays tax in advance. Other than the advance tax the other source of tax payment by the assessee is TDS.
There are some pros and cons of getting TDS deducted from the income which is further explained below.
PROS OF GETTING TDS DEDUCTED FROM INCOME:
- Relief from calculating Advance tax:
If you’re total income tax liability is more than Rs. 10000 than you have to calculate the advance tax by yourself on the total income to be earned during the year. By deducting TDS from your income the advance tax liability calculation burden is reduced from your end. Also you may end up saving the professional fees, which otherwise you would pay if you had hired professionals for calculating your advance tax liability.
- Relief from paying interest to the government:
Section 234B and 234C of Income Tax Act, where the assessee fails to calculate and pay the advance tax then interest at the rate of 1% is charged on the total income tax liability arising at the time of filing of return. However, where TDS is deducted from the income of the assessee then no interest is levied under the Act.
- Benefit of Interest on late refund of TDS by department:
As per Section 244A of the Income Tax Act, if a refund is granted under section 143(1) and there is a delay from the department end for the disbursement of refund then the department will pay you simple interest at the rate of 0.5% per month or part of the month till the refund is paid.
NOTE: For the purpose of this provision the period of refund will be taken from 1st April of the assessment year till the date of granting the refund.
CONS OF GETTING TDS DEDUCTED FROM INCOME:
- Delay in refund of TDS from the Department:
In some cases a delay in the TDS refund may be an issue for the assessee as its working capital is blocked by the department.
- Fees to professionals:
Calculation of Advance tax also requires a professional person. The fees charges charged by the professionals are usually high.
In some cases the assessee even after constant follow-ups, fails to get the refund processed by the department. Then in such situation he takes help of the professionals who further help in processing of refund by approaching the department officials. This activity will finally lead to heavy payment of professional fees to the experts, which sometimes may exceed the amount of refund.