Simplifying Tax Compliance: A Guide to TDS, GST, and Income Tax Advisory in India

​Navigating the intricacies of India's taxation system—encompassing Tax Deducted at Source (TDS), Goods and Services Tax (GST), and Income Tax advisory—can be challenging for individuals and businesses alike. Understanding these components is crucial for ensuring compliance and optimizing financial planning.​

Tax Deducted at Source (TDS):

TDS is a mechanism wherein tax is collected at the source of income generation. The payer deducts a specified percentage of tax before making payments such as salaries, interest, or contractual fees to the payee. This system aims to minimize tax evasion by ensuring tax collection at the point of income receipt. Under the Income Tax Act of 1961, various sections mandate TDS on different types of payments:​

Section 192: TDS on salaries, with the rate determined based on the applicable income tax slab of the employee.​

Section 194A: TDS on interest other than interest on securities, applicable when the interest amount exceeds ₹10,000 for banks and ₹5,000 for others, at a rate of 10%.​

Section 194C: TDS on payments to contractors and sub-contractors, applicable when a single payment exceeds ₹30,000 or aggregate payments exceed ₹1,00,000 in a financial year, at a rate of 1% for individuals/HUFs and 2% for others.​

Section 194J: TDS on fees for professional or technical services, applicable when the payment exceeds ₹30,000, at a rate of 10%.​

Non-compliance with TDS provisions can lead to penalties, including interest on the delayed payment and disallowance of expenses under Section 40(a)(ia). ​

Goods and Services Tax (GST):

Introduced in 2017, GST is a comprehensive indirect tax levied on the supply of goods and services across India, replacing multiple cascading taxes imposed by the central and state governments. It operates under a dual system, with both Central GST (CGST) and State GST (SGST) levied on intra-state supplies, and Integrated GST (IGST) on inter-state supplies. The GST Council, comprising representatives from the central and state governments, is responsible for making recommendations on various aspects of GST, including tax rates and exemptions.​

As of March 2025, discussions are underway to rationalize GST rates to simplify the tax structure and reduce compliance burdens. ​

Income Tax:

Income tax is a direct tax levied on the income of individuals and entities. The Income Tax Act of 1961 governs the provisions related to income tax in India. The Finance Act, enacted annually, outlines the applicable tax rates and amendments for the corresponding financial year.​

In the 2024 Union Budget, the income tax slabs under the new tax regime were revised as follows:​

Nil: Up to ₹3 lakh​

5%: ₹3 lakh to ₹7 lakh​

10%: ₹7 lakh to ₹10 lakh​

15%: ₹10 lakh to ₹12 lakh​

20%: ₹12 lakh to ₹15 lakh​

30%: Above ₹15 lakh​

Additionally, the standard deduction was increased from ₹50,000 to ₹75,000.

Simplifying Tax Compliance:

To simplify tax compliance concerning TDS advisory, GST, and Income Tax, consider the following strategies:

Stay Informed: Regularly update yourself on changes in tax laws and regulations by consulting official notifications from the Income Tax Department and the GST Council.​

Maintain Accurate Records: Keep detailed records of all financial transactions, including invoices, receipts, and payment records, to ensure accurate reporting and facilitate audits.​

Utilize Technology: Leverage accounting software and digital tools designed to assist with tax calculations, return filings, and compliance management.​

Seek Professional Assistance: Engage qualified tax professionals or consultants to navigate complex tax provisions and ensure compliance.​

Timely Compliance: Adhere to deadlines for tax payments and return filings to avoid penalties and interest charges.​

Frequently Asked Questions (FAQs):

- What is the due date for filing TDS returns?

TDS returns are filed quarterly. The due dates are:​

Q1 (April to June): 31st July​

Q2 (July to September): 31st October​

Q3 (October to December): 31st January​

Q4 (January to March): 31st May​

- Who is required to register under GST?

Businesses with an annual turnover exceeding ₹20 lakh (₹10 lakh for special category states) are required to register under GST advisory. Additionally, certain businesses, such as those involved in inter-state supply or e-commerce, must register regardless of turnover.​

- What are the penalties for late filing of income tax returns?

For returns filed after the due date but before 31st December of the assessment year, a penalty of ₹5,000 is levied. For returns filed after 31st December, the penalty increases to ₹10,000. However, for taxpayers with a total income not exceeding ₹5 lakh, the maximum penalty is ₹1,000.​

- How can I claim a refund for excess TDS deducted?

To claim a refund for excess TDS deducted, file your income tax return declaring the total income and the TDS deducted. The Income Tax Department will process the return and initiate the refund if applicable.