a study on impact of tax decuction at source on manufacturing cost
TRANSCRIPT
A STUDYON PERCEPTION OF TAX DEDUCTION AT SOURCE TOWARDS CORPORATE
By
R.NANDHAKUMAR(Reg.No.31709631060)
A PROJECT REPORT
Submitted to the
FACULTY OF MANAGEMENT STUDIES
In partial fulfilment of the requirements For the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
IN
FINANCE AND HUMAN RESOURCES
St. JOSEPH’S COLLEGE OF ENGINEERING, CHENNAIANNA UNIVERSITY
CHENNAI 600 025
AUGUST 2010
A STUDY ON PERCEPTION OF TAX DEDUCTION AT SOURCE TOWARDS CORPORATE
By
R.NANDHAKUMAR(Reg.No.31709631060)
A PROJECT REPORT
Submitted to the
FACULTY OF MANAGEMENT STUDIES
In partial fulfilment of the requirements For the award of the degree
of
MASTER OF BUSINESS ADMINISTRATION
IN
FINANCE AND HUMAN RESOURCES
St. JOSEPH’S COLLEGE OF ENGINEERING, CHENNAIANNA UNIVERSITY
CHENNAI 600 025
AUGUST 2010
ST.JOSEPH’S COLLEGE OF ENGINEERING(Affiliated to Anna University)
JEPPIAR EDUCATIONAL TRUSTJEPPIAR NAGAR ,OLD MAMALLAPURAM ROAD, CHENNAI-119
8
BONAFIDE CERTIFICATE
Certified that this project report titled “A STUDY ON PERCEPTION OF TAX
DEDUCTION AT SOURCES TOWARDS CORPORATE ” is the bonafide work of
“R.NANDHAKUMAR’’ Reg.no.31709631060 who carried out the project work under my
supervision . Certified further , that to the best of my knowledge the work reported herein
does not from part of any other project or dissertation on the basis of which a degree or award
was conferred on an earlier occasion on this or any other candidate.
SIGNATURE SIGNATURE
Dr. P. VASANTHALAKSHMI DR.JAYASHREE KRISHNAN B.Sc., M.B.A., PhD., B.Sc., M.B.A., PhD.,
INTERNAL GUIDE HEAD OF THE DEPARTMENTDepartment of Management Studies Department of Management StudiesSt.Joseph’s college of Engineering St.Joseph’s college of EngineeringRajiv Gandhi Road Rajiv Gandhi RoadChennai-600 119. Chennai-600 119.
DECLARATION
I R.NANDHAKUMAR student of DEPARTMENT OF MANAGEMENT STUDIES,
ST.JOSEPH’S COLLEGE OF ENGINEERING , CHENNAI would like to declare that the
project titled “A STUDY ON PERCEPTION OF TAX DEDUCTED AT SOURCE
TOWARDS CORPORATE” done for the partial fulfilment of M.B.A course of ANNA
UNIVERSITY is my original work.
Place:
Date: (R.NANDHAKUMAR)
ACKNOWLEDGMENT
First and foremost, I thank Almighty God for the strength and blessings showered, for
successfully completing the project
I express my sincere gratitude to the management of ST.JOSEPH’S COLLEGE OF
ENGINEERING for having provided me an opportunity to do my master degree in their
esteemed college
My sincere thanks and profound sense of gratitude goes to respected
Chairman Thiru. Jeppiar, M.A., B.L., and I also take this opportunity to thank
Dr. Babu Manohar M.A., M.B.A., Ph.D., honourable director of the esteemed institution .
My heartfelt thanks to the project Principal Jolly Abraham M.E., M.I.E., I am exceedingly
greateful to the Head Of the Department Dr. Jayashree Krishnan B.Sc, M.B.A., PhD., for
providing me necessary facilitates to complete this project work. I also thank
Dr.Vasanthalakshmi B.Sc., M.B.A., PhD., , who guided me throughout this project.
CONTENTS
S.NO. PARTICULARS PAGE NO.
1 INTRODUCTION
1.1 Need for study
1.2 Scope of the study
1.3 Company profile
1.4 Product profile
7
2 OBJECTIVES OF THE STUDY 9
3 INTRODUCTION TO TDS 10
4 RESEARCH METHODOLOGY
4.1 Research Design
4.2 Sources of Data
4.3 Sampling Design
4.4 Tools and Techniques used
21
4 REVIEW OF LITERATURE 24
5 LIMITATIONS OF THE STUDY 26
6 ANALYSIS AND INTERPRETATION 27
7 FINDINGS 40
8 SUGGESTIONS 41
9 CONCLUSION 42
10 ANNEXURE
Questionnaire 43
BIBLIOGRAPHY 44
ABSTRACT
A STUDY ON PERCEPTION OF TAX DEDUCTED AT SOURCE TOWARDS
CORPORATE
This study is conducted for the purpose of finding the awareness level of TDS
towards employees in corporate. This study was conducted using the questionnaire as the
data collection method where the questions were framed to identify the parameters of the
awareness level. This analysis was done using SPSS and it was found that employees were
highly aware of TDS.
1) INTRODUCTION
1.1) Nature of Study
All marketing research projects must start with explanatory design .This is a preliminary
phase and is absolutely essential in order to obtain a proper definition of problem at hand.
The major emphasis is on the discovery of ideas and insights. For example, a soft drinks firm
might conduct an explanatory study to generate possible explanations. The exploratory study
is particularly helpful in breaking broad and vague problem into smaller, more precise sub-
problem statements, hopefully, in the form of specific hypotheses. In a nutshell, we can say
that explanatory studies help in formulating hypotheses for the further research.
1.2) Scope of the study
The scope of TDS may be expanded to include more trades and professions. At present, the
TDS net covers income from salary, interest on securities, dividend from domestic companies
and prize money from sweepstakes among others.
1.3) Company Profile
Armstrong International Inc. is a U.S. based company with a global of sales and energy
training facilities located in 60 countries around the world. A fifth generation family owned
company. Armstrong is guided by core values including honesty, fairness, respect, trust,
loyalty, dignity, hard work, fearlessness, kindness and a firm belief in God.
We are committed to sustainability and energy conservation. For more than 108 years
Armstrong International has been a leader in steam engineering, energy conservation and
responsible environmental stewardship. Today, through of our global manufacturing and
service footprint. Armstrong is helping customers around the world conserve energy and
operate more efficiently. For instance, Armstrong customers save one ton of CO2 every 13
seconds, one ton of energy every 40 seconds, and 10 tons of water every 3 seconds.
Armstrong International has extensive expertise in the field of steam and condensate
management and we are specialists in utility optimization for process, industrial and
institutional facilities. We are very keen on sharing our expertise and experiences with
Indian customers as well.
We are currently in the process of constructing our Indian headquarters manufacturing
facility in Chennai. In the interim we are serving various Indian customers mobilizing the
production capabilities of our plants around the world.
1.4) Product Profile
Armstrong International provides an extensive range of products such as STEAM
TRAPPING STATIONS, CONDESATE RECOVERY SYSTEMS. BELOW SEALED
VALVES, MANIFOLDS, PRESSURE REDICNG VALVES and CONTROL VALVES.
SOPHISITICATED TEMPERATURE CONTROL EQUIPMENT, TRAP MONITORING
SYSTEMS and HOT WATER STATIONS.
In addition to a full product offering, Armstrong also provides a number of services.
Energy Audits :
Armstrong International has conducted thousands of system audits and has implemented the
recommendations, saving customers millions of dollars.
Turn Key Projects :
Armstrong International has implemented hundreds of turnkey energy conservation projects
where Armstrong provided the talent and manpower to install project ideas and mitigate cost.
Operation & Maintenance :
Armstrong International has operated and maintained hundreds of sites and provided service
to multiple facilities globally that have lowered operational costs at each facility.
Finance a Project :
Armstrong International has financed millions of dollars in energy projects across the globe.
Utility Ownership :
Today Armstrong International owns 20 global facilities which are operated and maintained
by Armstrong professionals.
2) Objectives of the Study
Primary Objective :
To study the profile of tax deducted at source in India.
Secondary Objective :
To analyze the functioning at TDS system in India.
To analyze the perception of corporate towards the tax deducted at source
To know the Awareness of TDS among the assesses
T o know the impact of TDS on assesses
TDS OVERVIEWIntroduction
TDS is tax deducted at source. Tax at the applicable rate is to be deducted form the salary by
the employer at the time of paying/crediting the salary. The employer will give a Tax
Deduction certificate at the end of the financial year and the employee can claim this
deduction through his income tax return for the year. Also, in case of contract or service
provided by anyone to another, above a certain amount, tax is to be deducted at the applicable
rate which are different for different types of payment. The payer of the bill will give a tax
deduction certificate in the prescribed form to the latter to claim in his tax return. The person
who deducts tax has to deposit the tax with the govt. treasury or authorised banks. A quarterly
return has to be filed with the appropriate authorities, of the tax deducted. Penalty for not
filing the return is Rs. 100/- per day of delay .
Electronic –TDS
Entities (both corporate and non-corporate deductors) making payments (specified under
Income Tax Act) to third parties (deductees) are required to deduct tax at source (Tax
Deducted at Source -TDS) from these payments and deposit the same at any of the designated
branches of banks authorised to collect taxes on behalf of Government of India. They should
also furnish TDS returns containing details of deductee(s) and challan details relating to
deposit of tax to ITD.
It is mandatory (w.e.f. June 1, 2003) for corporate deductors to furnish their TDS
returns in electronic form (e-TDS return).
From F.Y. 2004-2005 onwards furnishing TDS returns in electronic form is also
mandatory for government deductors in addition to corporate deductors.
Deductors (other than government and corporates) may file TDS return in electronic or
physical form.
National Securities Depository Ltd. (NSDL) as the e- TDS Intermediary (appointed by
ITD) receives, on behalf of ITD, the e-TDS returns from the deductors.
Deduction of tax from salaries :
Any person responsible for paying any income chargeable under the head ‘Salaries’ is
required to deduct tax at source on the amount payable. Tax is to be calculated at the rates
prescribed for the financial year in which the payment to employees is made. The person
responsible for paying that at the time of deducting tax at source, increase or decrease, the
amount to be deducted for the adjusting any previous deficiency of excess deduction.
Computation of salary and tax thereon :
Tax deducted at source from salary payable currency is to be calculated in accordance with
rule 26. For computing taxable salay, refer 10 to 23 and paras 104 to 112. At the time of
deducting tax at source during the financial year person responsible for paying salary should
keep the following points in view:
No tax is required to be deducted at source unless the estimated salary exceeds the
amount no to tax.
The amount received on account of encashment of leave due to an employee on
retirement in exemption under section 10 (10AA).
Notified allowances under section 10(14) are not subject to tax deduction at source.
House rent allowance qualifies for exemption subject to the specified limits responsible
for paying salary should ask the employee to produce proof of actual payment of purpose
of estimating his taxable salary. No deduction on account of house rent allowance is
however if the employee does not pay any rent or resides in his own house. The
disbursing authority should satisfy himself in this regard by insisting on production of
evidence of actual payment of excluding the house rent allowance from the taxable
income of the employee.
Though incurring actual expenditure on payment of rent is a prerequisite for claiming
deducted section 10(13A), the Board has been decided as an administrative measure that
salaried employee house rent allowance up to Rs. 3,000 per month will be exempted from
production of rent received however, he noted that this concession is only for the purpose
of tax deduction at source and in the assessment of the employee, the Assessing Officer
will be free to make such enquiry as he deemed purpose of satisfying himself that the
employee has incurred actual expenditure on payment of.
The value of the perquisites by way of free residential accommodation and amenities
provision of employers to their employees are determined under rule 3 and should be
taken increase for computing taxable salary.
No deduction is to be made from the salary income in respect of any donations for
charitable purpose tax relief admissible under section 80G in respect of such donations
will have to be claimed by the at the time of finalization of his assessment. However, in
cases where contributions are made by Jawaharlal Nehru Memorial Fund, the Prime
Minister’s Drought Relief Fund, the National children on the Indhira Gandhi Memorial
Trust or the Rajiv Gandhi Foundation, 50 percent of such contribution to be deducted in
computing the total income of the employee. Similarly, the donations to the National
Fund, the Prime Minister’s National Relief Fund, the Prime Minister’s Armenia
Earthquake Relief Fund, Africa (Public Contributions – India) Fund, the National
Foundation for Communal Harmony, Prime Minister’s Earthquake Relief Fund,
Maharashtra, National Blood Transfusion Council, State Blood Commission Council,
Army Central Welfare Fund, Indian Naval Benevolent Fund or Air Force Central Welfare
Minister, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996, National illness
Assistance Fund, Chief Minister/Lieutenant Governor’s Relief Fund or the notified
University of National eminence, the National Sports Fund, the National Cultural Fund,
the Fund for Technology Development and Application, National Trust for Welfare of
Persons with Autism, Cerebral Palsy, Mental Retardation and Disabilities will be eligible
for 100 percent deduction. It is to be noted that all eligible donations, with limit, will be
deductible under the provisions of section 80G.
The total salary should be rounded off to the nearest multiple of rupees ten by ignoring
the fraction than five rupees and increasing the fraction of five rupees or more.
Deduction of tax at source from interest on securities :
Any person responsible for paying any interest on securities to a resident is required at the
time of credit of such income to the account of the payee or interest payable account or
suspense account or at the time of payment of interest in cash, by cheque/draft, whichever is
earlier to deduct income-tax at the rates in force. No tax is, however, deductible at source
from the amount of interest payable.
Deduction of tax source from dividends :
The principal officer of an Indian company or a company which has made the prescribed for
the declaration and payment of dividends within India is required, before making at the
deduct tax at source from the amount of dividend at the prescribed rate deductible under
section 194 only if a shareholder is resident in India.
Cases where tax is not deductible or deductible at lower rates : - In the following cases
deducted or deducted at lower rates:
DIVIDENDS COVERED BY SECTION 115-O- No tax is deductible from June1, 1997 to
and from April 1, 2003 in the case of dividend referred to in section 115-O
APPLICATION IN FORM No. 13
DELCLARATION TO THE PAYER IN FORM NO 15G OR 15H
DIVIDEND UP TO Rs. 2500 – No tax shall be deductible after March 31, 2002, in
shareholder, being an individual if the following conditions are satisfied –
a. the dividend is paid by the company by an account payee cheque; and
b. the amount of such dividend or, as the case may be, the aggregate of the amounts of
distributed (or paid or likely to be distributed or paid) during the financial year by the
shareholder, does not exceed Rs. 2,500 (Rs. 1000 from June 1, 2002 to July 31, 2002).
Dividend To LIC/GIC – No deduction of tax at source shall be made under this section any
dividend payable to the Life Insurance Corporation of India.
Deduction of tax at source from winnings from lotteries or crossword puzzles:
A person responsible for paying to any person any income by way of winnings from lotteries,
crossword puzzles or (from June 1, 2001) winnings from card games or other games, for Rs.
5000 is required, at the time of such payment, to deduct income-tax thereon at the rates in
force. Where the prize is given partly in cash and partly in kind, tax is deductible from with
reference to the aggregate amount of the cash prize and the value of the prize in kind.
Moreover the lottery or crossword puzzle prize is paid in installments, the deduction is to be
made at the time of payment of each installment. Likewise, tax is deductible from the
amount of the prize money paid to be of lucky ticket with reference to the amount paid to
him. No tax is, however, deductible from the income way of bonus or commission paid to
the lottery agents or sellers of lottery tickets on the sale made by the Circular No. 257, dated
June 4, 1979
With effect from June 1, 1997, where the winnings are wholly in kind or where they are
partly in the partly in kind but the part in cash is not sufficient to meet the liability for tax
deduction in respect of the winnings, the person responsible for paying shall, before
releasing the winnings either in cash of ensure that tax has been paid in respect of the
winnings.
Deduction of tax at source from winnings from horse races :
Tax is deductible at source from any income by way of winnings from the horse races at
present way of winnings from horse races to be paid to a person exceeds Rs. 2500. The
obligation to deduction source applies only where such winnings are paid by a bookmaker or
a person to whom a license is granted by the Government under any law for the time being in
force for horse racing in any race for arranging for wagering or betting in any race course.
Deduction of tax at source from payments to contractors or sub-contractors :
The provisions of section 194C are given below –
Who is responsible for tax deduction – In the following two cases tax is deductible under
194C-
When payment is made by a specified person to a Resident Contractor – Any responsible
for paying any sum to any resident contractor for carrying out any work (increasing the
supply of labour for carrying out any work) in pursuance of a contract between a specified
persons and the resident contractor is required to deduct tax at source. For this purpose,
payer himself is treated as persons responsible for paying any sum to contractor. If, however,
payer is a company, the company itself inclusive of the principal officer thereof, is the person
responsible for paying to resident contractor.
Specified person – Meaning of – Tax is deductible under section 194C(1) only if payment is
made in pursuance of a contract between a specified person and a resident contractor. The
following are “Specified persons” for this purpose :
Deduction of tax at source from insurance commission :
Person responsible for paying to a resident any income by way of remuneration or revenue by
way of commission or otherwise, for soliciting or procuring insurance business income
relating to the continuance, renewal or revival of policies of insurance is required, at the time
of income to the account of the resident or the payment thereof (by whatever mode),
whichever deduct income-tax thereon at the rates in force. No deduction shall, however a
case where the amount of such income or, as the case may be, the aggregate of the amounts.
Deduction of Tax to non resident sportsman :
The person responsible for paying any income referred to in section 115BBA to a non-
resident foreign citizen-sportsman (including an athlete) or a non-resident sports
association/institution shall deduct tax at the rate of 10 percent. The tax is to be deducted at
the time of credit of such income to the tax of the payee or at the time of payment thereof in
cash or by issue of cheque or draft or by other mode, whichever is earlier.
Deduction of tax from payments in respect of National Savings Scheme :
Section 194EE has been inserted with effect from October 1, 1991. Under this section, the
person responsible for paying any amount referred to in clause (a) of sub-section (2) of
section 80CCA will income-tax thereon at the rate of 20 percent at the time of payment.
When tax is not deductible – In the following cases tax is not deductible:
PAYMENT UP TO Rs. 2,500 – Where the amount of payment or the aggregate amount of
payments in a financial year is less than Rs. 2,500, tax is not deductible under section 194EE.
Payment to Legal Heirs – Where the payment is made to the heirs of the deceased assessee
(depositor), no tax shall be deducted at source.
Declaration to the payer in form No. 15G or 15H
Deduction of tax at source on payments on account of repurchase of units by Mutual Funds or
UTI
The person responsible for paying to any person any amount referred to in section 80CCB
shall, at the time of payment thereof, deduct income-tax thereon at the rate of 20 percent.
Deduction of tax from commission, etc., on sale of lottery tickets :
The person responsible for paying any income by way of commission, remuneration or prize
(by whatever name called) on lottery ticket in an amount exceeding Rs. 1,000 shall deduct
income-tax at the rate of ten percent. Tax shall be deducted at the time of credit of such
income to the account payee or at the time of payment of such income in cash or by issue of
cheque/draft or by any other whichever is earlier.
When tax is deductible at lower rate (Sec. 197)
Section of tax at source from commission or brokerage (Sec. 194H)
Section 194H has been inserted with effect from June 1, 2001.
1. Who is responsible for tax deduction – Any person (other than an individual or Hindu
undivided family) who is responsible for paying commission or brokerage to a resident
shall deduct tax.
2. When tax has to be deducted – Tax shall be deducted at the time of credit of such
income to the account of the payee or at the time of payment of such income in cash or by
the issue of a cheque, draft by any other mode, whichever is earlier. Where my income is
credited to any account, whether by ‘suspense account’ or by any other name, in the
books of account of the person liable to pay such income, such crediting shall be deemed
to be credit of such income to the account of the payee.
Permanent in excess of Rs. 2,500 is subject to tax deduction – No tax is deductible if the
amount of commission or brokerage paid/credited during the financial year does not exceed
Rs. 2,500.
Commission or brokerage as defined in section 194H – Commission or brokerage for this
purpose includes any payment (not being insurance commission referred to in section 196D)
received or receivable, directly or indirectly, by a person acting on behalf of another person
for services rendered (not being professional services) or for any services in the course of
buying or selling of goods or in relation to any transaction relating to any asset, valuable
article or thing, not being securities. The expressed services means services rendered by a
person in the course of carrying on a legal, medicine, architectural profession or the
profession of accountancy or technical consultancy such other profession as is notified by the
Board for the purposes of section 44AA representative, film artist, company secretary and
information technology.
Deduction of tax at source from Income by way of rent :
Who is responsible for tax deduction – Any person responsible for paying rent to a resident is
required to deduct tax at source provisions of section 194-I. For this purpose, payer himself
is treated as person responsible . If, however payer is a company, the company itself,
including the principal officer there responsible for paying rent.
When tax has to be deducted – The person responsible for paying rent should deduct. Tax
is to be deducted at source either :
a. at the time of credit of such income to the account of payee; or
b. at the time of payment thereof in cash or by issue of a cheque or draft or by any other
whichever is earlier.
Where any income by way of rent is credited to any account (whether called “Suspense
account other name) in the books of account of the person liable to pay such rent, such
crediting should be credit of such income to the account of the payee.
No tax is deductible if payment during a financial year does not exceed Rs. 1,20,000 – No tax
on the amount of rent credited/paid during the financial year does not exceed Rs. 1,20,000.
Rent is defined in Section 194-I – Explanation (i) to section 194-I defines rent as
‘Rent’ means any payment, by whatever name called, under any lease, sub-lease, tenant’s
agreement or arrangement for the use of (either separately or together) any, -
(a) land; or
(b) building (including factory building); or
(c) land appurtenant to a building (including factory building) or
(d) machinery
Tax deduction at source on fees for professional or technical services :
Section 194J has been inserted with effect from July 1, 1995.
Who is liable to deduct tax at source under section 194J – Any person, who is responsible for
deducing tax to a resident any sum by way of fees for professional services, or fees for
technical services (with effect from July 13, 2006) royalty shall deduct tax at source.
Deduction of tax at source from other sums :
A person responsible for making payment to a non-corporate non-resident assessee or other
than a domestic company, of any interest (other than interest on securities) or (not being
salary) is required, at the time of payment or at the time of credit to the account of payable,
payable account, or suspense account, or suspense account, or at the time of payment,
whichever is earlier. Moreover, tax is not deductible in respect of the credited by an offshore
banking unit on deposits made after March 31, 2005 by a non-resident.
When tax is deducted at lower rate or when no tax is deducted :
Procedure in case of remittance – The Department of Economic Affairs, Ministry of Finance
a press Note dated May 17, 1988 laying down the procedure for remittances to foreign
company way of royalty and fees for technical services under approved agreements. This
procedure is applicable where income-tax @ 30 percent from such payments is deducted and
paid into “designated” branch and this procedure the remitter has to furnish to the
‘designated’ bank details of payments in the prescribed certified by a chartered accountant
long with the income tax challan payment. On payment of remitter, the designated bank
would forward a certificate regarding such payment to the Resident of India. On receipt of
the certificate of payment of tax from the concerned bank, the Reserve effect would permit
the remittance of the balance without insisting on a ‘No Objection Certificate’ from the tax
authorities.
The Reserve Bank of India insists on the production of a ‘No Objection Certificate’ from the
authorities whenever there is a claim that the rates for deduction of tax at source is lower
percent in case of royalty or fees for technical services, or if the proposed remittance is in
respect of.
In order to simplify and to bring uniformity in the form of application to be made by the
remittance authorization to be issued. The Board has considered the issue of non-statutory
forms for such payee a copy of each of these forms. These new form used while applying for
authorization and for granting authorization under section 195. The form whom the
application for authorization is made will verify the claims in the light of the Income tax.
‘Double Taxation Avoidance Agreements’ and the specific facts of the transactions, before
authorization remittance.
Payments to foreign agents of Indian exporters – Where a non-resident agent operates
outside the country, no part of his income arises in India. Further, since the payment is
usually remitted directly abroad, it cannot be held to have been received by or on behalf of
the agent in India. Such payments are, therefore, not taxable in India. Consequently, no tax
is deductible at source under section 195 in such case – Circular No. 786, dated February 7,
2000.
Furnishing information about TDS under section 195 – Section 195 is applicable in
respect of payment to a non-resident or a foreign company. The person making the
remittance is required to furnish an undertaking (in duplicate) addressed to the Assessing
Officer accompanied by a chartered accountant in a specified format. This undertaking and
certificate is submitted to authorized dealers who in turn are required to forward a copy to the
Assessing Officer. The purpose of the undertaking and the certificate is to collect taxes at the
stage when and as it may not be possible to recover the tax at a later stage from the non-
residents.
From April 1, 2008, a system of e-filling of the information in the certificate and introduced.
The information will be submitted in the manner prescribed by the Board.
Deduction of tax at source from interest or dividend or other sums payable to Government or
certain corporation
No tax is required to be deducted at source from any sum payable to the Government. Bank
or a corporation established by or under a Central Act which is under any in force, exempt
from income-tax on its income, if such sum is payable by way of interest respect of any
securities or shares owned by it or in which it has full beneficial interest accruing or arising to
it.
Deduction of tax at source from Income of Mutual Fund (Sec. 196A) :
Tax is not deductible under section 196A from April 1, 2003.
Deduction of tax at source is respect of units referred to in section 115AB (Sec. 196)
Section 196B has been inserted with effect from October 1, 1991, is payable in respect of
units referred to in section 115AB to a person responsible for making the payment shall, at
the time of credit of such income payee at the time of payment thereof in cash or by the issue
prescribed or by any other mode, whichever is earlier, deduct income-tax thereon at the rate.
Deduction of tax at source from Income from foreign currency bonds (Sec. 196C) :
Section 196C has been inserted with effect from June 1, 1992. Under this section for paying
any income (including long-term capital gain) payable in respect of depository receipts
referred to in section 115AC to a non-resident shall deduct tax at the time of such income.
The deduction is required to be made either at the time of credit of account of the payee or at
the time of payment thereof in cash or of a cheque or draft or by any other mode, whichever
is earlier.
No tax is deductible from June 1, 1997 to March 31, 2002 and from April 1, 2003, in
referred to in section 115-O.
Deduction of tax from income of Foreign Institutional Investors from securities
(Sec. 196D) :
Section 196D has been inserted with effect from June 1, 1993, to provide that or for paying
any income in respect of securities referred to in section 115A. Institutional Investor shall
deduct tax thereon at the rate of 20 percent. The deduction in either at the time of credit of
such income to the account of the payee of payment thereof in cash or at the time of issue of a
cheque or draft or by any other income earlier. No deduction of tax is to be made from any
income by way of capital gains arises of such securities.
No tax is deductible from June 1, 1997 to March 31, 2002 and from April 1, 2003 in
referred to in section 115-O.
3) RESEARCH METHODOLOGY
3.1) Research Design
Research is an original contribution to the existing stock of knowledge. It is the pursuit of
truth with the help of study, observations and experiments. As such the term ‘Research’ refers
to the systematic method consisting of enunciating the problem formulating a hypothesis ,
collecting the facts or data, analyzing the facts and reaching certain conclusions either in the
form of solutions towards the concerned problem or in certain generalization for some
theoretical formulation. The Study in this research is an exploratory study which means
exploring of facts from the respondents. The objective of exploratory research is the
development of hypothesis is to test various aspects.
3.2) Sources of Data :
Data plays a vital role for the successful completion of any research. Since , every possible
source is needed to tap information required for the study of source i.e., primary sources have
been used in this research to collect data.
Primary Data :
Primary data is the data directly collected from the respondents by using any structured
methodology. The researcher can also collect primary data using a structured questionnaire..
3.3) Sampling Design :
A sample design is a definite plan for obtaining a sample design from a given population. It
refers to the technique or the procedure the researcher would adapt in selecting items for the
sample. Sampling design in this research includes the sampling method, sampling units, and
sampling size.
Sampling Technique :
For the purpose of sampling , convenience sampling is used which belongs to the category of
non-probability sampling.
Methods of Data Collection :
The data has been collected through personally administered questionnaire. The questionnaire
was prepared and supplied to the respondents. Direct interview method is also used to get
information from some respondents.
The research methodology used in this data collection was primary data using structured
questionnaire. The data was collected from different sources from companies. The companies
are
Armstrong International pvt ltd
Visteon Automative Systems ltd
Ford India Pvt ltd
Hyundai India Pvt ltd
3.4 TOOLS AND TECHNIQUES USED FOR DATA ANLAYSIS
Simple Percentage Analysis :
The percentage analysis is mainly used to standardize the respondents. This analysis is
carried out for all the questions given in the questionnaire , mainly to access , how the
respondents are distributed in each category.
Percentage analysis uses percentage to process the data. This method uses percentage simply
as a number, reducing them into “0-100” range through percentage.
Percentage= n\N*100
n= number of respondents assured
N= Total number of respondents.
Chi-Square Test :
The chi-square test was first used by Karl Pearson in the year 1980. The quantity chi-square
test describes the magnitude of the discrepancy between theory and observation.
4) REVIEW OF LITERATURE
The Administration :
It is often argued that TDS places a special burden on tax administration. However it is worth
nothing that TDS was introduced one of its effects was the rationalization and simplification
of the direct tax system and its administration. The consolidation and incorporation of
numerous direct tax would simplify the rate structure, tax base and administration of direct
tax system, thereby eliminating the overlapping practices that had plagued those systems.
It also means reduction in the number of forms used, legislation to be applied and returns and
accounts with the business person has to contend.
Business :
It is true that TDS is collected from large number of firms than under any form of tax or
single state sales tax to the typical smaller firms the complexities of the tax and the need for
extensive records are likely to prove serious. However it is often overlooked that business
already function with considerable administrative responsibility for a number of laws
including the National Insurance Act.
Under the Income-Tax Regulations of 1980 every person without exception is required to
maintain detailed and extensive records of all its transactions. Compliance with this will
certainly ensure compliance with TDS regulations, and since there is an incentive for proper
record-keeping.
The seminal work on the subject of taxation and development was done by Burgess and
Stern (1993), who reviewed previous literature and presented what is still, 13 years later,
regarded as conventional wisdom.
The role of direct taxation in developing countries is much more limited. In contrast to
developed countries where taxation on personal income and social security contributions
raise two thirds of the total tax revenue, a narrow tax base and high enforcement costs render
direct taxation impractical for developing countries. The income tax base is mostly comprised
of wages of employees in the public sector, because all other taxpayers are self-employed or
small businesses who evade paying all, or most, of the income tax. In addition, taxation of
personal capital income is easily evaded.
Taxing the income of corporations, on the other hand, provides developing countries with a
large share of their total tax revenue (estimated in 1993 to be close to a third), compared to
only a small share, around 10%, in developed countries. Taxing large corporations does not
involve 20-Dec-06] significant administrative and compliance costs, because they are per
force required to comply with statutory accounting requirements.
Margalioth (2003) suggests that maintaining high corporate income tax rates may come at a
high cost in terms of economic growth as corporate tax rates affect FDI location, and FDI
may have significant spillover effects.
Non-tax revenue in developing countries comprised about 21% of GDP compared to 10% in
developed countries. These are aggregate figures and substantial variation exists across
countries.
The overall proportion of government expenditure of the GDP is higher in developed than
developing countries.3 This situation not necessarily optimal, because a greater need exists
for government intervention in developing countries, e.g. for building infrastructure and
education, than in developed countries. On the other hand, the costs of corruption,
administration and compliance are much greater in developing countries; hence, the outcome
of this trade-off is unclear.
The share of non-tax revenue of total revenue is, on average, larger for developing countries
than developed countries.4 Nevertheless, the main source of government revenue in
developing countries, taken as a whole, is the tax system, which is the focus of this short
paper.
The structure of taxation in developing countries is radically different from that of developed
countries. About two thirds of the tax revenue in developed countries is obtained from direct
taxes, mostly personal income tax and social security contributions. The remaining one-third
comes primarily from domestic sales tax. The situation is exactly reversed in developing
countries: about two-thirds of the tax revenue comes from indirect taxes, mostly VAT, sales
tax, excises and taxes on trade. The remaining one-third consists largely of corporate income
tax.
5) Limitations of study
Any research study will be restricted in scope by certain inherent limitations that are
participated by the choice of the research design, sampling procedure and respondent
selection. This study has following limitations
Even though the survey was conducted among the individuals of firms that are attracted
by TDS, the research may not reflect the real opinion of all the firms.
Because of time constraints, the sample size is restricted to 50 which may not reflect the
opinion of the entire population.
Since the study was restricted to individuals of firms that are attracted by TDS, majority
of findings are applicable only to those firms and cannot be generalized.
The samples may behave or give opinion differently at different times because of their
psychological temperament. This will affect survey.
6. DATA ANALYSIS
1) Analysis of awareness in age wise.
Age Respondent Percentage
20-40 25 75
40-60 11 15
60 and above 14 10
Inference
It has been seen that majority (75%) of the respondents are in the age of 20-40 age. The next
is (15%) of the respondents are in the age of 40-60) age. The next is (10%) of the respondents
are in the age of 60and above.
2) Analysis of awareness in Occupation
Occupation No.of respondents Percentage
Salaried 39 78
Self-Employed 11 22
Inference
It has been seen that most of the respondents of my research are salaried persons and they are
really TDS dealers.
3) Analysis awareness of charges in TDS
Response No.of respondents Percentage
Yes 47 74
No 3 6
Inference
Majority 94% of the respondents said that they know TDS is charged on their salary/
Remuneration. While 6% of the respondents do not know. It has been seen that there is good
awareness of TDS among respondents.
4) Analysis of awareness of calculation of TDS
Response No.of respondents Percentage
Yes 34 66
No 16 32
Inference
Majority 68% of the respondents said that they know to calculate TDS on their salary/
Remuneration. While 32% of the respondents do not know. It has been seen that most of the
respondents know to calculate TDS on their salary/ Remuneration.
5) Analysis of awareness of TDS refundable schemes
Response No.of responses Percentage
Yes 33 66
No 17 34
Inference
Majority 66% of the respondents said that they know TDS refundable schemes.
Remuneration. While 34% of the respondents do not know.
6) Analysis of awareness of process of TDS reimbursement
Response No.of Respondents Percentage
Yes 29 58
No 21 42
Inference
58% of the respondents said that they process of TDS reimbursement schemes. While 42% of
the respondents do not know.
7) Analysis of awareness about time of reimbursement of paid TDS
Response No.of Respondents Percentage
Yes 36 72
No 14 28
Inference
72% of the respondents said that they get reimbursement TDS duly.. While 28% of the
respondents do not know.
8) Analysis of awareness about reimbursement of TDS
Response No.of Respondents Percentage
Self 18 36
Through Lawyer 12 24
Through Agency 5 10
Others 15 30
Inference
36% of the respondents said that they are aware about reimbursement through self. The next
24% of the respondents said that they are aware about reimbursement through lawyer. While
next10% of the respondents said that they are aware about reimbursement through agency.
While the next (30%) through others.
9) Analysis of difficulties about reimbursement of TDS
Response No.of respondents Percentage
Delayed by tax department 25 50
Tax planning programme 13 26
Problem related to tax exemption 7 14
Others 5 10
Inference
50% of the respondents said that there are difficulties in delays by tax department. The next
26% of the respondents said that there are difficulties in tax planning programme. While the
next 14% of the respondents said that there are difficulties in problem relating to tax
exemption. While the next 10% of the respondents said that there are difficulties in other
problems.
10) Analysis of mode of TDS
Response No.of respondents Percentage
Monthly 25 50
Annually 25 50
Inference
50% of the respondents said that the mode of payment of TDS is monthly. While the next
50% of the respondents said that the mode of payment of TDS is annually.
6.2 CHI-SQUARE ANALYSIS
1. RESPONDENTS AGE VS RESPONDENTS OCCUPATION
Hypothesis
Null Hypothesis- H0- There is no significant relationship between Respondents Age and
Respondents Occupation
Alternative hypothesis-HA- There is significant relationship between Respondents Age and
Respondents Occupation
Respondents Age
Observed N Expected N Residual
20-40 7 8.3 -1.3
40-60 8 8.3 -.3
60 and above 10 8.3 1.7
Total 25
Respondents Occupation
Observed N Expected N Residual
Salaried 9 12.5 -3.5
Self-Employment 16 12.5 3.5
Total 25
Test Statistics
Respondents Age Respondents Occupation
Chi-Square .560a 1.960b
df 2 1
Asymp. Sig. .756 .162
a. 0 cells (.0%) have expected frequencies less than 5. The
minimum expected cell frequency is 8.3.
b. 0 cells (.0%) have expected frequencies less than 5. The
minimum expected cell frequency is 12.5.
Inference
Since the calculated value is less than table value Null hypothesis is accepted. Therefore is no
significant relationship between Respondents Age and Respondents Occupation.
2. Respondents awareness calculation of TDS VS Respondents Awareness of
refundable schemes
Hypothesis
Null Hypothesis- H0- There is no significant relationship between Respondents awareness calculation of TDS and Respondents awareness of refundable schemes
Alternative hypothesis-HA- There is significant relationship between Respondents awareness
calculation of TDS and Respondents awareness of refundable schemes
Analysis of calculation of TDS
Observed N Expected N Residual
Yes 10 12.5 -2.5
No 15 12.5 2.5
Total 25
Awareness of TDS Refundable Schemes
Observed N Expected N Residual
Yes 16 12.5 3.5
No 9 12.5 -3.5
Total 25
Test Statistics
Analysis of calculation of TDS Awareness of TDS Refundable Schemes
Chi-Square 1.000a 1.960a
df 1 1
Asymp. Sig. .317 .162
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 12.5.
Inference
Since the calculated value is less than table value Null hypothesis is accepted. Therefore is no
significant relationship between Respondents Respondents awareness calculation of TDS and
Respondents awareness of refundable schemes.
3. Analysis awareness of TDS Reimbursement VS Analysis of difficulties in
Reimbursement
Hypothesis
Null Hypothesis- H0- There is no significant relationship between Respondents awareness of
TDS Reimbursement and Respondents awareness of difficulties in Reimbursement
Alternative hypothesis-HA- There is significant relationship between Respondents
awareness of TDS Reimbursement and Respondents awareness of difficulties in
Reimbursement
Reimbursement of TDS
Observed N Expected N ResidualSelf 10 6.2 3.8
Through Lawyer 5 6.2 -1.2Through Agency 5 6.2 -1.2
Others 5 6.2 -1.2Total 25
Reimbursement Difficulties
Observed N Expected N ResidualDelayed by tax department 4 6.2 -2.2
Tax planning problem 5 6.2 -1.2Problem related to tax
exemptions 11 6.2 4.8
Others 5 6.2 -1.2Total 25
Test Statistics
Reimbursement of TDS Reimbursement DifficultiesChi-Square 3.000a 4.920a
df 3 3Asymp. Sig. .392 .178
a. 0 cells (.0%) have expected frequencies less than 5. The minimum expected cell frequency is 6.3.
Inference
Since the calculated value is less than table value Null hypothesis is accepted. Therefore is no
significant relationship between Respondents awareness of TDS Reimbursement and
Respondents awareness of Reimbursement difficulties.
Findings
There is good awareness among respondents in TDS.
Most of respondents know how to calculate TDS on their salary / remuneration.
66% of respondents know TDS refundable schemes but 34% of respondents do not know
the TDS refundable scheme due to which they have to face problem.
58% of respondents know process of TDS reimbursement while 42% do not know which
is very huge number.
72% of respondents said that they get reimbursed their TDS duly while 28% of
respondents do not.
36% of respondents said that they get reimbursed of their paid TDS by themselves. 24%
of the respondents said that they get reimbursed of their paid TDS, through lawyer. 10%
of respondents said that they get reimbursed of their paid TDS through agency. While
30% of respondents said that they get reimbursed of their paid TDS by other sources.
50% of respondents said that they have to face the difficulties of delayed by tax dept.
while refund their TDS. 26% of respondents said that they have to face tax planning
problem that how can they save their amount from TDS. 14% of respondents said that
they do not know the tax exemption schemes that how can they claim for exemption
regarding reimbursement of paid TDS. While 10% of the respondents said that they have
to face problem apart from this.
50% of respondents said that made of TDS on their salary charged by their own employer
is annually. While 50% of respondents said that mode of TDS on their salary charged by
their own employer is monthly.
Suggestions
32% of respondents do not know how to calculate TDS, so there is need to make them
more aware by publishing method of TDS.
The respondents do not know the refundable schemes of paid TDS, so they have to face
the problem related to tax planning & exemption.
Due to this problem they have to take help from agencies & lawyers to get reimbursed
their TDS duly. So there is need to make them aware.
Tax slab should be increased.
Conclusion
It has been seen that there is good awareness of TDS among respondents. Yes there is need
to make more aware. The people can invest their money in different securities to save their
taxes. Through taxes, Government perform many development activities. Due to tax people
do not disclose their income. Hence, it is very vital to make all the persons earning the
taxable income pay the Tax. But, the best way to make them pay is to deduct tax at source.
PRIMARY DATA COLLECTION SCHEDULE
1) Your (Employees) age level
20 – 40 years 40 – 60 years Above 60 years
2) Your occupation type
Salaried Self employed
3) Your nature of charges of TDS
Yes No
4) Your awareness of calculation of TDS
Yes No
5) Your awareness of TDS refundable schemes
Yes No
6) Your awareness of process of TDS reimbursement
Yes No
7) Your awareness of time of reimbursement of paid TDS
Yes No
8) Your awareness of reimbursement of TDS
Self Through lawyer Through Agency Others
9) Your awareness in difficulties of reimbursement in TDS
Delayed by Tax Department Tax Planning Problem
Problem related to Tax Exemptions Others
10) Your awareness of mode of TDS
Monthly Annually
Bibliography
Singhonia, Vinod. K., Kapil Direct Taxes law & practice
Goyal S.P. Tax Planning & Management
Websites
http://www.taxmanagementindia.com
http://www.incometaxindia.gov.in