Planning your taxes for the upcoming financial year (FY) 2024-25? The Income Tax Department has opened its TRACES portal for applications seeking lower or nil Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) deductions. This is a golden opportunity for taxpayers anticipating a lower tax liability in FY 2024-25.
What is TDS/TCS and Why Lower It?
TDS and TCS are advance taxes deducted by the payer (deductor) at the source of certain payments, like salaries, interest income, rent, and professional fees. This deducted amount is then deposited to the government on behalf of the taxpayer. While it simplifies tax filing, a higher TDS/TCS can significantly impact your cash flow, especially if your final tax liability is lower than the deducted amount.
Applying for Lower or Nil TDS/TCS on TRACES
By filing an application through the TRACES portal, you can request the deductor to withhold a smaller amount of TDS/TCS or even none at all. This helps bridge the gap between the deducted tax and your actual tax liability, improving your cash flow throughout the year.
Here’s a quick guide to applying for lower or nil TDS/TCS on TRACES:
- Eligible Forms:
- Form 13: Applicable for claiming lower or nil deduction of TDS on payments like interest on securities, dividends, and rent from property.
- Form 15E: Applicable for claiming lower or nil deduction of TCS on payments like professional fees, rent paid to companies, and payments made for plying goods or carriages.
- Application Window: The application window for FY 2024-25 opened on February 28, 2024.
- Important Note: The deadline to apply for lower or nil deduction for FY 2023-24 is March 15, 2024. Don’t miss out!
Who Should Apply?
Consider applying if you fall under any of these categories:
- Individuals with significant investments: If you have a healthy investment portfolio generating substantial income, your TDS might be higher than your actual tax liability.
- Senior citizens: Senior citizens often have lower tax liabilities due to various exemptions. Applying for lower TDS can ensure they have access to their income throughout the year.
- Freelancers and professionals: If your income is variable or you have significant business expenses, your TDS might be excessive compared to your final tax liability.
Additional Tips for Streamlining Your Tax Payments:
- Estimate your tax liability: Use online tax calculators or consult a tax advisor to estimate your tax liability for FY 2024-25. This will help you determine the appropriate amount of TDS/TCS reduction to apply for.
- Submit complete and accurate information: Ensure your application on the TRACES portal is complete and contains accurate information. Any discrepancies can delay processing and potentially lead to unnecessary tax deductions.
- Stay informed: Keep yourself updated on any changes or deadlines related to tax filing and deductions. The Income Tax Department website and official communication channels are reliable sources for such information.
By strategically applying for lower or nil TDS/TCS on TRACES, you can optimize your cash flow and avoid unnecessary deductions impacting your financial planning for FY 2024-25. Remember, consulting a tax advisor can provide valuable guidance tailored to your specific circumstances.