TDS Provisions on Pension Payments

TDS is the best medium of collecting tax from the citizens without much of hassles, as the responsibility to deduct tax is not on the government, but on citizen-payers. Tax department accords a lot of importance to TDS as a source of generating revenue and to administering the TDS provisions more vigorously. That is why several different payments and virtually all persons (barring the exception of non-tax audit Individuals & HUF) making such payments have been covered within the ambit of TDS provisions and the scope for the same is being increased day after day.

After the implementation of Sixth Pay Commission recommendations, substantial arrears were paid to the pensioners through nationalized banks. Because of which, several pensioners who hitherto having income less than exemption limit may now be subjected to tax during this year as well as in future years due to increase in the monthly pension amounts. While conducting concurrent audit of banks, the issue of applicability of TDS provisions on such pension payments came up for consideration.

Ref: Clubindia Article.