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. JOSEPHS COLLEGE OF ENGINEERING, CHENNAI ANNA 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. JOSEPHS COLLEGE OF ENGINEERING, CHENNAI ANNA UNIVERSITY

CHENNAI 600 025

AUGUST 2010 ST.JOSEPHS COLLEGE OF ENGINEERING

(Affiliated to Anna University)

JEPPIAR EDUCATIONAL TRUST JEPPIAR NAGAR ,OLD MAMALLAPURAM ROAD, CHENNAI-119

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 Dr. P. VASANTHALAKSHMI B.Sc., M.B.A., PhD.,

INTERNAL GUIDE

SIGNATURE DR.JAYASHREE KRISHNAN B.Sc., M.B.A., PhD.,

HEAD OF THE DEPARTMENT

Department of Management Studies St.Josephs college of Engineering Rajiv Gandhi Road Chennai-600 119.

Department of Management Studies St.Josephs college of Engineering Rajiv Gandhi Road Chennai-600 119.

DECLARATION

I R.NANDHAKUMAR student of DEPARTMENT OF MANAGEMENT STUDIES, ST.JOSEPHS 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.JOSEPHS COLLEGE OF ENGINEERING esteemed college My sincere thanks and profound sense of gratitude goes to respected for having provided me an opportunity to do my master degree in their

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. 1 INTRODUCTION

PARTICULARS

PAGE NO.

1.1 Need for study 1.2 Scope of the study 1.3 Company profile 1.4 Product profile 2 3 4 OBJECTIVES OF THE STUDY INTRODUCTION TO TDS RESEARCH METHODOLOGY 4.1 Research Design 4.2 Sources of Data 4.3 Sampling Design 4.4 Tools and Techniques used 4 5 6 7 8 9 10 REVIEW OF LITERATURE LIMITATIONS OF THE STUDY ANALYSIS AND INTERPRETATION FINDINGS SUGGESTIONS CONCLUSION ANNEXURE Questionnaire BIBLIOGRAPHY 43 44 24 26 27 40 41 42 21 9 10 7

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 subproblem 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 CO 2 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 OVERVIEW Introduction 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 Ministers 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 Ministers National Relief Fund, the Prime Ministers Armenia Earthquake Relief Fund, Africa (Public Contributions India) Fund, the National Foundation for Communal Harmony, Prime Ministers 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 Ministers Cyclone Relief Fund, 1996, National illness Assistance Fund, Chief Minister/Lieutenant Governors 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 194CWhen 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 nonresident 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, tenants agreement or arrangement for the use of (either separately or together) any, (a) (b) (c) (d) land; or building (including factory building); or land appurtenant to a building (including factory building) or 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 nonresidents. 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 20-40 40-60 60 and above

Respondent 25 11 14

Percentage 75 15 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 Salaried Self-Employed

No.of respondents 39 11

Percentage 78 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 Yes No

No.of respondents 47 3

Percentage 74 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 Yes No

No.of respondents 34 16

Percentage 66 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 Yes No

No.of responses 33 17

Percentage 66 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 Yes No

No.of Respondents 29 21

Percentage 58 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 Yes No

No.of Respondents 36 14

Percentage 72 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 Self Through Lawyer Through Agency Others

No.of Respondents 18 12 5 15

Percentage 36 24 10 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 Delayed by tax department Tax planning programme Problem related to tax exemption Others

No.of respondents 25 13 7 5

Percentage 50 26 14 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 Monthly Annually

No.of respondents 25 25

Percentage 50 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 20-40 40-60 60 and above Total 7 8 10 25 Expected N 8.3 8.3 8.3 Residual -1.3 -.3 1.7

Respondents Occupation Observed N Salaried Self-Employment Total 9 16 25 Expected N 12.5 12.5 Residual -3.5 3.5

Test Statistics Respondents Age Chi-Square df Asymp. Sig. .560a 2 .756 Respondents Occupation 1.960b 1 .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 refundable schemes Hypothesis Null Hypothesis- H0- There is no significant relationship between Respondents awareness calculation of TDS and Respondents awareness of refundable schemes

of

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 Yes No Total 10 15 25 Expected N 12.5 12.5 Residual -2.5 2.5

Awareness of TDS Refundable Schemes Observed N Yes No Total 16 9 25 Expected N 12.5 12.5 Residual 3.5 -3.5

Test Statistics Analysis of calculation of TDS Chi-Square df Asymp. Sig. 1.000a 1 .317 Awareness of TDS Refundable Schemes 1.960a 1 .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 Self Through Lawyer Through Agency Others Total 10 5 5 5 25 Reimbursement Difficulties Observed N Delayed by tax department Tax planning problem Problem related to tax exemptions Others Total 4 5 11 5 25 Test Statistics Reimbursement of TDS Chi-Square df Asymp. Sig. 3.000 3 .392
a

Expected N 6.2 6.2 6.2 6.2

Residual 3.8 -1.2 -1.2 -1.2

Expected N 6.2 6.2 6.2 6.2

Residual -2.2 -1.2 4.8 -1.2

Reimbursement Difficulties 4.920a 3 .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 Problem related to Tax Exemptions Tax Planning Problem 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