Dimapur, May 16 : The coincidence is comical as much as it is tragic: for a state like Nagaland where extortion is a common norm, legal taxes such as the government’s Income Tax and TDS (tax deducted at source) aren’t even paid as much as to extortion demands from undergrounds and money-minded civil organizations alike.
This new disclosure was made during a daylong training on income tax and TDS conducted by the Finance department, School Education department and the directorate of Income Tax of Guwahati on May 16 at the NBCC convention hall in Kohima town.
Highlighting on the importance of income tax and TDS, as per the provisions of section 80 CCD of the Income Tax Act, 1961, each individual employed by the central or state government are bound to pay their income tax by law. It is a “national law,” according to a DIPR report, “which every individual employee requires to pay on monthly basis.”
Currently, Assam stands first in the list of income tax payers while Meghalaya stands second. Nagaland is at the 6th.
Nagaland has the lowest mark in tax collection for the possible reasons:
• Lack of information and education about Income Tax.
• Non TDS/TCS on eligible payment on the table percentage of exemption
• Indifference to income tax law, assuming total tax exemption
• Lack of business class among tribal population
• Less initiative of tax authority keeping in view the large percentage of tribal population who are assumed exempted from paying Income Tax.
The program also highlighted the TDS. TDS is a means of indirect tax collection by government authorities according to the Income Tax Act of 1961. The TDS is managed by the Central Board of Direct Taxes which comes under the Indian Revenue service (IRS). TDS is collected as a means to keep a stable revenue source for the government throughout the year, while preventing people from avoiding taxes.
In view of the importance of tax, more DDOs will be appointed in all the departments and provide assistance in the form of chartered accountants to help in filling income tax.
The team leader and resource person for the training were Joint Commissioner NG Joseph Gangti, and OSD for the Finance department V. Kezo.
Income tax
Income Tax is the annual charge levied on both earned income (wages, salaries, commission) and unearned income (dividends, interest, rents). In addition to financing a government’s operations, progressive income taxation is designed to distribute wealth more evenly in a population, and to serve as automatic fiscal stabilizer to cushion the effects of economic cycles. Its two basic types are (1) Personal income tax, levied on incomes of individuals, households, partnerships, and sole-proprietorships; and (2) Corporation income tax, levied on profits (net earnings) of incorporated firms.
Tax Deducted at Source
Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits. The ‘Assessee’ is also required to file quarterly return to CBDT. Returns states the TDS deducted & paid to government during the Quarter to which it relates.
The provisions related to TDS are governed by the Income Tax Act of 1961. The law states that any permissible payment shall be paid after deducting prescribed percentage as tax – usually over a range of 1% to 10%.
The individual who receives the payment net of TDS (also known as the Assesse) is required to file return stating the TDS deducted and paid to government during over the relevant period.