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As per the applicable
provisions of the Income Tax Act' 1961, though regular assessments are
made in respect of any income in later assessment year, but the
assessee has to pay the tax in the following two ways:
- Tax Deduction at Source/ Tax Collection at Source:
In case of certain income, tax is deducted at source by the payer at
the prescribed rates either at the point of accrual or payment of such
income. On same lines tax is collected at source by the seller from
buyer/ licensee/ lessee at the time of debiting the amount to the
account of such buyer/ licensee/ lessee or the receipt of the payment
whichever is earlier.
Advance Tax
The assessee in certain cases is under an obligation to make payment
of advance tax , in certain installments.
Such taxes deducted/ collected or paid as advance tax in the previous
year itself are known as prepaid taxes and are consequently deductible
from the total tax due from the assessee.
A Tax Deduction or a Tax-Deductible
expense has the primary function to reduce ones taxable income. Since
taxes constitute a part of the taxable income earned by individuals,
tax deductions can reduce the taxable income and offer a certain
amount of tax relief.
With this, their taxable income falls
to a great extent and the pains of paying tax at a time on total
income earned is evenly distributed over the relevant previous year in
the same manner as if one is paying a form of advance tax to the Govt.
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