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By:

Kaustubh Kale

10 September 2024 at 6:07:15 pm

Family Finance Diary

Most people work hard to create wealth. They invest in bank deposits, mutual funds, stocks, insurance policies, real estate, gold, bonds and other assets. But one important question is often ignored: does your family know about all this? This question has become even more important today. Recently, our Prime Minister Narendra Modi highlighted that Indian banks are holding around Rs. 78,000 crore of unclaimed deposits, insurance companies have nearly Rs. 14,000 crore lying unclaimed, mutual...

Family Finance Diary

Most people work hard to create wealth. They invest in bank deposits, mutual funds, stocks, insurance policies, real estate, gold, bonds and other assets. But one important question is often ignored: does your family know about all this? This question has become even more important today. Recently, our Prime Minister Narendra Modi highlighted that Indian banks are holding around Rs. 78,000 crore of unclaimed deposits, insurance companies have nearly Rs. 14,000 crore lying unclaimed, mutual fund companies have around Rs. 3,000 crore, and dividends worth around Rs. 9,000 crore are also unclaimed. The government’s “Your Money, Your Right” initiative was launched to help citizens trace and claim such forgotten financial assets. These numbers tell us something very important. Many families do not lose money because of bad investments. They lose access to money because investments are scattered, undocumented or unknown to the next generation. Easy to Locate Personal finance is not only about creating wealth. It is also about ensuring that your family can locate, understand and access that wealth when required. Every family should maintain one proper financial book. Not just a password-protected file on a laptop. Not just a folder in email. Not just a WhatsApp message. Technology can fail. Phones can get locked. Passwords can be forgotten. Emails can become difficult to search. Excel sheets, links and soft copies can have multiple versions. During difficult times, the family should not be confused about which file is the latest and where to find what. Hardcopy Book A simple hardcopy book with proper pages, sections and annexures can become extremely useful. This book should give a bird’s eye view of your complete financial life. It should mention your bank accounts, fixed deposits, mutual funds, demat accounts, insurance policies, loans, property details, gold holdings, important documents, nominations and advisor contacts. Wherever necessary, annexures can be attached for policy copies, account statements, property papers and other important records. The idea is to create a clear roadmap for the family. They should know what exists, where it exists and whom to contact. Liabilities, Nominations Your family should also know about your liabilities. Home loans, business loans, credit card dues, personal loans or guarantees given should be clearly recorded. Wealth planning is incomplete without liability awareness. Nominations must also be checked and updated across all investments. Many people assume that old nominations are still correct, but life changes. NRI Families This becomes even more important when children live abroad. Many families today have NRI children who may not know which bank their parents use, where the property documents are kept, who the financial advisor is, or whether any old insurance policy exists. In such situations, one well-maintained financial book can save the family from confusion, delays and unnecessary stress. Regular Review Finally, review this financial book once or twice a year. Updating it is as important as creating it. A good financial plan should not only grow your money. It should also make sure that your family can find it, claim it and use it. Wealth should not become a mystery after you. It should become security, clarity and peace of mind for the people who matter most. (The author is Chartered Accountant and CFA (USA). Financial advisor. Vies personal. He could be reached on 9833133605)

TDS: The Silent Engine of India’s Tax System

By collecting tax at the point where income is generated, TDS reduces dependence on year-end filings and strengthens the tax system.

Tax Deducted at Source (TDS) has quietly transformed the way India collects taxes. Once seen mainly as a compliance requirement, it has become a key instrument of fiscal discipline and transparency. By collecting tax at the point where income is generated, TDS reduces dependence on year-end filings and strengthens the tax system.


Governed by the Income-tax Act, 1961, TDS applies to salaries, interest, rent, commissions and professional fees. Over time, it has evolved into a system that not only ensures timely revenue but also promotes wider accountability among taxpayers.


How TDS Works

At its core, TDS shifts the responsibility of tax collection from the taxpayer to the payer. Whether it is an employer deducting tax on salaries or a company paying professional fees, tax is withheld before the income reaches the recipient.


This simple mechanism ensures that tax is collected at the earliest stage, significantly reducing the chances of revenue leakage.


Revenue Lifeline

One of the most significant contributions of TDS is its ability to provide a steady and predictable stream of revenue. Instead of relying solely on annual tax returns, the government receives funds throughout the year.


This continuous inflow supports critical expenditures such as infrastructure, public services, and welfare schemes—ensuring that governance does not slow down due to cash flow constraints.


TDS has emerged as a strong deterrent against tax evasion. Since tax is deducted before income is received, the scope for concealment is drastically reduced.


Moreover, digital tools like Form 26AS and the Annual Information Statement (AIS) create a transparent financial trail. Any mismatch between reported income and tax credits is easily flagged, pushing taxpayers toward honest reporting.


Smarter TDS

In recent years, the government has moved to make TDS simpler, smarter and more technology-driven. Threshold limits have been raised to reduce the compliance burden on small taxpayers and businesses, while redundant provisions are being streamlined to improve efficiency.


The tax base has also widened, with TDS now extending to certain payments made by partnership firms to partners. At the same time, overlapping provisions such as TCS on goods, where TDS already applies, are being removed to avoid duplication and reduce confusion.


Further measures, including easier procedures for NRI property transactions and greater standardisation in TDS/TCS enforcement, aim to cut litigation and improve consistency. Automated systems for NIL or lower deduction certificates, along with centralised submission of forms such as 15G and 15H, are also making compliance faster and more transparent.


These reforms reflect a clear shift—from a control-based system to a more facilitation-driven tax regime.


The success of TDS today is deeply linked with technology. Platforms such as TRACES and the income tax portal have made it easier to track deductions in real time, download TDS certificates and file and revise returns digitally.


Recent rules have also tightened timelines—for example, correction statements now have defined deadlines to ensure accuracy in reporting and avoid mismatches in AIS and Form 26AS.


TDS is not just a collection mechanism—it is a behavioural tool. Since income details are already captured in government systems, taxpayers are encouraged to report accurately.


This has gradually led to a cultural shift where compliance is increasingly seen as the norm rather than the exception.


Persistent Challenges

Despite its strengths, the TDS system is not without problems. Multiple sections and varying rates make it complex to navigate, especially for small businesses. Errors in deduction and reporting are still frequent, while delays in issuing certificates often add to taxpayer frustration.


However, the government’s continued focus on simplification and digitisation is steadily addressing these concerns.


TDS has become one of the most effective tools in India’s tax administration. It ensures early tax collection, curbs evasion, and adds transparency to the system.


Recent reforms show the government’s intent to make TDS not just stricter but smarter and more taxpayer-friendly. As India moves towards a more digital, data-driven economy, TDS will continue to play a key role in strengthening fiscal stability.


In many ways, TDS is no longer just a tax mechanism—it has become the backbone of a more accountable and efficient tax system.


(The writer is a Chartered Accountant based in Thane. Views personal.)

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