Tax Deducted at Source (TDS) is a mechanism implemented by the Indian government to collect taxes directly from the source of income. It is a means of ensuring that taxes are deducted at the time of payment itself, rather than relying solely on the taxpayer’s self-assessment and payment.<\/p>\n
Applicable to various incomes – TDS is applicable to a wide range of income categories, including salaries, interest on fixed deposits, rent, commissions, contractor payments, professional fees, etc.<\/p>\n
Deduction at prescribed rates – TDS is deducted at rates prescribed by the tax department, which may vary depending on the nature of the payment and the relevant provisions of the Income Tax Act.<\/p>\n
Roles of deductor and deductee – The entity or person responsible for making the payment after deducting TDS is known as the deductor. The entity or person receiving the payment is referred to as the deductee.<\/p>\n
Responsibility of the deductor – It is the duty of the deductor to deduct the applicable TDS amount from the payment before remitting it to the deductee. The deductor must also issue a TDS certificate to the deductee as proof of the tax deduction.<\/p>\n
Linkage to PAN – TDS deductions are linked to the Permanent Account Number (PAN) of both the deductor and the deductee. This ensures proper tracking and documentation of the deductions made.<\/p>\n
Compliance and reporting – The deductor is required to file regular TDS returns with the tax department, providing details of the TDS deductions made during a specific period.<\/p>\n
Credit for deductee – The amount deducted as TDS is credited to the tax account of the deductee, which can be adjusted against their overall tax liability when filing their income tax return.<\/p>\n
Preventing tax evasion – TDS serves as a preventive measure against tax evasion by collecting tax directly at the time of payment, thereby ensuring a steady flow of revenue to the government.<\/p>\n
Tax Deducted at Source (TDS) is a mechanism implemented by the Indian government to collect taxes directly from the source of income. It is a means of ensuring that taxes are deducted at the time of payment itself, rather than relying solely on the taxpayer’s self-assessment and payment. Key points relating to TDS Applicable to […]<\/p>\n","protected":false},"author":30,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[24],"tags":[],"class_list":["post-4596","post","type-post","status-publish","format-standard","hentry","category-taxes"],"_links":{"self":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts\/4596","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/users\/30"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/comments?post=4596"}],"version-history":[{"count":0,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/posts\/4596\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/media?parent=4596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/categories?post=4596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fisdom.com\/glossary\/wp-json\/wp\/v2\/tags?post=4596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}