TDS stands for ‘Tax Deducted at Source’. It was introduced to collect tax at the source from where an individual’s income is generated.
Tax Deducted at Source, known commonly as TDS refers to the system launched by the Income Tax Department. It is one of the modes of tax collection. Through this system, the individual/company responsible for making specific payments is liable to deduct a specific percentage of tax, before making the full payment to the receiver, for instance salary, rent, interest, professional fees or commission. The amount that is deducted is directly credited to the government’s account.
TDS facilitates the sharing of the tax collection responsibility between the deductor and the government, ensuring a regular inflow of cash to the latter.
TDS enables salaried individuals to pay taxes in easy instalments each month, thus preventing them from the burden of lump sum tax payments
TDS follows the “pay as your earn” concept
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