Glossary · Income Tax
TDS
Tax Deducted at Source — tax withheld by the payer at the time of making specified payments such as salary, rent, interest, and professional fees.
TDS is collected under Sections 192 to 195 of the Income Tax Act. The deductor must deduct tax at the prescribed rate before crediting the payment, deposit it with the government by the 7th of the following month, and file a quarterly TDS return in Form 24Q, 26Q, or 27Q. Failure to deduct or deposit attracts interest under Sections 201 and 220, plus penalty and prosecution. TDS credit appears in Form 26AS and AIS of the deductee.
Examples
An employer paying a salary of ₹60,000 a month deducts TDS based on the employee's slab rate and deposits it with the government each month.