TDS- Tax Deducted At Source means collecting income tax in India, under the Tax Act, 1961. It is a system to collect tax from the very source of income. An employee who is liable to make payment to any other person shall deduct tax at source and deposit it to the account of the Central Government through any of the designated branches of banks authorized by the Government Of India.
Taxes are begun at the source at already established rates. This suggests that instead of deducting the taxes from income afterward, the Govt. chooses to subtract the taxes upfront from the source itself. This is considered with TDS returns containing details of the Deductee(s) and challan details relating to the deposit of tax to ITD.
The deduction rate of TDS is considered between 10% to 30%, which is obligatory for the tax category in which the income of a person lies. TDS facilitates backtracking evasion. Moreover, within the TDS system, the taxpayer doesn’t have to reimburse a lump sum amount as an annual tax at the end of the financial year. When a corporation makes a payment to another company for its services, it first deducts TDS from the payment and then pays the remaining amount to the other company.
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