Tax Deducted at Source (TDS) is one of the most significant tools of the Indian tax system. It’s a mechanism where tax is collected at the source of income—ensuring timely and steady revenue for the government while promoting tax compliance across all sectors.

Whether you’re salaried, a freelancer, or a business owner—TDS plays a crucial role in your financial transactions.

🔍 What Is TDS?

TDS is a system where a person (deductor) who is liable to make a payment of specified nature to any other person (deductee) deducts tax at the source and deposits it with the government.

💼 Common Transactions Where TDS Applies:

• Salaries

• Interest from banks

• Rent payments

• Commission or brokerage

• Professional fees

• Contract payments

• Purchase of immovable property

🎯 Why TDS Exists:

✅ Ensures a regular inflow of tax revenue
✅ Reduces the burden of year-end tax payments
✅ Brings more transactions into the tax net
✅ Discourages tax evasion
✅ Helps in early collection of government dues

📝 TDS Rates & Thresholds:

TDS rates vary based on the nature of the payment and the recipient’s status (individual, firm, company). Threshold limits apply—beyond which TDS becomes applicable.

📌 Key Points to Remember:

✔ Always collect your TDS certificate (Form 16/16A)
✔ Check Form 26AS regularly for TDS credits
✔ File your Income Tax Return (ITR) to claim refunds (if excess TDS is deducted)
✔ PAN-Aadhaar linking is essential to avoid higher TDS rates
✔ Non-compliance can lead to penalties and interest