Tax Law
TDS (Tax Deducted at Source)
A mechanism requiring the payer of certain kinds of income to deduct tax at the time of payment and deposit it with the government on the recipient's behalf.
TDS applies to payments like salary, rent above a threshold, professional fees, and interest, with the payer responsible for deducting the applicable percentage and depositing it with the tax department, which the recipient can then claim credit for against their overall tax liability.
Failure to deduct or deposit TDS correctly can expose the payer to interest, penalties, and disallowance of the expense for their own tax purposes.
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