← GlossaryPolicy & Tax
TDS (Tax Deducted at Source)
TDS requires the payer, such as an employer, bank or tenant, to deduct tax from certain payments and deposit it with the government on the recipient’s behalf. The recipient later claims credit for it when filing a return.
Why It Matters
TDS is why tax is collected even from people who would otherwise forget to pay.
In India
An employer deducts TDS from a monthly salary, and a bank deducts TDS from fixed deposit interest above a threshold.
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