Tax deducted at source (TDS) is a procedure that eliminates tax avoidance and spillage by making it obligatory to subtract TDS at predetermined rates from payments. Whether the boss owes you a wage, a commission from a customer, or a bank pays you interest on deposits, there are specific rules and prices for TDS deduction. TDS must be deducted and deposited with the government of India by the payer. The sum is billed to the payee net of TDS. This is considered part of the tax collected, and if too many TDS has been withheld, the taxpayer will file refunds and receive a refund from the Income Tax Department.
Aside from deducting the tax and depositing it in the government account, the deductor must also file the TDS return, which must be done in the form of a quarterly declaration to the I-T department. These TDS returns can be submitted electronically, and they appear on the payee's Form 26AS. TDS returns must be issued on schedule by the tax deductor.
The TDS return must include the deductor's TAN and PAN number, the payee's PAN number, the amount of tax paid, the particulars of the TDS challan, the mode of payment, and other information. The employer or agency deducting TDS must have a correct Tax Collection and Deduction Account Number in order to file a TDS return (TAN). Anyone making prescribed payments under the I-T Act is expected to deduct tax at source and deposit it within the time frame specified. TDS to be withheld from the following payments:
Payment of Salary, fees and commissions
Income earned on Securities
Any winning from lottery, puzzles, horse races etc.
Payment in respect of National Saving Scheme and many others