TDS is a method of direct taxation introduced to collect tax from the income source (source of income) or from the time of income payout (payment of income).

TDS full form:

Tax deducted at source means tax deducted at source. Under this method, if any person (deductor/deductor) is liable to make a payment to another person, he/she will transfer the balance amount to the deductee after deducting the tax at the source. The TDS amount deducted will be sent to the Central Government. The deductee can check the Tax Deducted at Source (TDS) amount in Form 26AS or TDS certificate(s) issued by the deductor (deductor).

TDS helps in controlling tax evasion. Not only this, in this method the taxpayer is not required to pay a huge amount as annual tax at the end of the financial year.

Let us take an example to understand the meaning of TDS in a better way. If the mode of payment is Professional Fee and the prescribed tax rate is 10%. Mr. X received Rs. 20,000/- to be paid, ABC Ltd. to Rs. 2000/- will have to be deducted and Rs. 18,000/- net payment (net payment). ABC Ltd. Deducted by Rs. 2000/- is directly deposited in the account of the government.



When an organization pays an amount to a person in lieu of salary or his work, then the first TDS is deducted from it. TDS i.e. Tax Deducted at Source. This means tax is deducted at the source. i.e. deduction on any income.



Your employer deducts applicable TDS at income tax slab rates. Banks deduct TDS @ 10% as per the TDS deduction chart. Or they can deduct 20% if your PAN is not known. The rates of TDS for most of the payments are prescribed in the Income Tax Act and TDS is paid on the basis of these specified rates.



Its user ID will be your PAN number and after generating the password through OTP, log in to the account. After login, go to View Tax Credit Statement (26 AS). After clicking on the View Tax Credit Statement (26 AS) option, a popup will appear and you will be redirected to another site.


How to return TDS?

After login into the Income Tax eFiling website, click on the TDS tab. Here you see the option of View Filed TDS on the second number. Click on this. In the next step, select your TAN Number, Financial Year, Form Name, Quarterly Order, etc., and click on the View Details button at the bottom.


Who is liable to deduct TDS on salary as per Income Tax Act 1961?

The person making the payment is liable to pay TDS and it is necessary to deposit it in the account of the government. These are called deductors. On the other hand, the person who receives the payment after deducting the tax is called a deductee.


What are the rules for rates(s) in Tax Deducted at Source?


Rules exist not only for filing Income Tax Returns but also with respect to TDS. If an individual or entity adequately complies with these rules, they may avoid penalties, fees, or interest. The main rules related to TDS are:

The first of the important rules is that tax at source should be deducted when the payment is due or when the actual amount is paid, whichever is earlier.

Delay in TDS deduction till tax deduction (tax deducted) interest @ 1% per month to be paid.

Every person whether he is an employer or any other is required to deposit tax in the account of the government before the 7th of the next month.

In case of late or non-payment of TDS, interest will be charged at the rate of 1.5% per month till tax is deposited.


How much tax needs to be deducted from your salary?


One of the most common forms of payment by individuals is the salary (salary) paid to employees. As per the existing rules governing Income Tax (Income Tax), there is no fixed rate (fixed rate) for deducting TDS from salary income (salary income). It depends on the income tax slab applicable to the taxable income of the employee. Thereafter, the employer calculates the tax liability on the basis of ‘Average Rate/Average Rate of Income Tax’.

Average rate / average rate means the total tax liability (tax liability) divided by the total income (income) of the employee. The employer considers all the investments made by the employee before deducting the tax on the salary to calculate the total tax liability.

Exemption: If the estimated salary (estimated salary) does not exceed the basic exemption limit, no tax should be deducted at the source.

Exempted Allowances: Allowances like Leave Travel Concession (LTC) / Traveling Leave Exemption, House Rent Allowance (HRA) / House Rent Allowance, Conveyance / Transport, Traveling are considered exempted as per the prescribed limit. Also, other perquisites (additional facilities) which do not form part of the salary should be deducted from the total salary (salary) of the employee to calculate taxable income (taxable salary).

Other Deductions: There are other deductions like sections 80C, 80CCC, 80CCD, 80CCG, 80D, 80DD, 80DDB, 80E, and 80EE which should be considered while calculating annual income and deducting tax at source.

Note: In order to claim these deductions, one needs to make the investment and declare the same.


Can TDS amount change during the financial year?


Generally, the employer deducts (deducts) TDS based on the net taxable income of the employee. It means deducting tax-saving deductions (tax-saving deductions) u/s 80C to 80U (based on the information furnished by the employee/employee) from the gross taxable income (gross taxable income).

Because the average rate of income tax is calculated on the basis of declarations made by the employee or the employee’s estimated salary for the upcoming period, it may change under the following circumstances:

Any bonus or salary increase received by the employee during the year  increases his income (income) and hence payable tax (tax payable)

Submission of proof of tax-saving investments that they had not submitted earlier.

The actual tax saving investment amount is less than that declared by the employee at the beginning of the year
In case of change of new job by the employee


In such cases, an additional TDS deduction is made in subsequent months to meet the short deduction made earlier. Similarly, if for any reason, the employer has deducted as per the higher rate of TDS, then the lower TDS will be deducted to average the total TDS in the coming months.

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