TDS Explained: Everything You Need to Know About Tax Deducted at Source

1. What is TDS?

Tax Deducted at Source (TDS) is a system where tax is deducted at the time of payment, ensuring tax collection at the source. It applies to salaries, interest, rent, commissions, and professional fees.

2. Who Needs to Deduct TDS?

✔ Employers paying salaries above the taxable limit
✔ Businesses making payments to contractors, professionals, or landlords above specified thresholds
✔ Banks on interest payments exceeding ₹40,000 (₹50,000 for senior citizens)

3. TDS Rates and Thresholds

TDS rates vary based on income type:
✔ Salary - As per income tax slab
✔ Interest on bank deposits - 10%
✔ Rent (exceeding ₹2,40,000 annually) - 10% for individual landlords
✔ Professional fees (above ₹30,000) - 10%

4. How to File TDS Returns?

✔ TDS must be deposited by the 7th of the following month.
✔ Quarterly TDS returns (Forms 24Q, 26Q, 27Q) must be filed with the Income Tax Department.
✔ Employees and recipients can verify TDS deductions in Form 26AS.

5. Benefits of TDS

✔ Prevents tax evasion
✔ Ensures a steady flow of government revenue
✔ Reduces last-minute tax burdens for taxpayers
✔ Provides proof of tax payment (Form 16 & 16A)

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