TDS or Tax Deducted at Source means a source of collecting tax by Government of India at the time when a transaction takes place. Here, the tax is required to be deducted at the time money is credited to the payee’s account or at the time of payment, whichever is earlier. But, in the case of payment of salary or life insurance policy, tax is deducted at the time of payment. This TDS amount is then deposited to income tax department, by the deductor (paying party). This means that the receiving party will have to pay only the remaining amount during the year end. In this way, some portion of your tax is automatically paid to the income tax department. Thus, TDS is considered as a method of reducing tax evasion conducted by the taxpayers.
Tax is deducted usually over a range of 1% to 10%.
Due Dates for payment of TDS
|Amount paid/credited||Due date of deposit of TDS|
|Without Challan||Same Day|
|With Challan||7th of next month|
|On perquisites opt to be deposited by the employer||
7th of next month
|Others||In the month of March||30th April|
|In other months||7th of next month|