Tax Deducted at Source

TDS stands for tax deducted at source. Any business or person making a payment is required to deduct tax at source if the amount surpasses certain limits. The person making the payment or responsible for getting a tax deduction is known as ‘deductor’. On the other hand, the person who gets the payment after the tax deduction is called ‘deductee’. It is the deductor’s responsibility to deduct TDS before securing the payment and deposit the same with the government. TDS is decreased irrespective of the method of payment like cash, cheque or credit.

Advantages of TDS
 

• TDS benefits both the Government and the Tax payers. Following are the advantages of TDS.


• TDS reduces the chances of tax evasion (avoidance) as the tax is collected at source.


• It is one of the steadiest sources of revenue for the government.


• The tax collection base is widened as most of the people have to pay TDS in some or the other form.


• It is convenient for the individuals as the tax gets deducted automatically.
• TDS Refund
  
  The TDS is that tax which is deducted at source i.e. from an individual’s salary before it gets credited to employee’s account. It is usually done by a pre-determined deductor. Otherwise, generally, TDS is deducted each month by employers based on tax projections declared by the employee at the beginning of each financial year. It falls under the part of Department of Revenue and is therefore managed by Indian Revenue Services (IRS). It is also vital at the time of conducting an audit.
  
  In addition to the above, it benefits the payer too. As the tax which is distributed throughout the year and is deducted every month, causes less tax burden at the end of the year.
  
  Therefore, this process is crafted in such a way that the government is able to collect taxes without the help of the Income Tax department and without their intervention but with help of Central Board for Direct Taxes (CBDT).