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What is Tax Deduction at Source (TDS)? Meaning, Definition, and various tax deduction sources

What is TDS? TDS is the abbreviation of Tax deduction at sources. The concept of TDS was introduced with the aim to collect the tax from the very source of the income. As per this concept, a person (payer) who make a payment any specified nature to any other person (Payee), shall deduct tax at source and remit the same into the account of the central government.  For example, Mr. X make payment of ₹50000, to Y Ltd as a professional fee. So Mr. X will deduct TDS @10% (as per TDS Rate chart) i.e. ₹ 5000 and remit the ₹5000 into account of central government. Deduction of Tax at Source and Advance payment (Sec. 190) The total income of assessee which he or she earned in the previous year is taxable in relevant assessment years. For example,  Income earned in PY 17-18 are taxable in AY 18-19, but the income tax is recovered from the assessee in Previous years itself through:- Tax deduction at source (TDS) Tax collection at source (TCS) Payments of advance tax.

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