TDS or Tax Deducted at Source is an income tax that is collected from certain payments like rent, salary, commission, interest, professional fees, etc. The person paying the amount should deduct TDS from such a payment. As per the Income Tax Act, any company or a person is required to deduct tax at the source itself if the money paid exceeds the specified limit. The person who receives a payment also has a liability to pay tax on their income. The payee will receive credits against the TDS payments, which they can claim against their actual tax liability while filing the annual ITR. The purpose of TDS may have been to reduce the chances of tax evasion by the recipient of the income. But, for an honest taxpayer, it also brings a few benefits.
