What is the full form of TDS

TDS: Tax Deducted at Source

TDS stands for Tax Deducted at Source. TDS is a direct taxation system that was introduced to collect taxes from the source of income or at the time of income payout.

In India, As per Income Tax Act, 1961, income tax must be deducted at source, Any payment covered under these provisions shall be paid after deducting a prescribed percentage of income tax.

As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government.

The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.

TDS is applicable on various incomes such as salaries, interest received, commission received, dividends etc.