TaxFinancial Glossary
TDS (Tax Deducted at Source)
Definition
Tax deducted by the payer before crediting income to the recipient. Your employer deducts TDS from salary, banks deduct TDS on FD interest above Rs 40,000 per year, and tenants deduct TDS on monthly rent above Rs 50,000. TDS rates vary by income type — 10% on FD interest, 10% on rent, 1% on property sale, etc.
Why It Matters
TDS is not the final tax — it is a prepayment. If excess TDS is deducted, you can claim a refund by filing ITR. If TDS is insufficient (common with multiple income sources), you must pay the balance as advance tax or self-assessment tax. Check Form 26AS regularly to ensure all TDS is correctly reflected.