26 March 2010
TDS stands for Tax Deduction at source. As the name implies, it the tax which is deducted at the time of the source of income i.e when first person pays an amount to the second person it reflects the second persons income and is liable for tax. So Income Tax lays down a liability on the first person i.e the paying person to deduct the tax at the rate specified in the act.
For ex. A Pays Rs 50000 as rent to Mr.B. Then Rs 50,000 is the income of Mr.B which is liable to Tax. So Income Tax Act wants Mr A to deduct the Tax (Let say 10% i.e 5000) and pay the balance amount i.e Rs 45,000 to Mr.B. Mr. A will deposit this TDS amount of Rs.5000 with the government account.
In this way the tax on the income is deducted at the stage of source of Income.
26 March 2010
Tax deducted at source mean the tax recovered from the source at the time of the payment itself.deduction rates are based on the different nature of payment
CAclubindia
