TDS – Tax Deducted at Source
Tax Deducted at Source is one of the modes of collecting income tax in India. This tax has to be deposited in the Government treasury within the specified time. There is no uniform rate for deducting a tax. It can range from 1% to 30% or more, depending on the entity on which it is applicable.
Two identities are involved in the process of TDS : Deductor and Deductee.
Deductor – It is a person or a company who deducts the Tax (i.e. debits the money), before the payment has been made. Sometimes they are referred as Employers. They must hold a Tax Deduction Account Number (TAN), which is a unique identification number for person deducting the tax.
Deductee – It is the person who is liable to pay the tax or from whom the tax is being deducted or accrued for deduction.