What is TDS and Why it is deducted ?

What is TDS and Why it is deducted ?

According to Income Tax Act 1961 Chapter 25 deal with Deduction and Collection of Tax at Source. Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.

Why  TDS is deducted

According to section 139 (i) every assessee whose income exceeding which is not chargeable to  income tax need to file income tax return voluntary  and in good faith but some assessee do not file Income Tax Return even his/her income is

exceeding which is not chargeable income tax  to need to file income. So government try to trace such assessee who do no file  Income Tax Return even his/her income is chargeable to tax. The government uses TDS as a tool to collect tax in order to minimise tax evasion by taxing the income (partially or wholly) at the time it is generated rather than at a later date.

Various section under which TDS deducted

 

 

 

 

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