What is Tax deducted at source?

July 10, 2012  //  Posted by: Financial advisor  //  Category: Tax

Tax deducted at source, taxTax deducted at source or more commonly known as TDS is one of the many modes of collecting incomes taxes from people living in India and the assesses of India. It is absolutely and entirely legal under the government act of India Income Tax Act, 1961, by the central board of taxes. It is also connected to the department of revenue which is managed by Indian Revenue Service, Ministry of finance, Govt of India.

To put in simple words, a certain pre fixed amount of the income is deducted by the employer at source, before paying the employee his/ her salary. Next, as a part of his own taxation regime the employer pays the taxes. A deductor is a person or company who is liable to deduct tax at source from the payment that is being made to the party. In plain regular terms a deductor is the Employer. On the other hand deductee is the person from whom the tax amount is being deducted. It is a good practise for a successful financial exchange.

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