Tax Deducted at Source (TDS) is a certain amount that is reduced when a particular payment, such as professional fees, interest, commission, salary, rent, etc. is made. People who make payments deduct tax at the source, while people who receive income/ payment are liable to pay tax. Now that you know what is TDS and when when TDS should be deducted, let’s read about why TDS is deducted:
The purpose of TDS is to lower the tax evasion by the recipient of the income because the tax will be collected at the time of making a payment.
It helps to reduce the burden on Tax Collection Agencies to collect tax
It acts as a steady source of revenue for the govt.
Let’s take the case of TDS on salary. It is related to the tax deduction made by your employer on your salaried income. Do you know why TDS is deducted from salary? Well, TDS on salary helps the govt. collect income tax accruing from an individual’s salary at the source.
I hope you like my answer on what is TDS and why it is deducted.
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What is TDS and why it is deducted?
Manveer
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3 Year
2021-09-23T12:49:26+00:00 2021-09-28T14:00:24+00:00Comment
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