Who is required to deduct TDS?

TDS (Tax Deducted at Source) is a part of income tax. It is required to be deducted by a person for specific payments made by them. In this answer, I will tell you who can deduct TDS as per the Income Tax Act.

Any person that makes certain payments specified under the Income Tax Act needs to deduct TDS when he makes such mentioned payment. However, if a HUF or individual (whose books aren’t needed to be audited) makes the payment, then no TDS needs to be deducted. However, the case is a bit different for TDS on Rent.

Now, you know who deduct TDS.

TDS rates for most payments are mentioned in the Income Tax Act and the payer needs to deduct TDS based on these set rates. If you provide investment proofs to your employer for claiming deductions and your aggregate taxable income is under the taxable limit, then you are not required to pay any tax. This is why no TDS needs to be deducted from your income.

Likewise, you can provide Form 15H and Form 15G to the bank if your aggregate income is under the taxable limit and they won’t deduct TDS on your interest income.

The person making the payment needs to deduct TDS at the specified rate. The payer is called the deductor and the payee, who receives the net payment is known as the deductee.

• Governmental agencies

• Local authority

• Such persons or categories of persons notified by the govt.

• A department or establishment of the State or Central Government

• Public sector undertakings.

• A society established by a Local Authority or any State or Central Government and the society is registered under the Societies Registration Act, 1860.

• A board or authority or any other body which has been set up by a State Legislature or a government (with 51 percent equity owned by the govt.) or by Parliament

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I hope I cleared all your doubts on who is required to deduct TDS.