The tax collected by the government as per the Income Tax Act, from the payer or employer who deducts tax from their employee, is the tax deducted at source.TDS is deducted either from salary, commission, rent etc. The rate of TDS varies, depending upon the nature of the income.
The main objective of TDS are:
It helps in timely payment of taxes of a salaried individual.
It helps in collecting tax from the income from contractors, professionals, etc. during payment.
It helps in the smooth operation of the government.
The advantages of TDS:
It prevents evasion of taxes.
It broadens the base for tax collection.
It is a steady source of revenue for the government.
Taxpayers do not have to make the payment themselves as it is collected automatically and deposited to the Central Government’s credit.
It allows the sharing of responsibility for deductor and tax collection agencies.