Tax deducted at source, as the name suggests, is the tax deducted at the time the income is received by or credited to the “person” so that collection of tax is preponed and there is regular flow of taxes to the government. Tan or tax deduction and collection number (tan) is mandatory 10-digit alpha number required to be obtained by all persons who are responsible for tax deduction at source (TDS) or tax collection at source (TDS) on behalf of the government. TDS is deducted on various types of income such as salary, interest on bank deposits and bonds, winnings from lotteries and horse races, payment to contractors and sub-contractors, insurance commission, commission or brokerage, rent, fees for professional and technical services etc.
TDS must be deposited to the credit of the central government and TDS returns should be filed within due dates prescribed by the income tax act, 1961. TDS certificates must be issued by the detector giving details of tax deducted. TDS returns are due quarterly.