What is TDS, Income tax, Slab and Calculator ?

TDS = Tax Deducted at Source

I.1 Income Tax

       1.1 What is TDS
       1.2 Who is Deductor and Deductee with examples
       1.3 How one can save the TDS
       1.4 Why to save TDS

What is TDS..?

As the name suggests, TDS is the spot deduction of the tax from the income source itself at the time of earning. This is deducted by the source if the payment amount/salary exceeds a certain limit. (As on date, this limit is 5,00,000 in India) 

A source here can be 

• a person 
• your bank
• your company/organization, etc

which is paying you some amount or as a salary.

Who are Deductor and Deductee?

      The TDS is deducted by the deductor and should pay this tax to the government on behalf of the deductee

Deductor: The Company/Person that makes payment after deducting TDS
Deductee: The Company/Person Which is receiving his/her payment after TDS

Examples :
Scenario 1: Mr.Joy is employed with ABC Company, then ABC company can deduct the TDS from Mr. Joy's Salary.
Here, Deductor is ABC Company and Deductee is Mr.Joy.

Scenario 2: Mr.Happy has his money in FD for about 5 years with ABC Bank then upon maturity of FD, ABC bank can cut TDS on the interest amount of the FD.
Here, Deductor is ABC Bank and Deductee is Mr.Happy.

This TDS is linked to the PAN of the Deductee and Deductor.
Hope the Concept is clear. 😃

How you can save the TDS (to stop my TDS from being deducted)?

          You can save the TDS by declaring/filling the investment declaration in advance in your organization/firm. Almost all firms encourage their employees to declare their investments in April as it is the start of the new financial year.

Why save the TDS?

         You can claim/IT Return your TDS which was deducted for the previous financial year. You should not let your firm/company to cut the TDS, though you will be getting the interest on the TDS amount which was deducted along with the IT Return.

        So instead of a TDS refund in ITR (it return filing), save your income tax from the income tax department in an official way.
         It is not worth to see your TDS being deducted if you are going to have your investments in place during the year. This is because the inflation rate is much higher than the rate of interest in the IT Returned TDS amount. So it is wise to be proactive in this case and to save the TDS beforehand.

Have you checked other blogs on

 "Old Regime vs New Regime of taxation"

"Various Ways To Save Tax"

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With your valuable comments,
Please let me know what else I can do to help you better with the information in the upcoming blogs:

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