• When TDS isn’t deducted at source, the deductor shall be at risk of interest and penalty. however you can pay traditional tax on your income as self assessment tax that if would have deducted by employer be referred to as TDS however assessed cannot deduct TDS in his own income.

• When you make a payment to the Government of India or the Reserve Bank of India, no TDS is collected. No TDS will be deducted in case of payment made to or received from the followings:
  • LIC, UTI and other insurance or cooperative societies.
  • Banks.
  • Central or State Financial Corporations
  • Interest in KVP, Indira Vikas Party, or NSC
  • Refund from income Tax department or Interest paid under Direct Tax.
  • Interests received from recurring deposit or savings account in cooperative societies or banks.
  • Interest received in NRE account.
  • All institutions notified under no-TDS.

Apart from these, there are other institutions where TDS is applicable, for example, interest on compensation from Motor Vehicles Claims Tribunal (MVCT). Taxpayers are required to check whether or not TDS is applicable on their income with a particle institution.

• Tax Deducted at Source (TDS) is applicable for individuals and businesses, the collector is required to collect tax at source before making certain types of payments for rendering specific services.
• The types of payments include Salaries, Interest payments by banks, Commission payments, Rent payments, Consultation fees, Professional fees etc.
• The collector is directed to collect a certain percentage of TDS that is sent to the Central Government.

• The amount deducted as the TDS depends on the amount you earn. TDS starts getting deducted after you start earning. Both the government and the Tax-payers get benefitted from TDS. When you make payments through cash, cheque or credit card, a certain amount of tax is deducted, which gets deposited to the central agencies. The advantages of collecting TDS are,
  • It prevents people from avoiding taxes.
  • It ensures a steady source of revenue for the Government.
  • The Tax Collection base is widened.
  • The burden of responsibility of the Tax Collection Agencies and the Deductor are lessened.
  • It is convenient for the deductee as Tax is automatically deducted.