Definition of TDS in Accounting

Definition of TDS in Accounting

Definition of TDS in Accounting

What is TDS in Accounting? TDS or tax deducted at source is a deduction made by someone while making a payment or crediting the account, whichever is early. This could be your employer, customer or even a bank paying you interest on a fixed deposit. Before making a payment to you, the payer deducts and pays tax on your behalf to the Income-tax department. You can claim/adjust TDS credit while filing your income tax return against income tax payable. You can view the details of the TDS credit in Form 26AS by logging into your income tax filing account.

Also Read:- What Is a Bank Reconciliation Statement?

Who Can Deduct TDS?

TDS or Tax Deducted at Source at prescribed rates is made mandatory by the Income Tax Act on certain persons responsible for making payments. The tax deducted has to be deposited by them to the government. The recipient of income receives the net amount (i.e. gross income minus direct tax deducted at source).

Also Read:-Bank Statement in Accounting

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