TDS (Tax Deducted at Source)

The concept of TDS was introduced with an aim to collect tax from the very source of income as per Income Tax section 192. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government.

TDS applies to all residents of India and NRIs as per Income Tax Act of India. Income earned by NRIs in India, including rent, interest, and dividends, is subject to Tax Deduction at Source (TDS). This means that anyone making payments to NRIs must deduct the applicable tax before crediting the income or when it accrues, depending on which comes first.