A TDS return, also known as a Tax Deducted at Source return, is a document filed with the Income Tax department in India. It summarizes the tax deducted from certain payments made by a deductor (withholder) to a deductee (recipient).

• Tax Deducted at Source (TDS): When you make specific types of payments in India, you are required to deduct a certain amount of tax at source (TDS) before disbursing the entire amount. This deducted tax is then deposited with the government.
• Who is Involved?
  • Deductor: This is the entity responsible for deducting TDS from payments. It could be a company, an employer, a bank, or any other person making specific types of payments.
  • Deductee: This is the recipient of the payment from which TDS is deducted. It could be an individual, a company, or any other entity.
• TDS Return: The deductor is required to file a TDS return with the Income Tax department. This return contains details about the TDS deducted, including:
  • Deductor’s and deductee’s PAN details
  • Type of payment made
  • Amount of TDS deducted
  • Challan details (proof of tax deposit with the government)

Why is it important?

• TDS returns help the government collect taxes regularly throughout the year.
• It serves as a record for both the deductor and the deductee, reflecting the tax deducted at source.
• The deductee can claim credit for the TDS deducted when filing their income tax return.