The concept of TDS was introduced with an aim to collect tax from the very source of
income. 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. The deductee from whose income tax has been deducted at
source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or
TDS certificate issued by the deductor. Taxes shall be deducted at the rates specified in the
relevant provisions of the Act or the First Schedule to the Finance Act. However, in case of
payment to non-resident persons, the withholding tax rates specified under the Double Taxation
Avoidance Agreements shall also be considered. Tax deducted or collected at source shall be
deposited to the credit of the Central Government by following modes:
1) Electronic mode: E-Payment is mandatory for
a) All corporate assesses; and
b) All assesses (other than company) to who provisions of section 44AB of the Income
Tax Act, 1961 are applicable.
2) Physical Mode: By furnishing the Challan 281 in the authorized bank branch