Glossary term
TDS
Tax withheld at the point of payment — employer deducts from salary, bank from FD interest, broker from broker-side dividends.
Tax Deducted at Source (TDS) is the system by which Indian tax is withheld at the moment of payment, then deposited with the government on the payee's behalf. Employers deduct from salary, banks from FD interest above ₹40,000/year (₹50,000 for seniors), and AMCs from dividend distributions.
TDS is not the final tax — it's a credit. When you file your ITR, total TDS is compared against your actual tax liability, and you either get a refund or pay the difference. Form 26AS shows all TDS credited against your PAN.