The full form for TDS is Tax Deducted at Source. This tax makes up a major part of the government’s income. Usually, TDS gets deducted before the amount actually gets credited to your account. If you’re employed at a firm or company, the government will be taking the TDS directly from your employer, and the employer can add TDS to the salaries of their employees. If you’re receiving any payment such as salary, royalty commissions, rent, interest from banks, or any other fee, the TDS will be applicable in such cases.
TDS percentage may vary as per which type of payment you’re receiving. For the most part, TDS varies between 1% to 10% of the total amount. For salary personnel, TDS doesn’t apply if your salary is below 3 lakh per annum. However, if it is more than 3 lakh per annum, the TDS percentage may vary on how much you earn annually. For 3 to 5 lakh, you’ll need to pay 5% of the total amount. Let’s say if you’re earning 5 lakh per annum, 5% TDS will be deducted which would be 25,000 rupees.