Tax Deduct at source - A certain amount of tax should be reduced from amount which is paid to the supplier.

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Tax Deduct at source is a mechanism where a certain amount of tax is deducted from payments made to suppliers.

Tax Deduct at source is also known as TDS (Tax Deducted at Source).
It is a method of collecting tax at the source of income.
The person making the payment is responsible for deducting the tax and remitting it to the government.
TDS is applicable to various types of payments such as salaries, interest, rent, professional fees, etc.
The deducted tax amount is then credited to the account of the payee and can be adjusted against their total tax liability.
For example, if a company pays a supplier $1,000 for services rendered and the applicable TDS rate is 10%, then $100 will be deducted as TDS and the supplier will receive $900.
TDS ensures a steady stream of revenue for the government and helps in preventing tax evasion.

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