TDS is managed by the Central Board for Direct Taxes (CBDT) and is a part of the Department of Revenue, which is managed by Indian Revenue Service (IRS). TDS is applicable on salary, commission, royalty payments, brokerage, contract payments, interest earned on several financial investments, earnings from lotteries, rent income, professional fees, etc. TDS is a medium of collecting Income Tax in India under the Indian Income Tax Act of 1961. Based on the investment declaration statement, the employer will estimate the taxable income and start deducting tax on a monthly basis in the form of tax deducted at source (TDS) before paying the monthly salary to the employee. These investment declarations are called for, so that tax deductions are done accordingly. Most of the organizations ask their salaried employees to send their investment declaration at the start of every financial year.
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