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TDS stands for Tax Deducted at Source. It is a system of tax collection in India where the person responsible for making payment of specified nature to any person is required to deduct tax at source and deposit the same to the government. The person deducting TDS is known as the "deductor" and the person whose income is taxed is called the "deductee". The idea behind TDS is to collect tax at the source of income, which makes the tax collection process more efficient and reduces the tax burden on the taxpayer.
TDS applies to various types of payments, including salary, commission, rent, and interest, among others, and the rate of TDS varies depending on the type of payment and the income of the deductee. The TDS deducted is credited towards the final tax liability of the deductee.
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