- By Aditya Pratap Singh
- Thu, 04 Apr 2024 05:17 PM (IST)
- Source:JND
ITR Filling 2024: Income Tax (Income Tax) and TDS (Tax Deducted at Source) are two terms that are frequently used in the personal finance domain. Both terms continue to be confusing to many people. TDS and income tax are two distinct terms, and in this article, we will talk about the difference between TDS and income tax.
Income Tax
Income tax is levied on a person or company's annual earnings in any fiscal year. This income can come from various sources, such as salary, business, or rental of a property. A person earning more than Rs 2.5 lakh under the old tax system and Rs 3 lakh under the new tax system must pay income tax.
Also Read: ITR Filling 2024: Check List Of Documents Required To Claim HRA Exemption
For a person between the ages of 60 and 80, the threshold is Rs 3 lakh, and for senior citizens over the age of 80, it is Rs 5 lakh. Income tax rates are determined by the income slabs specified in the Tax Act. Income tax is levied on total annual income, including salaries, capital gains, and other sources of income.
TDS
Tax deducted at source, or TDS works to prevent tax evasion. TDS requires any individual or organization to deduct a predetermined percentage of tax before making the payment while making salary, interest, rent, and professional fees. The reduced amount is immediately sent to the government. TDS simplifies the tax collection system and serves as a safeguard against possible evasion.
TDS is deducted from various sources of income throughout the year, including salary, rent, winnings, lottery, investments, prize money, and so on. The payer deducts TDS and immediately sends it to the government. The TDS tax rates are determined by the government, and the payer has no say in the matter.