Key idea
You rarely pay income tax in one lump. Your employer chips it away every month and sends it to the government on your behalf. That is TDS.
Tax Deducted at Source (TDS) is the reason your take-home is lower than your gross. Rather than waiting for you to pay tax at year-end, your employer estimates your annual tax, divides it across the months, and deducts a slice from each salary, depositing it with the government.
The monthly journey of your tax
| Step | What happens |
|---|---|
| 1 | Employer estimates your yearly tax |
| 2 | Deducts a slice each month (TDS) |
| 3 | Deposits it with the government |
| 4 | It shows up in your Form 26AS / AIS |
| 5 | You reconcile it all when filing your ITR |
Why the system works this way
TDS spreads your tax across the year so you are never hit with one large bill, and it gives the government a steady, traceable flow. The catch is that the employer's estimate is only an estimate. If it deducted too much (you had deductions it did not know about), you claim a refund when you file. If too little, you pay the balance.
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