---
title: "Tax Deducted at Source (TDS): Meaning & Rules"
description: "Tax Deducted at Source (TDS) is a key Indian tax mechanism that ensures income tax is withheld by payers, impacting taxpayers and compliance."
url: "https://modeldiplomat.com/learn/glossary/tax-deducted-at-source"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- Tax Deducted at Source is an Indian direct-tax mechanism requiring the payer of specified incomes to withhold tax at prescribed rates and remit it to the government on the recipient's behalf.
- What is the difference between TDS and TCS?
- Is TDS a final tax or can it be refunded?
- What happens if a deductor fails to deposit TDS?
- Why is a higher TDS rate applied when PAN is not furnished?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

Tax Deducted at Source is an Indian direct-tax mechanism requiring the payer of specified incomes to withhold tax at prescribed rates and remit it to the government on the recipient's behalf.

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In February 2023, Finance Minister Nirmala Sitharaman introduced Section 194BA in the Union Budget, requiring online gaming platforms to deduct TDS on net winnings credited to a player's account.

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