TDS
Tax deducted at source: tax withheld by the payer and deposited against the recipient's permanent account number.
Formula
TDS = Payment Amount x Applicable Rate, credited against the recipient's final tax liability
Unit
₹
In depth
TDS is a collection mechanism rather than a separate tax — the amount withheld is credited against the final liability, and any excess is refunded on filing a return. In the securities context it applies to dividends above a threshold, to interest, and to payments to non-residents, though not to capital gains for residents. Because it is reported against the PAN, deducted amounts appear in the annual information statement whether or not the taxpayer remembers the income. Failing to link PAN with Aadhaar renders the PAN inoperative and triggers deduction at a substantially higher rate.
Worked example
A ₹60,000 dividend with 10% TDS credits ₹54,000 to the account and ₹6,000 to the PAN. If the investor's slab rate is 30%, a further ₹12,000 is payable; if it is 5%, ₹3,000 is refundable.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “TDS” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.