Basic difference between Income Tax and TDS?

Posted by All India ITR
April 17, 2018

Still confused with Income Tax and TDS, fret not as here are some of the basic differences between Income Tax and TDS.

Income Tax

It is a mandatory tax paid by individualsand HUFs who have their income from various sources. It is a direct tax thatgoes directly from taxpayer to the government.


Tax Deducted at Source or TDS is a part ofIncome Tax that has already been paid by the taxpayer and it can be set offagainst income tax and balance the tax liability to be paid.

Major Differences

AnnualPayment and Periodic Payment

Income tax is an annual tax it is deposited to the Government once in every year. On the other had TDS is a periodic tax which is paid in certain intervals.

Direct and Indirect

Income Tax is a direct tax as it is paid directly to the Government, if we talk about Tax Deducted at Source or TDS it is deposited to the employer by the employee after which the employer deposit’s it to the government.

Grossand Certain Income

Income Tax is levied on the entire income earned by a taxpayer for a particular financial year, whereas TDS is levied on a few people who are making certain prescribed payments.

Afterand Before Completion of the Financial Year

Income Tax is levied on the individuals or HUFs for the income they have earned from the certain prescribed tax limits for a particular time period after the completion of a financial year. The wholeprocess of the deduction of tax at source is quite different from that ofincome tax as the TDS is calculated and deducted even before the individualreceives his/her income.

If the taxpayer has paid more tax than his/her liability, then in that case the taxpayer can claim tax refund.