Every country and state has their own expenditure on defense, development, construction, salaries of government employees and other plans which are important for growth of nation and states. For this country impose tax on the individual, firms, corporate house, import and export etc.
Income is the tax imposed on the individual ,a firm or a corporate house when income of the individual or the business entity exceeds a particular basic limit exempted by income tax law of the country.
Income tax is calculated on the basis of annual income of the concerned individual or business enterprise.
However, although income tax is calculated on annual income basis, the tax is deducted at source periodically over the accounting year for which income tax is payable. In case of salary payable to an employee, the employer has the duty to deduct income tax from the salary every month.
In case of distribution of prizes of lottery and gambling, a certain percentage of such winning is deducted at source from the amount payable to such winner. There are scores of other individuals whose income is taxed at source by the person making payment to such individuals.
It might possible salaried person does not have annual salary some which fall under the tax and he does not pay TDS, but if he has some other source of income and summation of salary and other income exceed exemption limit then he has to pay income tax at the end of year, however he need not to give any TDS.
2. Whereas Income tax is a person’s total annual tax liability, the TDS represents a fraction of his total annual tax liability.
3. A person may not have to pay tax at source, but may have to pay income tax at the end of the year in certain cases. For example, if an individual has income from salary as well as income from house property. Tax may not be deducted from his income from salary if it is below taxable limit. But if his total income, including the income from house property, exceeds the exemption limit, he will have to pay tax on his annual taxable income in one lump sum at the end of the year.
4. Similarly, an individual may not have taxable income, but still may have to pay TDS. One case in example is income from dividends or income from bank interests. Such dividend or interest income is taxed at source. But on yearly basis he may not have taxable income. So he is eligible to get income tax refund after submitting annual return and claiming refund of such TDS amount.