TDS is a tax collection mechanism in which a portion of a payment is deducted at the source before the remaining amount is paid to the recipient. It is commonly applied to salaries, dividends, interest payments, and other forms of income. TDS helps the government collect taxes in advance and ensures that tax liabilities are met in a timely manner. Taxpayers can claim credit for TDS amounts against their total tax liability when filing their returns. For example, if you earn ₹10,000 in interest from a bank, the bank might deduct ₹1,000 as TDS before giving you the remaining ₹9,000.