What is TDS and why is it important under Indian tax laws?

TDS stands for Tax Deducted at Source. It is a mechanism under Indian tax laws where the payer is required to deduct a certain percentage of tax from the payments made to the recipient and deposit the same with the government. TDS provisions are important as they help the government collect taxes in advance, ensuring a steady flow of revenue. It also ensures tax compliance by making the deductors accountable for deducting and depositing the tax. Under Section 192 of the Income Tax Act, 1961, TDS is mandatory on salary payments above a specified threshold.