Updated Dec 19, 2020 | 08:29 IST TDS is deducted either at source at the time of the payments or at the time of credit whichever is earlier. Filing Income Tax Return (ITR)? Don't forget to claim excess TDS | Photo Credit: IANS Tax Deducted at Source (TDS) is applicable on a host of income type during a financial year and a taxpayer needs to compare the TDS paid with the tax liability for the year. According to the Income Tax (I-T) Act, any person or company making a payment is required to deduct tax at source if the payment exceeds certain limit. This TDS is deducted at the rates prescribed by the I-T department.