TDS is what your company cuts from your salary when paying you.
The approach in simple language is: considering your package at the very beginning of a financial year your income tax is calculated. Suppose on your current package you owe 24000/- as income tax.
Now the amount would be devided by 12 i.e each month 2000/- would be deducted from your salary as income tax.
So, at end of year when you get FORM16, your tax payable would be "0" (in recent rule if your income is under 5lac, and your form16 shows 0 tax payable, you do not need to file return).
Now, if you invest in between and provided the relevant docs in company, your TDS would be re-calculated.
i.e after submitting investment docs it was calculated that you annual tax is 8000/- instead of 24000/-.
Now, if you have already paid tax for 3 months in old calculation, you have paid (2000*3=6000/-) that amount is deducted from present tax payable.
i.e 8000-6000=2000/-
Now this is devided by rest of the month i.e. 2000/9=222.23/-
This would be your new tax payable.
For RD, the clearly mentioning that they won't be deducting any tax from the amount you get when the RD matures. You needto show the amount you received as interest as income when filling tax return.
(if TDS were implemented at the bank and the tax were 500/- you would have got 23500/- as your matured amount instead of 24000/- at the end of RD tenure)
(the above information is true to my knowledge
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