Who Needs to Pay TDS? Eligibility and Responsibilities

A common question in tax compliance is who needs to pay TDS — a question with implications for employers, payers, and recipients alike. In simple terms, the obligation to deduct TDS falls on the person or entity making certain specified payments, such as salary, interest, rent, professional fees, or contractor fees — provided these payments exceed threshold limits defined by tax regulations. Entities like companies, businesses, professionals, individuals (in specific cases), and institutions may be responsible for deducting TDS before making eligible payments. Once TDS is deducted, the payer must deposit it with the tax department within the stipulated deadline and issue a TDS certificate (Form 16/16A) to the payee. Individuals and businesses that fail to comply with TDS provisions may face interest, penalty, or legal consequences. This article outlines exactly who needs to pay TDS, responsibilities, exceptions, and best practices to maintain compliance — helping both payers and payees fulfill their tax duties accurately.