TDS stands for Tax Deducted at Source, which means tax is deducted by the payer at the time of making specific payments such as salary, rent, professional fees, commission, interest, contractor payments, and more. Every business—whether a startup, MSME, LLP, partnership firm, proprietor, or company—incurs expenses that may attract TDS. Since the payment made by one person becomes income for another, the payer is legally responsible for deducting tax at the prescribed rate and depositing it with the government. TDS becomes applicable only after crossing the threshold limit specified under each section of the Income Tax Act.