Explanation:
TDS stands for Tax Deducted at Source. It is a system implemented by the government to collect taxes at the time of making payments. When certain types of payments are made, such as salary, interest, rent, commission, etc., the person making the payment is required to deduct a certain percentage of tax before making the payment. This deducted tax is then deposited with the government.

Key Points:
- TDS is a method of collecting tax at the source of income.
- It ensures regular collection of taxes and prevents tax evasion.
- TDS is applicable to various types of payments such as salary, interest, rent, commission, etc.
- The person making the payment is responsible for deducting the tax and depositing it with the government.
- TDS rates vary depending on the type of payment and the income slab of the recipient.
- The deducted tax is then reflected in the Form 26AS of the recipient, which can be used for claiming tax credits.
- TDS certificates, also known as Form 16 and Form 16A, are issued by the deductor to the deductee as proof of tax deduction.
- The deductee can adjust the deducted tax against their total tax liability at the time of filing their income tax return.
- If the deducted tax is higher than the actual tax liability, the deductee can claim a refund of the excess tax deducted.

Example:
Let's say Mr. A receives a salary of Rs. 50,000 per month. As per the income tax rules, his employer deducts 10% TDS on his salary. So, the employer deducts Rs. 5,000 as TDS and deposits it with the government. This deducted tax is then reflected in Mr. A's Form 26AS. When Mr. A files his income tax return, he can claim this TDS as a credit against his total tax liability. If his total tax liability is lower than Rs. 5,000, he can claim a refund of the excess TDS deducted.

In conclusion, TDS is a tax collection mechanism that ensures regular and timely tax payments. It helps in reducing tax evasion and provides a convenient way for individuals to pay their taxes.