TDS (Tax Deducted At Source) is a recovery mechanism comprised within the overall Income Tax Law in India whereas the income tax is the tax that the taxpayer has to pay on his incomes. A simpler way to understand this would be to classify TDS as an advance payment of tax by having the same deducted at source at applicable rates.
The recipient of the income or the taxpayer is entitled to have the TDS deducted against his name set off against his final income tax liability and is only required to pay any shortfall that may arise after such a set-off. In case of excess TDS deducted, a refund is granted to the taxpayer.
To obligate the person making the payment to deduct taxes at source, mandatory provisions have been included in the Income Tax Law coupled with interest and penalties for failure to comply with the TDS provisions. The provisions also benefit the person receiving the income as it seeks to save him from the hassles of having to pay the taxes at a later point of time, which may then be payable along with interest.