Deductor/ Payer is required to deduct tax before making payment to a payee. For example, while making the payments like salary, rent, interest, commission, professional fees, payments to freelancers, a percentage of the total amount is to be withheld by the payer.


"Deductor": the payer who withholds the amount of tax. 


"Deductee": the payee from whose payments the TDS is being deducted. 


Deductor will deposit the TDS to the Income Tax Department so that the deductee can claim the credit for the same.


For example: ABC Pvt Ltd is making a payment of Rs. 1,00,000 to Ajay as professional fees. Here ABC is a Deductor/ Payer and they will deduct 10% TDS u/s 194J before making payment to Ajay/ Payee. So Ajay will receive Rs. 90,000 as his income and Rs. 10,000 (10% of 1,00,000) will be deposited as TDS by ABC to the Income Tax Department. TDS is deposited via Challan and the same will be reported in TDS Return (Form 26Q) by ABC Ltd.