Meaning
Withholding Tax is an advance payment of income tax, collected at the source of income.Definition
It is a government requirement for the payer of an item of income to deduct tax from the payment and remit it directly to the tax authorities on behalf of the recipient.How It Works
When you receive certain types of income, such as salary, interest, or dividends, the entity making the payment (the payer) deducts a portion of it as tax. This deducted amount is then deposited with the government.Purpose
The primary purpose is to ensure timely tax collection throughout the year, reduce the burden on taxpayers at year-end, and minimize instances of tax evasion.Author
