Employer will deduct TDS only on the Source of Income HE is generating for the employee. If the employee has other sources of income, the employer will not deduct TDS on such other Incomes, because the employer if not making payments for such other sources of income of the employee.

For Eg., A has employed B on salary and B receives Interest on FD’s. So, A (employer) will only deduct TDS on the payments of salary which he makes to the B (employee). However, the bank will deduct TDS on the payment of interest which the bank makes to the B.