What is TDS and who deducts it?

TDS (Tax Deducted at Source) is advance tax collected by the payer on behalf of the government. Employers, banks, businesses paying rent/professional fees must deduct TDS and deposit with the government. The recipient claims credit in their tax return.

What happens if PAN is not provided?

Without valid PAN, TDS is deducted at 20% or the normal rate, whichever is higher. For example, if normal TDS on rent is 10%, non-PAN deduction becomes 20%. Always provide PAN to avoid excess deduction.

What is the TDS threshold limit?

TDS thresholds vary by section: Interest from banks - ₹40,000/year (₹50,000 for seniors), Rent - ₹2,40,000/year, Professional fees - ₹30,000/year, Contractor payment - ₹30,000 single or ₹1,00,000/year.

How do I claim TDS refund?

TDS credit reflects in Form 26AS (now AIS). File income tax return declaring total income. If TDS exceeds actual tax liability, excess is refunded. For example, if ₹50,000 TDS was deducted but actual tax is ₹30,000, you get ₹20,000 refund.

TDS Calculator - Calculate Tax Deducted at Source India

What is TDS (Tax Deducted at Source)?

TDS (Tax Deducted at Source) is a mechanism where tax is collected at the point of income generation rather than waiting for year-end assessment. The payer deducts tax from payments like salary, rent, interest, and professional fees, then deposits it with the government.

Our TDS calculator helps you compute exact deductions for various payment types, considering PAN/non-PAN rates, threshold limits, and applicable surcharge/cess.

TDS Rates for FY 2024-25 (AY 2025-26)

Section	Nature of Payment	Threshold (₹)	TDS Rate
192	Salary	As per slab	Slab rates
194A	Interest (Banks)	40,000 (50K seniors)	10%
194A	Interest (Others)	5,000	10%
194C	Contractor - Individual	30,000/1,00,000	1%
194C	Contractor - Others	30,000/1,00,000	2%
194H	Commission/Brokerage	15,000	5%
194I(a)	Rent - Plant/Machinery	2,40,000	2%
194I(b)	Rent - Land/Building	2,40,000	10%
194J	Professional/Technical Fees	30,000	10%
194J	Technical Services (194J(a))	30,000	2%
194N	Cash Withdrawal (>₹1Cr)	1,00,00,000	2%
194Q	Purchase of Goods	50,00,000	0.1%

Note: Non-PAN cases attract TDS at 20% or regular rate, whichever is higher.

Key TDS Sections Explained

Section 194A - Interest Income

Banks deduct 10% TDS on FD/RD interest exceeding ₹40,000/year (₹50,000 for senior citizens). Interest from NBFCs, companies, and post office (taxable schemes) also falls under this section with ₹5,000 threshold.

Section 194C - Contractor Payments

Applicable when paying contractors/sub-contractors. Threshold: ₹30,000 single payment OR ₹1,00,000 aggregate during the year. Rate: 1% for individuals/HUF, 2% for companies/firms.

Section 194I - Rent

TDS on rent paid exceeding ₹2,40,000/year (₹20,000/month). Rate: 2% for plant/machinery/equipment, 10% for land/building/furniture. Applies to businesses and professionals paying rent.

Section 194J - Professional Fees

Covers fees for professional services (doctors, lawyers, CAs, consultants) and technical services. Threshold: ₹30,000/year. Rate: 10% for professionals, 2% for technical services to call center operations.

TDS Calculation Example

Rent Payment to Individual

Monthly Rent	₹50,000
Annual Rent	₹6,00,000
Threshold	₹2,40,000
TDS Applicable	Yes
TDS Rate (194I)	10%
Monthly TDS	₹5,000
Net Payment	₹45,000

TDS on Salary (Section 192)

Employers estimate annual salary, compute tax liability as per chosen regime (old/new), and deduct TDS monthly. Steps:

Estimate gross salary including all allowances
Deduct exemptions (HRA, LTA, etc.) under old regime
Apply standard deduction (₹75,000 under new regime)
Calculate tax on taxable income
Divide by 12 for monthly TDS

Use our Income Tax Calculator to compute tax under both regimes.

TDS Compliance Deadlines

Activity	Due Date	Form
TDS Deposit	7th of next month	Challan 281
Quarterly Return (Q1-Q3)	31st July, Oct, Jan	Form 24Q/26Q
Quarterly Return (Q4)	31st May	Form 24Q/26Q
TDS Certificate - Salary	15th June	Form 16
TDS Certificate - Others	15 days from quarter end	Form 16A

Lower/Nil TDS Certificate

If your income is below taxable limit or you're eligible for deductions that reduce tax, you can apply for lower/nil TDS certificate (Form 13). Steps:

File application on TRACES portal
Submit supporting documents
AO issues certificate within 30 days
Submit certificate to deductor

Form 15G and 15H

Form 15G (below 60 years) and Form 15H (senior citizens) are self-declarations to avoid TDS on interest income when total income is below taxable limit.

Form 15G: Annual income below basic exemption (₹3L new regime)
Form 15H: Tax liability on total income is NIL (for senior citizens)
Submit at start of financial year to banks/NBFCs
Not valid for NRIs

Frequently Asked Questions

Is TDS refundable?

Yes. TDS is advance tax. When you file ITR, your total tax is calculated. If TDS exceeds actual liability, the excess is refunded. Refund timeline is typically 4-8 weeks after processing.

What if deductor didn't deposit TDS?

If TDS was deducted from your payment but not deposited, you can still claim credit if it reflects in your Form 26AS/AIS. The deductor faces penalties and interest for delayed deposit.

Can I avoid TDS legally?

Yes, through: (1) Form 15G/15H for interest income, (2) Lower deduction certificate, (3) Staying below threshold limits where possible, (4) Timing payments across financial years.

What's the penalty for not deducting TDS?

Interest: 1% per month for non-deduction, 1.5% per month for non-payment after deduction. Penalty: Equal to TDS amount under Section 271C. The expense may also be disallowed for income tax.