TDS Calculator

TDS (Tax Deducted at Source): Complete Guide for India

Tax Deducted at Source (TDS) is a mechanism of collecting income tax at the very source of income. Under this system, the person making a specified payment (the deductor) is required to deduct tax at a prescribed rate before making the payment to the recipient (the deductee). The deducted amount is then deposited with the government on behalf of the recipient. TDS ensures a steady flow of revenue to the government throughout the year and reduces the burden of paying a large lump sum at the end of the financial year. It applies to a wide range of payments including salary, interest income, rent, professional fees, commissions, and more.

Major TDS Sections and Rates

• Section 192 (Salary): TDS is deducted at the applicable income tax slab rates after considering declared investments and deductions. Your employer issues Form 16 as a TDS certificate.
• Section 194A (Interest on FD/RD): 10% TDS if interest exceeds ₹40,000 in a year (₹50,000 for senior citizens). Banks deduct TDS on cumulative interest across all branches.
• Section 194C (Contractor Payments): 1% for individuals/HUFs and 2% for companies. Threshold is ₹30,000 per single payment or ₹1,00,000 aggregate in a year.
• Section 194J (Professional/Technical Fees): 10% on payments exceeding ₹30,000 per year. Covers fees paid to doctors, lawyers, architects, CAs, and IT consultants.
• Section 194-IA (Property Purchase): 1% TDS on purchase of immovable property valued above ₹50,00,000. The buyer is responsible for deducting and depositing TDS.
• Section 194-IB (Rent by Individuals): 5% TDS if monthly rent exceeds ₹50,000. Even individuals and HUFs not subject to audit must deduct TDS on rent.

Example: TDS on Fixed Deposit Interest

Suppose you have a fixed deposit of ₹10,00,000 at 7% interest. Your annual interest is ₹70,000, which exceeds the ₹40,000 threshold. The bank deducts TDS of 10% on ₹70,000 = ₹7,000. You receive ₹63,000 as net interest. If you do not provide your PAN, TDS is deducted at 20%, meaning ₹14,000 would be deducted instead.

Form 16, Form 16A, and Quarterly Filing

Form 16 is the TDS certificate issued by employers for salary income, containing details of salary paid and tax deducted. Form 16A is the TDS certificate for non-salary payments such as interest, rent, and professional fees. Deductors must file quarterly TDS returns: Q1 (April-June) by 31st July, Q2 (July-September) by 31st October, Q3 (October-December) by 31st January, and Q4 (January-March) by 31st May. Late filing attracts a fee of ₹200 per day under Section 234E.

No PAN Penalty (Section 206AA)

If the deductee does not furnish their PAN to the deductor, TDS is deducted at the higher of: the rate specified in the relevant section, 20%, or the rate in force. This means not providing PAN can double or even quadruple the TDS amount. Always ensure your PAN is updated with banks, employers, and other deductors.

How to Claim TDS Refund

If TDS deducted exceeds your actual tax liability for the year, you can claim a refund by filing your Income Tax Return (ITR). Check your Form 26AS or Annual Information Statement (AIS) on the income tax portal to verify all TDS credits. Ensure the TDS shown in 26AS matches your Form 16/16A. Refunds are typically processed within 4-6 weeks of filing, and interest under Section 244A is paid on delayed refunds.

Tips and Best Practices

• Submit Form 15G (below 60 years) or Form 15H (senior citizens) to your bank if your total income is below the taxable limit to avoid TDS on interest income.
• Verify TDS entries in Form 26AS regularly to ensure the deductor has deposited the tax with the government.
• Buyers purchasing property above ₹50 lakh must deduct 1% TDS and pay using Form 26QB within 30 days.
• If you are a freelancer receiving payments after TDS, file your ITR to claim excess TDS as a refund.
• Keep copies of all TDS certificates (Form 16/16A) for at least 6 years from the end of the assessment year.

When to Use This Calculator

Use this TDS calculator to estimate the tax that will be deducted on your FD interest, rent payments, professional fees, or property purchase. It is useful for both deductors (to know how much to deduct and deposit) and deductees (to estimate net income after TDS). This tool also helps you decide whether to submit Form 15G/15H or plan advance tax payments.