TDS Calculator
TDS for 20+ sections at FY 2025-26 thresholds and rates — with the correct sec 206AA no-PAN rule (higher of the section rate or 20%, never added).
What is Tax Deducted at Source (TDS)?
Tax Deducted at Source (TDS) is a statutory direct taxation mechanism introduced by the Government of India under the Income Tax Act, 1961 to collect revenue at the very point where income is generated or payments are disbursed. The entity making the payment (the Deductor) is legally obligated to deduct a specified percentage of tax before remitting the net amount to the payee (the Deductee), and deposit that deducted tax directly to the Central Government.
TDS acts as a prepaid tax that prevents tax evasion and ensures steady cash flows into the government treasury. For payees, the TDS deducted is not a final tax expense; it represents advance credit that can be claimed against your final income tax liability when filing your annual Income Tax Return (ITR).
Common TDS Sections, Thresholds, and Rates
Different categories of commercial and personal transactions are governed by distinct statutory sections, each with its own threshold exemption limit and statutory rate:
- Section 192 (Salary): Employer deducts average progressive income tax based on the employee's estimated annual salary income and chosen tax regime.
- Section 194A (Interest other than securities): Banks deduct 10% TDS on fixed deposit interest exceeding ₹40,000 per financial year (₹50,000 for senior citizens). Other interest exceeding ₹5,000 attracts 10%.
- Section 194J (Professional & Technical Fees): 10% TDS on professional fees, royalty, and director fees exceeding ₹30,000 per year; 2% TDS on technical services, call center operations, and royalty for cinematographic films.
- Section 194C (Contractor Payments): 1% TDS for payments to individuals/HUFs, and 2% TDS for payments to corporate entities, where single contract exceeds ₹30,000 or aggregate annual payments exceed ₹1,00,000.
- Section 194I (Rent): 10% TDS on rent of land, building, or furniture exceeding ₹2,40,000 per year; 2% TDS on plant and machinery hire.
- Section 194Q (Purchase of Goods): 0.1% TDS on purchases exceeding ₹50,00,000 from a resident seller if buyer's turnover exceeds ₹10 crore.
TDS and Net Payout Calculation Formulation
TDS Amount = Gross Payable × (TDS Rate ÷ 100) · Net Payout = Gross Payable − TDS Amount
- Gross Payable: Total billed amount or contractual payment due before tax deductions
- TDS Rate: Statutory percentage notified under relevant section of Income Tax Act
- Net Payout: Liquid payment disbursed to payee's bank account
- Non-Furnishing of PAN (Section 206AA): If deductee fails to furnish a valid PAN, TDS must be deducted at 20% (or higher statutory rate)
- Specified Non-Filers (Section 206AB): Higher rate applies if deductee failed to file ITR for previous year and aggregate TDS exceeded ₹50,000
Worked example: ₹50,000 Professional Fee under Section 194J
Consider a registered freelance consultant or CA billing a client for ₹50,000 of professional consultancy services under Section 194J:
- Gross Invoice Amount: ₹50,00,000 ÷ 100 = ₹50,000 (exceeds the ₹30,000 annual threshold)
- Applicable TDS Rate under Section 194J(a): 10%
- TDS Deducted by Client: ₹50,000 × (10 ÷ 100) = ₹5,000
- Net Amount Transferred to Consultant: ₹50,000 − ₹5,000 = ₹45,000
- Client's Obligation: Deposit ₹5,000 to the Central Government by the 7th of the following month and issue Form 16A
- Consultant's Status: The ₹5,000 appears in Form 26AS/AIS and reduces final tax payable at year-end
Master TDS Rates and Thresholds Reference Table
| Section | Nature of Payment | Threshold Limit | Standard TDS Rate | Rate Without PAN (Sec 206AA) |
|---|---|---|---|---|
| 192 | Salaries | Basic Exemption Slab | Average Slab Rate | Highest Slab Rate (30%) |
| 194A | Bank Fixed Deposit Interest | ₹40,000 (₹50,000 for Seniors) | 10% | 20% |
| 194C | Contractor Payments (Individual/HUF) | ₹30,000 (Single) / ₹1,00,000 (Annual) | 1% | 20% |
| 194C | Contractor Payments (Company/Firm) | ₹30,000 (Single) / ₹1,00,000 (Annual) | 2% | 20% |
| 194H | Commission or Brokerage | ₹15,000 | 2% (Budget 2024) | 20% |
| 194I(a) | Rent on Plant & Machinery | ₹2,40,000 per year | 2% | 20% |
| 194I(b) | Rent on Land or Building | ₹2,40,000 per year | 10% | 20% |
| 194-IB | Rent Paid by Individuals/HUFs | ₹50,000 per month | 2% (Budget 2024) | 20% (capped at 1 mo rent) |
| 194J | Professional Fees / Royalty | ₹30,000 per year | 10% | 20% |
| 194J | Technical Services / Call Center | ₹30,000 per year | 2% | 20% |
Form 26AS, AIS, and Reconciling TDS Credit
Once a deductor deposits TDS, they file quarterly TDS returns (Form 24Q for salary, Form 26Q for non-salary). The government credits this tax against the deductee's PAN in two official records:
- Form 26AS: The official tax credit statement reflecting all TDS deposited by employers, clients, and banks.
- Annual Information Statement (AIS) & Taxpayer Information Summary (TIS): Comprehensive records showing all financial transactions, including interest, stock sales, and contractual earnings.
If TDS deducted from your payment does not reflect in Form 26AS, you must follow up with the deductor to revise their quarterly TDS return; otherwise, the Income Tax Department will not grant credit, resulting in tax demand notices.
Preventing TDS: Form 15G, Form 15H, and Lower Deduction Certificates
If your total annual income is below the taxable threshold, you can legitimately prevent TDS deduction upfront without waiting for a tax refund:
- Form 15G: Self-declaration for resident individuals below 60 years stating that their total estimated income will not exceed the basic exemption limit.
- Form 15H: Self-declaration for resident senior citizens (aged 60+) stating that their final computed tax liability for the financial year will be nil.
- Section 197 Lower/Nil Deduction Certificate: Taxpayers with high business expenses or carried forward losses can apply online to their Assessing Officer for a formal certificate authorizing payers to deduct TDS at lower or nil rates.
Frequently Asked Questions on TDS
Key insights into rates, threshold exemptions, Form 16/16A, Section 206AA penalties, and refunds.
TDS is a mechanism of collecting tax in advance as income is disbursed. Income tax payable is your actual total tax liability calculated on your overall annual income at year-end. If TDS deducted exceeds your final tax liability, you receive an income tax refund with interest; if TDS is lower, you pay the balance as self-assessment tax.
Log in to the official Income Tax e-filing portal (incometax.gov.in) and download your Form 26AS or Annual Information Statement (AIS). These statements show the deductor’s TAN, section code, transaction date, amount paid, and exact TDS deposited against your PAN.
Under Section 206AA of the Income Tax Act, if you fail to furnish a valid Permanent Account Number (PAN) to the payer, TDS must be deducted at the penal rate of 20% (or the applicable statutory rate, whichever is higher), regardless of normal threshold limits.
Form 15G (for individuals below 60) and Form 15H (for senior citizens aged 60+) are self-declaration forms submitted to banks at the start of each financial year certifying that your total annual income will be below the taxable limit. Upon receipt, the bank is prohibited from deducting TDS under Section 194A.
Yes. If you are an individual or HUF not subject to tax audit and pay monthly house rent exceeding ₹50,000, you must deduct TDS at 2% (reduced from 5% in Budget 2024) from the rent paid in the last month of the tenancy and deposit it using Form 26QC without needing a TAN.
Form 16 is an annual TDS certificate issued by employers for salary deductions under Section 192. Form 16A is a quarterly TDS certificate issued by banks, clients, and companies for non-salary deductions (interest, professional fees, contractor payments). Form 16B is issued by property buyers for TDS on immovable property under Section 194-IA.
TDS deducted during any calendar month must be deposited via Challan ITNS 281 by the 7th of the following month (e.g., TDS deducted in October must be deposited by November 7). For the month of March, the statutory deposit deadline is extended to April 30.
Under Section 201(1A), delayed deduction attracts simple interest at 1% per month or part of a month from the date on which tax was deductible to the date of actual deduction. Delayed deposit after deduction attracts higher simple interest at 1.5% per month or part of a month until deposited.
Section 206AB mandates higher TDS rates (twice the normal rate or 5%, whichever is higher) on payments made to "specified persons" who failed to file their Income Tax Return for the preceding financial year and whose aggregate TDS/TCS exceeded ₹50,000.
To claim a refund, file your annual Income Tax Return (ITR-1, 2, 3, or 4) on the income tax portal. The system automatically reconciles TDS against total tax liability. Any excess TDS is credited directly to your validated bank account with interest under Section 244A.