Tax Deducted at Source (TDS) is a mechanism where tax is deducted at the source of income before payment is made. It applies to salary, rent, professional fees, interest income, and many other payments. The TDS calculator helps you determine whether TDS is applicable and how much will be deducted — so you can plan your cash flows accordingly.
Key TDS Sections You Should Know
Section 192 (Salary) — deducted by employers based on estimated annual income. Section 194A (Bank interest) — 10% above ₹40,000/year. Section 194C (Contractor payments) — 1%/2% above ₹30,000 per payment. Section 194H (Commission) — 5% above ₹15,000. Section 194I (Rent) — 10% above ₹2.4 lakh/year for land/building. Section 194J (Professional fees) — 10% above ₹30,000/year.
Difference Between TDS and Advance Tax
TDS is deducted at source by the payer on behalf of the recipient. Advance Tax is paid by the recipient themselves in quarterly instalments. If you have income without TDS (rental income, capital gains, freelance income), you may need to pay Advance Tax. Total annual tax liability exceeding ₹10,000 (after TDS) triggers the Advance Tax obligation.
How to Avoid Excess TDS
Submit Form 15G (individuals below 60) or Form 15H (senior citizens) to the deductor if your income is below the taxable limit. For salary TDS, submit declarations of deductions and exemptions to your employer at the start of the year so they factor these in and avoid excess deduction.
Frequently Asked Questions
How do I get a refund if excess TDS is deducted?
File your Income Tax Return (ITR) and claim the excess TDS as a refund. The refund is processed by the Income Tax Department and credited directly to your bank account, typically within 30–90 days of filing.
What happens if the deductor doesn't deposit TDS?
Your credit appears in Form 26AS only after the deductor deposits the TDS. If not deposited, you cannot claim the credit. The deductor faces a penalty of 1.5% per month for non-deposit.
Is TDS deducted on mutual fund redemptions?
For resident Indians, no TDS is deducted on mutual fund redemptions. You pay capital gains tax at the time of ITR filing. For NRIs, TDS applies at 20% (equity LTCG), 30% (equity STCG), and slab rate for debt funds.
What is Form 26AS?
Form 26AS is your annual tax credit statement from the Income Tax Department. It shows all TDS deducted on your income by all deductors, advance tax paid, and self-assessment tax. Always reconcile it before filing your ITR.