TDS Calculator 2026

Tax Deducted at Source (TDS) is the government's primary mechanism for collecting income tax at the point where income is generated rather than waiting for annual filing. The person making the payment (the deductor) is legally required to deduct a percentage of tax before releasing the payment to the recipient (the deductee). This withheld amount is then deposited with the government on behalf of the deductee and credited to their tax account.

Who must deduct TDS? Any person (individual, HUF, company, firm, trust, or government body) making specified payments is required to deduct TDS — provided the payment exceeds the prescribed threshold limit for that category. For salary TDS (Section 192), only employers deduct. For non-salary payments (rent, professional fees, interest), any person whose books are required to be audited, or whose turnover exceeds the prescribed limits, must deduct TDS. Individuals and HUFs without business income are generally not required to deduct TDS on most payments — except under Section 194-IA (property purchase above ₹50 lakh) and Section 194M (payments above ₹50 lakh to contractors/professionals).

TAN — Tax Account Number for deductors. Every person who is required to deduct TDS must obtain a TAN (Tax Account Number) — a 10-digit alphanumeric identifier. TAN must be quoted on all TDS challans, TDS returns, and TDS certificates. Failure to apply for TAN attracts a penalty of ₹10,000 under Section 272BB. TAN can be applied for online through the income tax portal or NSDL/UTIITSL websites.

TDS deposit timelines. TDS deducted during a month must be deposited with the government by the 7th of the following month. For March TDS, the deadline is 30th April. Government deductors have until the 7th of the following month for non-salary TDS. The deposit is made through Challan No. 281 (available on the TIN NSDL portal or through net banking). Late deposit attracts interest at 1.5% per month under Section 201(1A) from the date of deduction to the date of actual deposit — this interest is calculated for each month or part of a month.

How TDS benefits the deductee. The deducted TDS is not lost money — it is an advance payment of your income tax. When you file your ITR, the TDS deducted (as reflected in Form 26AS and AIS) is credited against your total tax liability. If TDS exceeds your liability, you get a tax refund. If TDS falls short, you pay the balance as self-assessment tax. The key insight: TDS is not an additional tax — it is a pre-payment mechanism that ensures steady revenue for the government while spreading the tax burden throughout the year.

TDS rates in India are not uniform — they vary by the nature of the payment, and each category has its own threshold below which no TDS is deducted. The rates are significantly higher when the recipient does not provide a PAN (Permanent Account Number), making PAN compliance critical for both deductors and deductees.

Section 192 — Salary (rate: as per income tax slab). Employers calculate TDS on salary based on the employee's estimated annual income and applicable slab rates. The employer considers declared investments (80C, 80D), HRA exemption, and other deductions. TDS on salary is deducted monthly. If the employee switches jobs, they should provide Form 12B (details of previous employer income) to avoid under or over-deduction. Use our income tax calculator to estimate your salary TDS.

Section 194A — Interest (rate: 10% with PAN, 20% without PAN). Banks and financial institutions deduct TDS on interest when the annual interest exceeds ₹40,000 (₹50,000 for senior citizens). This covers FD interest, RD interest, and other deposit interest. Note: interest on savings accounts is covered under Section 194A for banks but exempt up to ₹10,000 under Section 80TTA. Co-operative banks and post office deposits have slightly different thresholds.

Section 194J — Professional/Technical fees (rate: 10% with PAN, 20% without PAN). TDS is deducted on payments for professional services (legal, medical, engineering, architectural, accounting, technical consultancy, interior decoration, advertising) exceeding ₹30,000 per year. For technical services (other than professional), the rate is 2%. This section significantly impacts freelancers and consultants — if you earn fees from multiple clients, each client deducts TDS independently based on their payments to you.

Section 194I — Rent (rate: 10% with PAN, 20% without PAN). TDS on rent applies when annual rent exceeds ₹2,40,000. The rate is 2% for plant and machinery rent and 10% for land, building, or furniture rent. Section 194-IB covers individuals/HUFs (not subject to audit) paying rent above ₹50,000/month — they must deduct TDS at 5%. Section 194H covers commission and brokerage at 5% above the ₹15,000 threshold. For all these sections, the 20% rate without PAN applies universally — emphasising why deductors must insist on collecting PAN from all payees before making payments.

TDS is designed as a presumptive collection mechanism — it deducts tax assuming you will owe it. But if your actual tax liability is zero or lower than the TDS rate, you have legal options to prevent over-deduction at source rather than claiming a refund later. This is more tax-efficient because you retain your money throughout the year instead of lending it to the government for months.

Form 15G — for individuals below 60 years with nil tax liability. If your total income is below the basic exemption limit (or your tax liability is zero after deductions), submit Form 15G to banks, post offices, and other deductors. This declaration states that your estimated total income for the year will not exceed the taxable limit, and requests the deductor to not deduct TDS. Eligibility: you must be a resident individual (not a company or firm), and the tax on your estimated total income must be nil. Important: Form 15G is valid for one financial year — submit it at the start of every April.

Form 15H — exclusively for senior citizens (60+). Form 15H works like Form 15G but with a key relaxation: senior citizens need only declare that their estimated tax liability is nil after applying exemptions, deductions, and rebates — even if total income exceeds the basic exemption limit. For example, a senior citizen with ₹4 lakh income and ₹1.5 lakh in 80C deductions has taxable income of ₹2.5 lakh — below the ₹3 lakh exemption for seniors. They can submit Form 15H to prevent TDS on their FD interest. This is particularly valuable for retirees who have substantial fixed deposits and rely on interest income.

Lower/Nil Deduction Certificate under Section 197. For professionals, freelancers, and businesses where TDS at standard rates leads to significant over-deduction (because of high expenses or other deductions), apply for a lower deduction certificate from the Assessing Officer. The application is made via Form 13 on the TRACES portal. The AO examines your income, expenses, and tax history, then issues a certificate specifying a lower rate (or nil rate) for TDS. This certificate is provided to your clients/deductors, who then deduct TDS at the certified lower rate. It is valid for the specified financial year and specific deductors.

Practical tips. (1) Submit Form 15G/15H to every bank where you hold deposits — not just your primary bank. (2) For Section 197 certificates, apply early in the financial year (April–May) to benefit from lower TDS throughout the year. (3) Maintain records of all forms submitted — if a bank still deducts TDS after receiving Form 15G/15H, you can raise a complaint and claim the excess as tax refund. (4) Never submit Form 15G/15H if your actual tax liability is non-zero — it constitutes a false declaration and attracts penalties under Section 277.

TDS compliance is a year-round obligation for deductors, not a one-time annual event. The deductor must deduct TDS correctly, deposit it on time, file quarterly returns, and issue TDS certificates — failure at any stage triggers penalties, interest, and potential prosecution. Understanding the compliance calendar is essential for businesses, employers, and any person required to deduct TDS.

Quarterly TDS return forms. Form 24Q — for TDS on salary (Section 192); Form 26Q — for TDS on non-salary payments to residents (all other sections); Form 27Q — for TDS on payments to non-residents; Form 27EQ — for Tax Collected at Source (TCS). Due dates: Q1 (Apr–Jun) by 31st July, Q2 (Jul–Sep) by 31st October, Q3 (Oct–Dec) by 31st January, Q4 (Jan–Mar) by 31st May. Returns are filed electronically through the TRACES portal using validated .fvu files generated by the RPU (Return Preparation Utility).

Penalties under Section 234E — late filing fee. A fee of ₹200 per day is levied for every day the TDS return is delayed, subject to the maximum of the total TDS amount in the return. For example, if Q1 return with ₹50,000 TDS is filed 100 days late, the penalty is ₹20,000 (₹200 × 100), not ₹50,000. This penalty is mandatory and cannot be waived by the Assessing Officer. Beyond the late fee, the AO can also levy a penalty up to ₹1 lakh under Section 271H for returns filed more than 1 year late.

Interest for non-deduction and late deposit. Section 201(1A) imposes interest at: (1) 1% per month (or part of a month) from the date TDS was deductible to the date of actual deduction — if TDS was not deducted at all; (2) 1.5% per month from the date of deduction to the date of actual deposit — if TDS was deducted but not deposited on time. This interest is computed separately for each payment and adds up quickly. The deductor is also treated as an assessee in default and may face recovery proceedings for the TDS amount plus interest.

TDS certificates and their importance. Deductors must issue: Form 16 (annual salary TDS certificate) by 15th June; Form 16A (quarterly non-salary TDS certificate) within 15 days from the due date of filing the TDS return. These certificates are generated through TRACES and contain a unique certificate number that links to the deposited TDS. For deductees, Form 16/16A is essential for filing income tax returns — always verify that the TDS shown in the certificate matches your Form 26AS and Annual Information Statement (AIS) on the e-filing portal before filing.

If TDS deducted during the year exceeds your actual tax liability, you are entitled to a refund of the excess amount. But claiming this refund requires accurate reporting and reconciliation — mismatches between your ITR and the department's TDS records are the single biggest reason for refund delays and rejections.

Step 1 — Download and verify Form 26AS. Form 26AS is your consolidated tax credit statement — it shows all TDS deducted by every deductor (employer, banks, clients), advance tax paid, self-assessment tax paid, and high-value transactions reported by third parties. Download it from the e-filing portal → "Services" → "View Form 26AS". Cross-check every entry with your records. If a deductor deducted TDS but it doesn't appear in Form 26AS, it means they either haven't deposited it or haven't filed their TDS return — contact the deductor immediately.

Step 2 — Reconcile with the Annual Information Statement (AIS). The AIS (introduced from AY 2021-22) is a more comprehensive version of Form 26AS. It captures: TDS/TCS details, interest from savings and deposits, dividend income, share transactions, mutual fund purchases and redemptions, foreign remittances, and even GST turnover. Review the AIS carefully — if any information is incorrect or relates to someone else, submit feedback on the AIS portal. The department uses AIS data for automated scrutiny, so unaddressed mismatches can trigger notices.

Step 3 — Report TDS accurately in your ITR. In your ITR, the Schedule TDS1 (salary TDS) and Schedule TDS2 (non-salary TDS) must exactly match Form 26AS. Enter: TAN of deductor, name of deductor, section under which TDS was deducted, total income from that deductor, TDS deducted, and TDS claimed for the current year. If you have TDS from previous years that was not claimed, it generally cannot be claimed in the current year — TDS must be claimed in the year the income is offered for taxation.

Handling TDS mismatches and rectification. Common issues: (1) TDS in 26AS but not in your records — this could be a duplicate or erroneous entry by the deductor; do not claim TDS you did not actually suffer. (2) TDS in your records but not in 26AS — ask the deductor to file/correct their TDS return; you cannot claim TDS that doesn't appear in 26AS. (3) Amount mismatch — verify with the deductor and request a correction statement if needed. If the CPC disallows TDS credit due to mismatch, file a rectification under Section 154 with supporting documents (Form 16/16A, bank statements). Our income tax calculator can help you compute your actual liability and determine the expected refund after accounting for all TDS credits.