TDS Calculator — Section-wise Tax Deducted at Source

What is TDS (Tax Deducted at Source)?

TDS is a method of collecting income tax in India at the source of income generation. Instead of receiving the full amount and paying tax later, the recipient receives the amount AFTER tax has been deducted by the payer. The deductor (payer) is responsible for depositing TDS with the government within prescribed timelines. Introduced to ensure timely tax collection and curb evasion.

Key Sections of TDS

No-PAN Higher TDS Rule (Section 206AA)

If the recipient doesn’t furnish PAN/Aadhaar, TDS is deducted at the HIGHER of: (a) the prescribed rate, (b) the rate as per Income Tax Act, or (c) 20%. This penal rate often catches contractors and freelancers off-guard. Always quote PAN.

Examples of Higher TDS Without PAN

TDS on Salary — How Employers Compute It

Section 192 mandates employers deduct TDS based on EMPLOYEE’S estimated tax liability for the year. Steps:

1. Estimate annual salary (Basic + DA + HRA + Allowances + Perquisites)
2. Subtract Standard Deduction (₹50K old / ₹75K new), Exempt allowances (HRA computed, LTA, etc.)
3. Subtract Section 80C, 80D, 80CCD(1B) etc. (only in old regime) based on investment declarations
4. Compute tax on taxable income using applicable slabs (default = New Regime; opt for Old via Form 12BB)
5. Divide annual tax by 12 → monthly TDS
6. Adjust quarterly based on actual changes (bonus, midyear joining, investment shortfall)

Issue Form 16 by 15 June following financial year end.

TDS Deposit and Filing Calendar

Penalty for late deposit: Interest @ 1% per month for delay in deduction, 1.5% per month for delay in deposit (Sec 201(1A)). Plus ₹200/day late filing fee (Sec 234E) capped at TDS amount, plus prosecution risk for chronic defaulters.

Form 26AS & AIS — Verify Your TDS

Form 26AS (now Annual Information Statement) is your master TDS record. Available on the IT portal under “Services → Annual Information Statement.” Shows:

• All TDS deducted on your income (employer, banks, MFs, customers)
• Advance tax + self-assessment tax paid
• High-value transactions (mutual fund purchases >₹10L, credit card spend >₹2L)
• Property purchases, foreign remittances

Always reconcile Form 26AS with your bank/payslip BEFORE filing ITR. Missing TDS = you don’t get credit; excess TDS = you’ve been over-deducted (claim refund).

How to Avoid Excess TDS — Form 15G/15H

• Form 15G: For non-senior citizens with total income below taxable limit. Submit to banks/AMCs to prevent TDS on interest/dividends.
• Form 15H: Same purpose for senior citizens (60+).
• Lower TDS Certificate (Form 13): Apply to Assessing Officer for lower/nil TDS if your actual tax liability is much lower. Useful for businesses with large turnover but low net income.
• Submit early in financial year — banks deduct TDS quarterly; once deducted, you must claim refund in ITR.

TDS for Property Buyers — Section 194-IA Trap

If you buy any property worth > ₹50 lakh (other than agricultural land), YOU as buyer must:

1. Deduct 1% TDS on entire consideration (NOT just the excess over ₹50L)
2. Deposit using Form 26QB within 30 days
3. Issue Form 16B to seller
4. Mention seller’s PAN in Form 26QB (else 20% TDS!)

Many buyers forget — penalty includes interest + ₹200/day late fee + potential prosecution. Always factor TDS into purchase planning.

TDS Refund — When You’re Over-Deducted

If TDS exceeds your actual tax liability (common for retirees, low-income earners), you claim refund by filing ITR. Process:

1. File ITR by due date (31 July for individuals)
2. Refund credited to bank account (pre-validated PAN-Aadhaar linked)
3. Processing time: 7-90 days; faster for ITR-1/2; longer for ITR-3
4. Refund includes interest @ 6% per year from 1 April (or date of TDS, whichever later) till refund date — Section 244A

Frequently Asked Questions