TDS (Tax Deducted at Source) is one of the most confusing aspects of Indian taxation. Whether it's your employer deducting TDS from salary, your bank cutting TDS on FD interest, or a client deducting TDS on freelance payments — understanding TDS is essential to ensuring you pay the right tax and claim refunds you're entitled to.
What is TDS and How Does It Work?
TDS is a mechanism where the payer deducts tax at source before making a payment to you. The deducted amount is deposited with the government on your behalf. When you file your ITR, this pre-paid tax is adjusted against your total tax liability — and if excess TDS was deducted, you get a refund.
TDS is not an additional tax. It's a prepayment of your income tax, deducted at the source of income.
TDS Rate Chart for FY 2025-26
| Section | Type of Payment | TDS Rate | Threshold |
|---|---|---|---|
| 192 | Salary | As per slab | Above basic exemption |
| 194A | FD Interest (Bank) | 10% | Above ₹40,000 (₹50,000 seniors) |
| 194I | Rent (Property) | 10% | Above ₹2,40,000/year |
| 194J | Professional/Technical Fees | 10% | Above ₹30,000/year |
| 194C | Contractor Payment | 1% (Individual), 2% (Company) | Above ₹30,000 |
| 194H | Commission/Brokerage | 5% | Above ₹15,000/year |
| 194B | Lottery/Prize Winnings | 30% | Above ₹10,000 |
TDS on Salary (Section 192)
Your employer calculates your estimated annual income and deducts TDS monthly at the applicable slab rate. You must declare your investments and deductions to your employer via Form 12BB at the beginning of the financial year. Based on your declaration, your employer adjusts TDS monthly. At year-end, if actual investments don't match declarations, you may face additional tax liability or get a refund.
TDS on FD Interest (Section 194A)
Banks deduct 10% TDS on FD interest if total interest exceeds ₹40,000 in a year (₹50,000 for senior citizens). If your total income is below the taxable limit:
- Submit Form 15G (non-senior citizens below taxable limit) to avoid TDS
- Submit Form 15H (senior citizens) to avoid TDS
- These forms must be submitted at the beginning of each financial year
How to Check TDS Deducted — Form 26AS and AIS
All TDS deducted against your PAN is reflected in:
- Form 26AS: Available on the Income Tax portal (incometax.gov.in). Shows all TDS, TCS and advance tax paid.
- Annual Information Statement (AIS): More comprehensive — includes interest income, dividend, property transactions, and foreign remittances.
- Taxpayer Information Summary (TIS): Simplified summary of AIS for quick reference.
Claiming TDS Refund
If excess TDS has been deducted (more than your actual tax liability), you can claim a refund by filing your ITR. Steps:
- File ITR before July 31 (assessment year)
- Verify the ITR via Aadhaar OTP or net banking
- Refund is processed to your bank account — usually within 30–60 days
- Track refund status on incometax.gov.in
Form 16 — Your TDS Certificate
Your employer must issue Form 16 by June 15th of the assessment year. Form 16 has two parts:
- Part A: Summary of TDS deducted and deposited by employer with PAN/TAN details
- Part B: Detailed salary breakup — all allowances, perquisites, deductions claimed and tax computation
Use Form 16 directly to file your ITR — most details auto-populate if your employer has filed TDS returns correctly (Form 24Q).
TDS Calculator — How to Use
Our free TDS Calculator covers all major sections. Enter the payment amount, select the TDS section, specify if PAN is available, and instantly see the TDS deducted, cess amount, and net payment received. Perfect for freelancers calculating net income, landlords estimating rent income, and professionals understanding FD interest TDS.