TDS
Definition
Tax Deducted at Source — a mechanism where the payer deducts tax before making payment and deposits it with the government. Applied on salary, interest, rent, professional fees, and more. TDS rates vary: salary (as per slab), interest (10%), rent (10% if >₹2.4L/year).
Why is TDS Important?
Navigating the Indian tax system requires a clear understanding of terms like TDS. With the introduction of the new income tax regime alongside the old one, taxpayers must evaluate their deductions, exemptions, and tax brackets carefully. This concept is a key component in optimizing your tax liabilities under the Income Tax Act and GST framework.
Proper tax planning using this metric can help individuals and businesses maximize their take-home income while remaining fully compliant with government regulations. We provide free tax calculators to help you estimate these figures accurately and make informed decisions before filing your returns.
What is TDS?
Tax Deducted at Source (TDS) is a system where tax is collected at the source of income itself. The payer (employer, bank, client) deducts tax before making payment and deposits it with the government on your behalf.
Common TDS Rates
| Income Type | Section | TDS Rate | Threshold |
|---|---|---|---|
| Salary | 192 | As per slab | Basic exemption limit |
| FD Interest | 194A | 10% | ₹40,000/year (₹50,000 seniors) |
| Rent (>₹50K/month) | 194-IB | 5% | ₹50,000/month |
| Professional Fees | 194J | 10% | ₹30,000/year |
| Property Sale | 194-IA | 1% | ₹50,00,000 |
What to Do If Excess TDS Is Deducted
- File your Income Tax Return (ITR)
- Claim refund for excess TDS deducted
- Submit Form 15G/15H to avoid TDS if income is below taxable limit