What happens if TDS is not deducted?

The payer faces penalties and interest for non-deduction. The payee still needs to pay tax on income.

How do I claim TDS refund?

File your income tax return. If TDS deducted exceeds your actual tax liability, you'll get a refund.

Form 26AS is your annual tax credit statement showing all TDS deducted against your PAN.

How to Calculate TDS

TDS (Tax Deducted at Source) is a mechanism where the payer deducts tax at prescribed rates before making payments. Understanding TDS helps you plan your cash flows and avoid surprises.

TDS Calculation Formula

TDS = Payment Amount × TDS Rate

Where:

Payment Amount = Gross amount being paid
TDS Rate = Applicable TDS percentage based on payment type and section

Step-by-Step:

1
Identify payment type
Salary (192), Interest (194A), Rent (194I), Professional fees (194J), etc.
2
Check applicable rate
Each section has different TDS rates.
3
Check threshold
TDS applies only above certain threshold amounts.
4
Calculate TDS
Apply rate to the payment amount above threshold.

Worked Examples:

FD interest of ₹60,000

FD Interest: ₹60,000Section: 194ARate: 10%

Result: TDS = ₹6,000

Since interest exceeds ₹40,000 threshold, TDS of 10% applies on full amount.