TDS Calculator. Deduct at source, correctly.

TDS, or Tax Deducted at Source, is income tax collected at the moment a payment is made rather than at the year end. The payer (the deductor) keeps back a fixed percentage of the payment and deposits it with the government against the payee's PAN, then hands over the rest. The person receiving the money (the deductee) later claims that amount as tax already paid. Anyone making specified payments must deduct: companies and firms always, and individuals or HUFs once their business turnover crosses the tax-audit limit. Common cases are salary (192), contractor bills (194C), professional fees (194J), rent (194I) and commission (194H). Each section sets its own rate and its own threshold below which no TDS is due.

If the payee does not give a valid PAN, Section 206AA overrides the normal rate: TDS is deducted at the higher of the section rate or 20%. So a professional fee under 194J that would normally be cut at 10% is deducted at 20% with no PAN, and a contractor payment under 194C that would be 1% jumps to 20%. Where the section rate is already 20% or more, the rate does not change. The higher deduction is not a penalty you lose forever; the payee can still claim it back by filing a return, but only if they can link the TDS to their PAN, which is exactly what is missing. In practice, always collect a valid PAN before paying, because 206AA also blocks lower-deduction certificates and can trigger notices for a wrong or inoperative PAN.

These three are the most commonly confused because they all cover payments to service providers, but they carry very different rates. Section 194C is for a contractor or sub-contractor doing work (construction, catering, transport, advertising, manufacturing to your specification): 1% if the payee is an individual or HUF, 2% if a company or firm, with a ₹30,000 single-payment or ₹1,00,000 yearly threshold. Section 194J is for professional or technical services (a chartered accountant, lawyer, doctor, designer, consultant or a technical or call-centre service): 10% for professional fees, 2% for technical, threshold ₹50,000. Section 194H is for commission or brokerage paid to an agent for arranging a sale or service: 2% (cut from 5% on 1 October 2024), threshold ₹20,000. The test is the nature of the work, not the invoice title.

TDS is not an extra tax; it is an advance instalment of your own income tax. Everything deducted against your PAN during the year is credited to you and appears in Form 26AS and the Annual Information Statement (AIS) on the income-tax portal. When you file your return, you add up your total tax due for the year and subtract the TDS already deducted. If the TDS is more than your final liability, which is common for small contractors, senior citizens on interest, or anyone below the taxable limit, the excess is refunded to your bank account after the return is processed. If it is less, you pay the balance. Always reconcile your invoices against Form 26AS / AIS before filing, because you can only claim credit for TDS that the deductor has actually deposited and reported.

Budget 2025 raised several TDS thresholds with effect from 1 April 2025 to reduce compliance for small payments. The annual rent threshold under 194I went up from ₹2,40,000 to ₹6,00,000, and the 194J professional/technical threshold rose from ₹30,000 to ₹50,000. The 194A bank-interest threshold for senior citizens was raised to ₹1,00,000 (₹50,000 for others). These follow the earlier 1 October 2024 rate cuts that took 194H commission and 194M from 5% to 2% and 194O e-commerce from 1% to 0.1%. Because TDS rates and thresholds are amended in almost every Union Budget and by mid-year CBDT circulars, treat the numbers in this tool as FY 2025-26 (AY 2026-27) figures and confirm them against the latest Finance Act and CBDT notifications before you deduct.