TDS Calculator
Understanding TDS (Tax Deducted at Source)
TDS is a means of collecting income tax in India. Under the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
Why is TDS Deducted?
The concept of TDS was introduced with an aim to collect tax from the very source of income. It helps in checking tax evasion and ensures a regular flow of revenue to the government. It acts as a system of checks and balances.
Common TDS Deductions
- Salary: Deducted by employer based on your tax slab.
- Interest on Securities: Typically 10%.
- Interest from Banks (FD/RD): 10% if interest exceeds ₹40,000 (₹50,000 for senior citizens). 20% if PAN is not provided.
- Contractor Payments: 1% (Individual/HUF) or 2% (Others).
The Formula
TDS Amount = (Total Payment × TDS Rate%) / 100Net Payment = Total Payment - TDS Amount
FAQ
Can I get a refund of TDS?
Yes. If your total tax liability for the year is less than the TDS deducted, you can claim a refund by filing your Income Tax Return (ITR).
What is Form 16/16A?
These are TDS certificates. Form 16 is issued by employers for salary TDS, while Form 16A is issued for other payments like interest or professional fees.