Tax Deducted at Source (TDS) is the mechanism by which the government collects tax at the point a payment is made, rather than waiting for the recipient to file a return and pay tax later. Whether it's salary, professional fees, rent, contractor payments, or interest, different categories of payments attract different TDS rates and thresholds under the Income Tax Act.
Getting TDS wrong — whether deducting too little, too much, or forgetting to deduct altogether — can create compliance headaches for both the person deducting tax (the "deductor") and the person receiving payment (the "deductee"), including interest, penalties, and disallowance of expenses in some cases.
This calculator shows you the applicable TDS rate for common payment types and estimates the deduction on a given amount for FY 2026-27. Note that many TDS sections have a threshold limit below which no deduction is required — this calculator shows the applicable rate but does not automatically apply threshold exemptions, so please confirm applicability for your specific transaction, especially if the payee has not furnished PAN (which can trigger a higher TDS rate).
The deductor becomes liable to pay interest, and in serious cases can face penalties and prosecution under the Income Tax Act. Timely deposit and TDS return filing are essential.
In most cases, TDS is deducted at a higher rate — typically 20% or the rate specified under the section, whichever is higher — when PAN is not furnished.
Yes, TDS deducted is reflected in Form 26AS/AIS against the deductee's PAN and can be claimed as a credit against their final tax liability when filing their income tax return.
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