TDS Explained: Complete Guide to Tax Deducted at Source
Everything you need to know about TDS including rates, filing, and compliance
TL;DR - TDS Quick Summary
- TDS (Tax Deducted at Source) is advance tax collected when income is generated
- Common sections: 192 (Salary), 194A (Interest), 194C (Contractors), 194J (Professionals)
- Deducted TDS appears in Form 26AS - claim credit/refund when filing ITR
- TDS deposit deadline: 7th of the next month
What is TDS?
Tax Deducted at Source (TDS) is a system where tax is collected at the source of income generation. The payer deducts tax before making payment to the receiver. This ensures the government receives tax throughout the year, rather than waiting for year-end returns.
Understanding TDS is crucial whether you are receiving salary, earning freelance income, or running a business. The deducted tax is credited to your account and can be claimed when filing your Income Tax Return.
Common TDS Sections & Rates
Here are the most frequently encountered TDS sections. For the complete rate chart, see our TDS Rate Chart 2025-26.
| Section | Payment Type | TDS Rate |
|---|---|---|
192 | Salary | As per slab |
194A | Interest (Bank/FD) | 10% |
194C | Contractor Payment | 1-2% |
194H | Commission/Brokerage | 5% |
194I | Rent (Property) | 10% |
194J | Professional Fees | 10% |
Key Takeaway
TDS is not an extra tax - it is advance tax payment. When filing your ITR, you claim credit for all TDS deducted. If total TDS exceeds your actual tax liability, you will receive a refund. Always verify TDS credited in Form 26AS/AIS before filing your return.
How to Claim TDS Refund
If your employer or payer deducted more TDS than your actual tax liability, you can claim a refund by following these steps:
- 1Check Form 26AS for TDS credited to your PAN
- 2File ITR before the deadline (July 31 for non-audit cases)
- 3Claim excess TDS as refund in your return
- 4E-verify your return within 30 days
- 5Refund processed directly to your bank within 30-45 days
Use our Tax Refund Calculator to estimate your potential refund amount.
TDS Compliance for Businesses
If you are a business owner or employer, TDS compliance is mandatory. Non-compliance attracts penalties and interest charges.
- ✓Deduct TDS at correct rates based on the payment type
- ✓Deposit TDS by 7th of next month (challan 281)
- ✓File quarterly TDS returns (Form 24Q, 26Q, 27Q)
- ✓Issue TDS certificates - Form 16 for salary, Form 16A for others
Late Deposit Penalty
TDS Compliance Calendar
By 7th of Next Month
Deposit TDS to government via challan 281
Quarterly Returns
Q1-Q3: By 31st of next month. Q4: By 31st May
Check our Tax Calendar for all important tax deadlines.
Related Tools & Resources
Related Calculators
TDS Comprehensive Calculator
Calculate TDS across salary, interest, rent, professional fees with latest rates (rent 2% - Oct 2024)
Section 195 TDS on Foreign Payments
Calculate TDS on payments to non-residents with DTAA rates and Form 15CA/15CB requirements
Lower TDS Certificate (Section 197)
Calculate eligible lower TDS rate for certificate application on property sales, NRO interest, rent, and fees
Freelancer Income Calculator
Convert foreign income (USD/EUR) to INR and calculate tax implications