What is the TDS?
TDS requires the payer to deduct tax before making certain payments and deposit it with the government. It is not an extra tax — the recipient claims it as credit when filing their return.
Each payment type has its own section, rate and threshold. Below the threshold no TDS applies; without a valid PAN, the rate jumps to 20% regardless of section.
Formula & worked example
Net payable = Payment − TDS
Worked example: ₹5,00,000 of professional fees under Section 194J at 10% → TDS of ₹50,000, so the professional receives ₹4,50,000 and claims ₹50,000 as credit in their return. Without PAN the rate would be 20%, deducting ₹1,00,000.
How to use this tds calculator
- Enter the gross payment before any deduction.
- Select the applicable section — it determines both rate and threshold.
- Indicate whether PAN was provided; the penalty rate is 20%.
- The net figure is what you actually pay the recipient.
Smart tips
- Thresholds are per financial year per deductee, not per transaction — cumulative payments count.
- Always collect PAN before paying. Without it the rate doubles and the recipient cannot claim credit.
- TDS must be deposited by the 7th of the following month; late deposit carries 1.5% monthly interest.
- Form 16A must be issued quarterly so the recipient can claim credit in their return.
- A recipient with income below the taxable limit can submit Form 15G/15H to avoid TDS on interest.
Frequently asked questions
What is TDS?
Tax Deducted at Source — the payer deducts tax before paying and deposits it with the government. The recipient claims it as credit when filing.
What is the TDS rate on professional fees?
10% under Section 194J, applicable once payments exceed ₹30,000 in a financial year.
What happens if PAN is not provided?
TDS is deducted at 20% under Section 206AA, and the deductee cannot claim credit without linking PAN.
Can I get a TDS refund?
Yes. If total TDS exceeds your actual tax liability, the excess is refunded when you file your income tax return.
Want the theory behind the numbers? Read our TDS guides on the Money Blog.