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.
Several of these limits were raised with effect from 1 April 2025: professional fees under 194J moved from ₹30,000 to ₹50,000, rent under 194I from ₹2,40,000 a year to ₹50,000 a month, bank and post-office interest under 194A from ₹40,000 to ₹50,000 (₹1,00,000 for senior citizens), and commission under 194H from ₹15,000 to ₹20,000. The 194H rate was separately cut from 5% to 2% with effect from 1 October 2024. Section 194C is unchanged at ₹30,000 for a single payment or ₹1,00,000 in aggregate for the year.
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 generally per financial year per deductee, not per transaction — cumulative payments count. Section 194C is the exception, with both a ₹30,000 single-payment test and a ₹1,00,000 annual aggregate test.
- 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 to a person exceed ₹50,000 in a financial year — the threshold was raised from ₹30,000 with effect from 1 April 2025. Fees for technical services are deducted at 2%.
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? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 30 Sep 2026. How we check these numbers.