TDS (Tax Deducted at Source) is not a tax on the payer — it’s a mechanism where the payer deducts a portion of the payment and deposits it with the government on behalf of the recipient. If you’re a tenant, a business paying contractors, or someone paying a professional, you may be legally required to deduct TDS. This calculator covers the most common TDS sections for individuals and businesses in India.
Quick reference: TDS rates and thresholds (FY 2025-26)
| Section | Payment type | Threshold | Rate (with PAN) | Rate (no PAN) |
|---|---|---|---|---|
| 194A | FD / bank interest | ₹40,000 (₹50,000 senior citizens) | 10% | 20% |
| 194I | Rent — land/building | ₹2,40,000/year | 10% | 20% |
| 194I | Rent — plant & machinery | ₹2,40,000/year | 2% | 20% |
| 194J | Professional fees | ₹30,000/year | 10% | 20% |
| 194J | Technical service fees | ₹30,000/year | 2% | 20% |
| 194C | Contractor (individual) | ₹30,000 single / ₹1,00,000 aggregate | 1% | 20% |
| 194C | Contractor (company) | ₹30,000 single / ₹1,00,000 aggregate | 2% | 20% |
| 194H | Commission / brokerage | ₹15,000/year | 5% | 20% |
| 194 | Dividend | ₹5,000/year | 10% | 20% |
Who needs to deduct TDS?
Individuals and HUFs: Must deduct TDS only if they are subject to tax audit under Section 44AB. So if you’re a salaried individual paying rent, you generally don’t need to deduct TDS (unless the rent is above ₹50,000/month — see Section 194IB).
Section 194IB (for individuals/HUF not under tax audit): If monthly rent exceeds ₹50,000, the tenant must deduct 5% TDS. This is a one-time deduction at the time of payment or year-end, whichever is earlier. Use Form 26QC to deposit it.
Businesses (companies, firms, LLPs): Must deduct TDS on all applicable payments regardless of size.
How to deposit TDS
- Deduct TDS at the time of payment (or credit, whichever is earlier)
- Deposit via Challan 281 on the Income Tax portal
- Due date: 7th of the following month (April–February); 30th April for March
- File quarterly TDS return (Form 24Q for salary, 26Q for others)
- Issue TDS certificate: Form 16 for salary (annual, by 15 June), Form 16A for others (quarterly, within 15 days of due date of return)
Penalty for not deducting or not depositing: Interest at 1% per month for non-deduction, 1.5% per month for deduction but non-payment. Plus penalty equal to the TDS amount under Section 271C.
When is TDS not required?
- The payment is below the threshold limit for that section
- The recipient files Form 15G (resident, non-senior, income below taxable limit) or Form 15H (senior citizen, income below taxable limit) — applicable mainly for FD interest under Sec 194A
- The recipient holds a lower or nil TDS certificate from the Income Tax Officer under Section 197
- The payer is an individual/HUF not subject to tax audit (except Section 194IB for high-rent)
Worked example: FD interest
You have a 2-year FD of ₹6 lakh at 7.5% at SBI. Annual interest = ₹45,000.
- Threshold: ₹40,000 (regular) — exceeded
- TDS rate (with PAN): 10%
- TDS = ₹45,000 × 10% = ₹4,500
- Net interest credited: ₹40,500
You can claim back the ₹4,500 when filing your ITR if your total income is below the taxable limit, or offset it against your tax liability if you’re in a higher bracket.
How to avoid TDS on FD: Submit Form 15G (if age < 60 and income below basic exemption limit) or Form 15H (if senior citizen) to the bank at the start of each financial year. The bank must accept it and stop deducting TDS.
Frequently asked questions
What is Form 26AS and AIS?
Form 26AS is your tax credit statement — it shows all TDS deducted against your PAN. AIS (Annual Information Statement) is a newer, more detailed version showing all financial transactions. Always check these before filing ITR; if TDS is deducted but doesn’t appear in 26AS, the deductor hasn’t filed their return, and you can’t claim credit.
Can I claim a refund of excess TDS?
Yes — file your ITR and claim the excess TDS as a refund. For example, if your bank deducted ₹4,500 on FD interest but your total tax liability is ₹0 (income below ₹7 lakh under new regime), you’ll get the full ₹4,500 back from the IT department.
What if PAN is not available?
TDS at 20% (or the applicable rate, whichever is higher) is deducted under Section 206AA. This is a significant penalty for not furnishing PAN — ensure your PAN is registered with every bank, tenant, and payer.
Is TDS on rent applicable to co-working spaces?
Yes if it qualifies as rent of immovable property. If you’re a company paying ₹2.4 lakh+ per year to a landlord for office space, 10% TDS under 194I applies. Many co-working spaces structure their agreements as service contracts (not pure rent) to avoid TDS applicability — check your agreement.
Sources
- Income Tax Act 1961: Sections 194, 194A, 194C, 194H, 194I, 194J, 194IB, 206AA
- Finance Act 2025: threshold and rate changes
- CBDT Circular on TDS certificates (Form 16/16A timelines)
- Income Tax Department e-filing portal — Challan 281 instructions