TDS in India: What It Is, Who Deducts It, Rates, and How to Claim a Refund

What Is TDS and Why Does It Exist?

Tax Deducted at Source (TDS) is the government's way of collecting tax in advance. Instead of waiting for you to file your return and pay tax at year-end, the person paying you deducts a percentage upfront and deposits it with the government on your behalf.

Think of it as a pre-payment of your income tax. If too much TDS is deducted, you get a refund. If too little, you pay the difference when filing ITR.

Key TDS Rates You Should Know (FY 2025-26)

Section	Payment Type	TDS Rate	Threshold
192	Salary	As per slab	Basic exemption
194A	FD/Bank Interest	10%	₹50,000/year (₹1L for seniors)
194-I	Rent	10%	₹6 lakh/year
194J	Professional Fees	10%	₹30,000/year
194H	Commission	5%	₹15,000/year
194-IB	Rent by individuals	5%	₹50,000/month
194N	Cash withdrawal	2%	₹1 crore/year

Important: If you do not provide your PAN, TDS is deducted at 20% — much higher than normal rates. Always share your PAN with your employer, bank, and clients.

How to Check Your TDS

1. Form 26AS: Log into the income tax portal (incometax.gov.in) and download your Form 26AS. It shows ALL TDS deducted against your PAN — from salary, FDs, rent, everything.
2. Annual Information Statement (AIS): A more detailed version showing all financial transactions reported by banks, brokers, and other entities.
3. Form 16: Your employer gives you this after the financial year ends. It shows salary, TDS deducted, and deductions claimed.
4. Form 16A: For non-salary TDS (FD interest, professional fees, rent). Issued by the deductor.

How to Claim a TDS Refund

If more TDS was deducted than your actual tax liability, you get a refund. Here is how:

1. File your ITR — report all income and TDS deducted (from Form 26AS)
2. E-verify your return within 30 days (via Aadhaar OTP, net banking, or DSC)
3. Wait for processing — the IT department processes your return and calculates the refund
4. Refund credited to your bank — typically within 30-45 days of e-verification. Ensure your bank account is pre-validated and linked to PAN.

Pro tip: If you expect your total income to be below the taxable limit, submit Form 15G (or 15H for seniors) to your bank. This prevents TDS deduction on FD interest altogether.

Common TDS Situations and What to Do

TDS on FD interest exceeding ₹50,000

Banks deduct 10% TDS when your total interest exceeds ₹50,000 in a year. If your total income is below ₹5 lakh, you can claim this back as a refund when filing ITR.

Freelancer clients deducting TDS on your fees

Clients deduct 10% under Section 194J. If you use Section 44ADA and your tax is less than 10% of income, you will get a refund.

Tenant deducting TDS on rent

If your annual rent exceeds ₹6 lakh, the tenant deducts 10% TDS. As a landlord, claim credit for this TDS when filing your ITR.

Related Reading

• Tax Calculator — calculate your exact tax and refund
• Tax Planning for Salaried Employees
• Tax Planning for Freelancers

Disclaimer: TDS rates and thresholds are based on FY 2025-26 rules and may change. This article is for educational purposes only.