TDS Calculator (India)
Select a Section
194A – Interest other than interest on securities
194C – Payment to contractors and sub-contractors
194D – Insurance commission
194DA – Payment in respect of life insurance policy
194H – Commission or brokerage
194I – Rent on land, building or furniture
194J – Fees for professional or technical services
194Q – Purchase of goods
Understanding TDS in India
Tax Deducted at Source (TDS) is a mechanism introduced by the Income Tax Act, 1961, in India. It's a way for the government to collect income tax at the point where income is earned. Essentially, any person responsible for paying certain specified incomes is required to deduct tax at the source before making the payment to the recipient. This deducted tax is then deposited with the government.
Why TDS?
The primary objectives of TDS are:
- To curb tax evasion: By deducting tax at the source, it becomes harder for individuals or entities to hide their income.
- To ensure timely revenue collection: The government receives tax revenue throughout the financial year, rather than waiting until the end for tax assessments.
- To simplify tax administration: It reduces the burden on tax authorities to track down all taxpayers and collect taxes.
Key Concepts in TDS
- Payer: The person responsible for deducting tax at source.
- Payee: The person or entity receiving the payment after TDS has been deducted.
- TDS Rate: The percentage of tax to be deducted, as specified by the Income Tax Act for different types of payments.
- Threshold Limit: For certain types of payments, TDS is only deductible if the amount of payment exceeds a specified limit during the financial year.
- TDS Certificate (Form 16/16A): The payer issues a TDS certificate to the payee, which serves as proof of tax deduction and deposit. The payee can claim credit for this deducted tax against their total tax liability.
Common TDS Sections and Their Applicability
Our calculator covers some of the most common TDS sections:
- Section 194A: Interest other than interest on securities – TDS is applicable on interest income earned from banks, post offices, or co-operative societies if it exceeds a certain threshold (₹40,000 for individuals/HUFs, ₹50,000 for senior citizens). For other entities, the threshold is lower or non-existent.
- Section 194C: Payment to contractors and sub-contractors – TDS applies to payments made to resident contractors and sub-contractors for carrying out work. The rate is 1% for payments to individuals/HUFs and 2% for others, subject to threshold limits.
- Section 194D: Insurance commission – TDS is applicable on commission paid to an agent by an insurer. The rate is 5%.
- Section 194DA: Payment in respect of life insurance policy – TDS applies to any sum paid to a policyholder under a life insurance policy, excluding the sum payable on the death of the insured. The rate is 5%.
- Section 194H: Commission or brokerage – TDS is applicable on commission or brokerage paid to a resident. The rate is 5%, subject to a threshold limit.
- Section 194I: Rent on land, building or furniture – TDS applies to rent paid for the use of land, building, or furniture. The rates are 2% for plant and machinery, and 10% for land, building, or furniture, subject to threshold limits.
- Section 194J: Fees for professional or technical services – TDS applies to fees paid for specified professional or technical services. The rate is 10%, subject to a threshold limit.
- Section 194Q: Purchase of goods – Introduced recently, TDS applies to the purchase of goods where the total value of purchase from a seller exceeds ₹50 lakhs in a financial year. The rate is 0.1%.
Non-Resident Payments and TDS
TDS provisions also apply to payments made to non-residents. The rates can differ, and importantly, Double Taxation Avoidance Agreements (DTAA) between India and other countries may provide for lower tax rates or exemptions. When calculating TDS for non-residents, it's crucial to consider the applicability of DTAA provisions.
Disclaimer
This calculator provides an estimated TDS amount based on the selected section and payee status. Tax laws are complex and subject to change. The specific rates and thresholds can vary based on individual circumstances, payment nature, and DTAA. Always consult with a tax professional or refer to the latest Income Tax Act provisions for accurate tax calculations and compliance.