What is tax deducted at source (TDS)?
Reviewed by Ranga & Company
TDS: Tax deducted at source (TDS) is income tax that a payer deducts before paying salary, rent, professional fees, contractor bills or interest, and deposits with the government against the payee's PAN.
At a glance
- Deposit by
- 7th of the next month (30 April for March)
- Quarterly returns
- 31 July, 31 October, 31 January, 31 May
- Certificates
- Form 16 (salary), 16A (others), 16B (property)
- Late deposit interest
- 1.5% a month from date of deduction
- Late return fee
- ₹200 a day (234E), up to the TDS amount
Common TDS sections
| Section | Payment | Rate |
|---|---|---|
| 192 | Salary | Slab rates |
| 194A | Interest other than on securities | 10% |
| 194C | Contractors | 1% (individual/HUF), 2% (others) |
| 194H | Commission or brokerage | 2% |
| 194-I | Rent: land or building / plant and machinery | 10% / 2% |
| 194J | Professional fees / technical services | 10% / 2% |
| 194-IA | Purchase of property ₹50 lakh+ | 1% |
Thresholds apply before TDS is required, and several were revised in Budget 2025. Without a valid PAN, TDS is generally 20%.
TDS compliance cycle
- Get a TAN before deducting
- Deduct at the right rate when paying or crediting, whichever is earlier
- Deposit through challan ITNS 281 by the 7th
- File quarterly returns (24Q salary, 26Q others, 27Q non-residents)
- Issue TDS certificates within the due dates
Common mistakes
- Deducting under the wrong section, for example 194C instead of 194J
- Quoting the wrong PAN of the deductee, so credit doesn't reach them
- Depositing TDS but filing the quarterly return late
Frequently asked questions
What happens if TDS is deducted but not deposited?
The deductor pays interest at 1.5% a month from the date of deduction, plus late fees and possible penalties. The payee can claim credit once it is deposited.
How do I check TDS deducted on my income?
Log in to the income tax e-filing portal and view Form 26AS or the Annual Information Statement (AIS).
What is the TDS rate without PAN?
Generally 20%, or the applicable rate if higher, under section 206AA.
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