Calcumetrics — Free online financial calculatorsCalcumetrics
Formulas & Methodology

Last reviewed: — Moved to sections 392–393 of the Income-tax Act, 2025; cash withdrawal threshold now ₹1 crore.

TDS Calculator: Tax Year 2026-27

Statutory source: Income-tax Act, 2025, sections 392–393 (as amended by the Finance Act, 2026). Payments up to 31 March 2026 (FY 2025-26) stay under the Income-tax Act, 1961.

Select the payment type under section 393 of the Income-tax Act, 2025

₹

Total invoice or transaction value before tax

Results

TDS Amount Withheld
₹10,000
Net Amount Payable / Receivable₹90,000
Gross Invoice Amount₹1,00,000
TDS Rate Applied10%
Statutory Threshold₹50,000

Assumes resident deductee with PAN furnished. A higher rate of 20% applies under s.397(2)(b) if PAN is missing.

For information only. Not tax advice. Verify with a Chartered Accountant before filing.

How Tax Deducted at Source (TDS) works in India

Tax Deducted at Source (TDS) is a direct taxation mechanism under sections 392 and 393 of the Income-tax Act, 2025 (Chapter XVII-B of the Income-tax Act, 1961 until 31 March 2026), designed to collect revenue at the very point of income generation. The paying entity (deductor) must withhold the prescribed percentage of tax before remitting the net proceeds to the recipient (deductee):

1. Mandatory Withholding Condition: If Aggregate Payment > Statutory Section Threshold

2. TDS Deduction Formula: TDS Amount = [ Gross Base Payment × Section Withholding Rate (%) ] ÷ 100

3. Below-Threshold Rule: If Aggregate Payment ≤ Statutory Section Threshold → TDS = ₹0

4. Net Receivable Payment: Net Payout = Gross Base Invoice − TDS Amount

5. Non-PAN Penalty (s.397(2)(b)): If Deductee Lacks Valid/Linked PAN → Rate = Higher of Prescribed Rate or 20%

Step-by-Step Worked Example (Default Scenario)

Consider an independent professional or agency issuing an invoice of ₹1,00,000 for professional consulting services falling under section 393(1) Table Sl. 6(iii) of the Income-tax Act, 2025:

Statutory Step / ComponentLegal Basis / CalculationComputed OutputTax Administration Role
Gross Service Invoice AmountContractual Fee for Services₹1,00,000Total gross revenue earned by the professional deductee.
Statutory Exemption Thresholds.393(1) Sl. 6(iii) Annual Limit₹50,000 / YearSince ₹1,00,000 exceeds ₹50,000, statutory withholding is mandatory.
Applicable TDS Withholding Rates.393(1) Sl. 6(iii) (Professional)10.00%Statutory rate for professional services (2% for purely technical services).
Tax Deducted at Source (TDS)₹1,00,000 × 10.00%₹10,000Deposited by the client with the Central Government by the prescribed due date.
Net Amount Disbursed to Payee₹1,00,000 − ₹10,000₹90,000 (90.0%)Actual bank transfer received into the professional's account.
Annual Tax Return CreditAIS / Form 26AS Credit₹10,000 Advance CreditCredited against annual income tax liability; refundable if total tax < TDS.

Common TDS Provisions & Thresholds (Tax Year 2026-27)

  • s.393(1) Sl. 6(iii) [old 194J] — Professional / Technical: 10% for professional services; 2% for technical services. Threshold: ₹50,000 a year.
  • s.393(1) Sl. 6(i) [old 194C] — Contractors: 1% for individuals/HUFs; 2% for others. Threshold: ₹30,000 single / ₹1,00,000 aggregate.
  • s.393(1) Sl. 2(ii) [old 194I] — Rent: 10% for land/building (2% for plant/machinery). Threshold: ₹50,000 a month or part of a month.
  • s.393(1) Sl. 5(ii) [old 194A] — Bank Interest & FDs: 10%. Threshold: ₹50,000 (₹1,00,000 for senior citizens); ₹10,000 for interest from other payers.
  • s.393(1) Sl. 1(ii) [old 194H] — Commission & Brokerage: 2%. Threshold: ₹20,000.
  • s.393(1) Sl. 8(ii) [old 194Q] — Purchase of Goods: 0.1% on the part of purchases above ₹50,00,000 in a tax year.
  • s.393(3) Sl. 5 [old 194N] — Cash Withdrawal: 2% above ₹1 crore a tax year (₹3 crore for co-operative societies).

Section 397(2) & PAN Compliance

Furnishing a valid Permanent Account Number (PAN) is critical under Indian tax laws:

  • The 20% Non-PAN Rate: Under section 397(2)(b) [old 206AA], if the deductee fails to provide a valid PAN, the deductor must deduct TDS at the higher of the statutory rate, the rate in force, or 20% (5% for purchase of goods and e-commerce payments).
  • Inoperative PAN Trap: Failure to link PAN with Aadhaar renders the PAN legally "inoperative," automatically triggering the punitive 20% deduction rate.
  • No-deduction declarations: Individuals whose estimated tax is nil can give a self-declaration under section 393(6) [old Form 15G / 15H] to receive interest without TDS.

Assumptions & Regulatory Nuances

  • Exclusion of Surcharge & Cess: For domestic resident entities and individuals, TDS on commercial payments is deducted at the flat rate in section 393 or the Finance Act, 2026 without adding surcharge or the 4% Health & Education Cess.
  • GST Exclusion Rule: Per CBDT Circular No. 23/2017, when Goods and Services Tax (GST) is indicated separately on an invoice, TDS is deducted strictly on the basic value of services, excluding the GST component.
  • Deposit & certificates: Deductors deposit withheld tax and file quarterly statements and TDS certificates within the time prescribed under section 397(3) of the Income-tax Act, 2025.
TDS vs. Advance Tax: How Do They Interact?Read our in-depth comparison on TDS vs. Advance Tax: Key Differences, Payment Responsibilities, and Form 26AS Reconciliation to ensure your tax credits match before filing your annual return.
Does TDS Cover Your Entire Annual Tax Liability?If tax deducted at source falls short of your total tax by ₹10,000 or more, you must pay quarterly advance tax to avoid 1% per month penal interest. Read our guide: Advance Tax in India: The Quarterly Calendar and How to Avoid Section 234B & 234C Penal Interest.

Frequently asked questions

What happens if the payment is below the TDS threshold?
If the aggregate or single payment does not exceed the threshold limit in column D of the section 393 Table of the Income-tax Act, 2025, no TDS is deducted and the payee receives 100% of the gross invoice amount. For purchase of goods [old 194Q], TDS applies only to the part above ₹50 lakh.
What TDS rate applies if the payee does not furnish a PAN?
Under section 397(2)(b) of the Income-tax Act, 2025 [old 206AA], if the deductee fails to furnish a valid Permanent Account Number (PAN) to the deductor, TDS is deducted at the higher of the prescribed rate, the rate in force, or 20% (5% for purchase of goods and e-commerce payments).
Can TDS deducted be claimed back during income tax filing?
Yes. TDS is tax withheld on your behalf. When you file your return for the tax year, the TDS shown in your Annual Information Statement (AIS) is adjusted against your final tax liability, and any excess is refunded to your bank account with interest.
What is the TDS rate on professional vs technical services in tax year 2026-27?
Under section 393(1) Table Sl. 6(iii) of the Income-tax Act, 2025 [old 194J], fees for professional services (such as legal, medical, engineering, accountancy) attract 10% TDS, whereas fees for technical services, film royalties and call centre operators attract 2%, both sharing the ₹50,000 threshold. Payments made up to 31 March 2026 (FY 2025-26) stay under the Income-tax Act, 1961.
Do surcharge and Health & Education Cess apply to TDS on domestic payments?
No. For resident payees, TDS on non-salary payments is deducted at the flat rate in section 393 (or the rate in force under the Finance Act, 2026) without adding surcharge or the 4% Health and Education Cess.

Related tax calculators

Taxes

Income Tax Calculator (India)

Compare old vs new regime tax for tax year 2026-27.

Taxes

Advance Tax Calculator

Split advance tax into the four instalments and estimate interest for late payment.

Taxes

Salary CTC Calculator

Break down gross Cost-to-Company (CTC) into in-hand take-home salary, EPF, and taxes.

Estimated TDS Deducted

₹10,000

Cookie settings

Choose which optional cookies Calcumetrics may use. You can change this at any time from the footer.