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TDS Calculator: FY 2026-27

Last verified: 24 Sept 2026

Statutory source: Income Tax Department (CBDT) · Chapter XVII-B.

Select the category of transaction under Income-tax Act

₹

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₹30,000

Assumes resident deductee with PAN furnished. Higher rate of 20% applies under Sec 206AA if PAN is missing.

How Tax Deducted at Source (TDS) works in India

Tax Deducted at Source (TDS) is a direct taxation mechanism under the Indian Income-tax Act, 1961, 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 (Sec 206AA): 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 194J of the Income-tax Act:

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 ThresholdSection 194J Annual Limit₹30,000 / YearSince ₹1,00,000 exceeds ₹30,000, statutory withholding is mandatory.
Applicable TDS Withholding RateSection 194J (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 Central Government via Challan ITNS 281.
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 CreditForm 26AS / AIS Credit₹10,000 Advance CreditCredited against annual income tax liability; refundable if total tax < TDS.

Common TDS Sections & Statutory Thresholds

  • Sec 194J (Professional / Technical): 10% for professional services; 2% for technical services. Annual threshold: ₹30,000.
  • Sec 194C (Contractors / Freelance Work): 1% for Individuals/HUFs; 2% for Corporate entities. Threshold: ₹30,000 single / ₹1,00,000 aggregate.
  • Sec 194I (Rent on Land & Building): 10% for land/building (2% for plant/machinery). Annual threshold: ₹2,40,000.
  • Sec 194A (Bank Interest & FDs): 10% standard. Threshold: ₹40,000 for general citizens (₹50,000 for senior citizens ≥60 years).
  • Sec 194H (Commission & Brokerage): Rationalized rate per Finance Act. Annual threshold: ₹15,000.
  • Sec 194Q (Purchase of Goods): 0.1% on purchase value exceeding ₹50,00,000 in a financial year.

Section 206AA & PAN Compliance Mandate

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

  • The 20% Non-PAN Penalty: Under Section 206AA, if the deductee fails to provide a valid PAN, the deductor must deduct TDS at the higher of the statutory rate or 20.00%.
  • Inoperative PAN Trap: Failure to link PAN with Aadhaar renders the PAN legally "inoperative," automatically triggering the punitive 20% deduction rate.
  • Form 15G / 15H Exemption: Senior citizens (15H) and individuals with nil taxable income (15G) can submit self-declarations to receive interest without TDS deduction.

Assumptions & Regulatory Nuances

  • Exclusion of Surcharge & Cess: For domestic resident entities and individuals, TDS on commercial payments is deducted strictly at the flat rate prescribed by the Finance Act 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.
  • Form 16A Compliance: Deductors must deposit withheld tax by the 7th of the following month (30th April for March) and issue quarterly TDS certificates (Form 16A) to payees within 15 days of filing Form 26Q.
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 statutory threshold specified under that section of the Income-tax Act, no TDS is deducted and the payee receives 100% of the gross invoice amount.
What TDS rate applies if the payee does not furnish a PAN?
Under Section 206AA of the Income-tax Act, if the deductee fails to furnish a valid Permanent Account Number (PAN) to the deductor, TDS must be deducted at higher of the prescribed rate or 20%.
Can TDS deducted be claimed back during income tax filing?
Yes. TDS is advance tax withheld on your behalf. When you file your annual Income Tax Return (ITR), the TDS reflected in your Form 26AS / Annual Information Statement (AIS) is adjusted against your final tax liability, and any excess is refunded directly to your bank account with interest.
What is the difference between Section 194J for professional vs technical services?
Under Section 194J, fees for professional services (such as legal, medical, engineering, accountancy) attract 10% TDS, whereas fees for purely technical services or call center operations attract a reduced rate of 2%, both sharing the ₹30,000 threshold.
Do surcharge and Health & Education Cess apply to TDS on domestic payments?
No, for domestic resident individuals and entities, TDS on non-salary payments is deducted at the flat rate specified by the Finance Act without adding surcharge or the 4% Health and Education Cess.

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Estimated TDS Deducted

₹10,000