Learning article
What is TDS? Tax Deducted at Source Explained
A simple breakdown of how TDS works, why it appears on your salary and bank interest, and how it fits into your final tax picture.
Quick takeaways
TDS is not a final tax; it's a prepayment collected by the payer.
Different types of income have different TDS thresholds and rates.
Form 26AS and AIS show all TDS credits linked to your PAN.
Story intro
Riya got her first salary and saw a big deduction labelled ‘TDS’. She thought her tax was done. But when her bank sent her an interest certificate with TDS too, she realised something didn’t add up. That’s when she understood TDS is only part of the story.
Overview
How TDS works
When someone pays you salary, interest, rent, or professional fees above a certain limit, they deduct a percentage as TDS before making the payment.
The deductor deposits this with the government, and it reflects in your Form 26AS against your PAN.
Important facts
Common TDS thresholds
Salary: TDS is deducted based on estimated annual income and slab rate.
Bank interest: TDS @10% if interest exceeds ₹40,000 (₹50,000 for senior citizens) in a year.
Rent (194I): ₹2,40,000 per annum.
Professional fees (194J): ₹30,000 per annum.
Common mistakes
Why TDS alone is never enough
Assuming zero tax liability just because TDS was deducted.
Not checking Form 26AS for missing credits.
Forgetting to pay advance tax when TDS covers only part of your tax due.
Key takeaways
How to use TDS correctly
Match TDS in your salary slip with Form 16.
Check Form 26AS and AIS for all other TDS credits.
Claim refund if total TDS exceeds final tax liability.
FAQs
Common questions
Keep reading
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