💸 Tax Guide · TDS India 2025-26

What is TDS? Complete Guide for Salaried Employees & Freelancers

Q: What is TDS and how is it different from income tax?

TDS (Tax Deducted at Source) is not a separate tax — it is income tax collected in advance at the point of payment. Your employer, bank, or client deducts TDS and deposits it with the government. When you file your ITR, this TDS is credited against your actual tax liability. If TDS exceeds tax due, you get a refund; if it falls short, you pay the balance.

Q: What is the TDS rate on salary in India?

TDS on salary (Section 192) is deducted at the applicable income tax slab rate — not a fixed percentage. Your employer estimates your annual salary, subtracts eligible deductions (standard deduction, 80C declarations, HRA), computes the annual tax, and divides it by 12 to get the monthly TDS amount. The effective rate varies from 0% to 30% based on your income.

Q: How do I check how much TDS has been deducted from my salary?

Log in to the Income Tax portal (incometax.gov.in) with your PAN and password. Go to Services → View Form 26AS or Services → Annual Information Statement (AIS). Form 26AS shows all TDS deducted against your PAN — from salary (by employer), bank FDs, professional fees, and other sources. Cross-check the TDS amount with your Form 16.

Q: When do I get a TDS refund?

You receive a TDS refund when the total TDS deducted across all sources (salary, FD, professional fees) is greater than your actual income tax liability for the year. File your ITR by July 31, pre-validate your bank account on the IT portal, and verify your ITR. Refunds are typically credited within 20-45 days of successful ITR verification.

Q: What is Form 15G and when should I submit it?

Form 15G is a self-declaration submitted to your bank (or other deductors) stating that your total income is below the taxable limit and therefore TDS should not be deducted on FD interest or other payments. It is valid for one financial year and must be re-submitted every April. Senior citizens above 60 use Form 15H instead of Form 15G.

Updated August 2026 · Covers TDS on salary, FD interest, rent, freelance income & how to claim refund

TDS on salary is based on your income tax slab. After TDS, verify the deductions in your Form 16. Use the Tax Regime Calculator to know your exact tax liability and whether you'll get a refund.

TDS stands for Tax Deducted at Source. It is a method of collecting income tax where the payer deducts tax before making a payment and deposits it directly with the government. For salaried employees, your employer deducts TDS monthly from your salary. For freelancers, clients deduct TDS before paying professional fees.

Key idea: TDS is not an extra tax — it is an advance payment of your income tax. At the end of the year when you file your ITR, TDS already paid is adjusted against your total tax liability. If TDS paid > tax due → you get a refund. If TDS paid < tax due → you pay the difference.

How TDS on Salary Works

Every April, your employer estimates your total annual income and calculates the expected income tax for the year. This amount is divided by 12 and deducted monthly from your salary as TDS (shown on your payslip as "TDS" or "IT deduction").

When you submit investment declarations (80C proof, HRA rent receipts, home loan certificate), your employer recalculates the TDS and adjusts the remaining monthly deductions. This is why TDS deducted in January-March is sometimes higher — to cover any shortfall from under-declaration earlier in the year.

TDS Rates for Common Income Types — FY 2025-26

Income Type	Section	TDS Rate	Threshold (no TDS below this)
Salary	192	As per income tax slab	Basic exemption limit
Bank FD Interest	194A	10%	₹40,000/year (₹50,000 for senior citizens)
Professional / Freelance Fees	194J	10%	₹30,000/year per deductor
Rent (individual/HUF)	194IB	2%	₹50,000/month
Contractor / Service Payment	194C	1% (individual), 2% (company)	₹30,000 single / ₹1L annual
Commission / Brokerage	194H	5%	₹15,000/year
Dividend from shares/MF	194	10%	₹5,000/year
Property purchase (buyer deducts)	194IA	1%	Property value above ₹50 lakh
EPF withdrawal before 5 years	192A	10%	₹50,000

⚠️ No PAN = 20% TDS: If you haven't linked your PAN for a payment that attracts TDS, the deductor must deduct TDS at 20% instead of the standard rate — regardless of income. Always submit PAN to your employer, bank, and clients.

How to Check Your TDS — Form 26AS and AIS

All TDS deducted against your PAN is visible in two documents on the Income Tax portal (incometax.gov.in):

Form 26AS — Annual tax statement showing TDS from all sources (salary, FD, rent, professional income), self-assessment tax paid, and advance tax. Go to: IT Portal → Services → View Form 26AS.
AIS (Annual Information Statement) — More comprehensive than Form 26AS. Shows all financial transactions reported against your PAN: salary, dividends, mutual fund purchases/sales, property transactions, foreign remittances. Go to: IT Portal → Services → Annual Information Statement.

Always cross-verify TDS in your Form 16 / Form 16A against Form 26AS before filing ITR. Mismatches can cause ITR processing delays or demand notices.

How to Claim TDS Refund

If more TDS has been deducted than your actual tax liability — which is common for people switching jobs, investing in 80C, or having HRA exemptions that weren't submitted on time — you are eligible for a TDS refund.

File your ITR by July 31 (for salaried employees). The system automatically computes refund = TDS paid − Tax due.
Pre-validate your bank account on the IT portal (your account must be linked to PAN for refund credit).
Verify your ITR via Aadhaar OTP, net banking, or by sending signed ITR-V to CPC Bengaluru within 30 days of filing.
Track refund status on the IT portal or NSDL refund tracker (tin.tin.nsdl.com). Refunds are typically processed within 20-45 days of ITR verification.

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TDS for Freelancers and Consultants

If you earn professional fees, consulting income, or technical service income, clients deduct 10% TDS under Section 194J before paying you — if the payment exceeds ₹30,000 in a year from a single client. This does not mean you pay 10% tax — it is just advance tax. Your actual tax is based on your total income and applicable slab rate.

To receive payments without TDS deduction (if your total income is below the tax-free limit), you can apply for a Lower/Nil TDS Certificate under Section 197 from your Income Tax Officer. This certificate is submitted to clients so they pay you without deduction.

Form 15G and 15H — Stop TDS on FD Interest

If your total income is below the taxable limit, you can submit Form 15G (for individuals below 60) or Form 15H (for senior citizens) to your bank to prevent TDS deduction on Fixed Deposit interest. These forms declare that your income is below the taxable threshold. Submit at the start of every financial year — they are not auto-renewed.

Frequently Asked Questions

What is TDS and how is it different from income tax?