TDS (Tax Deducted at Source) is a system under the Income Tax Act where the person making certain payments - like salary, rent, contractor fees, or professional fees - deducts tax at the prescribed rate before making payment, and deposits it with the government. The deducted tax is credited to the payee's 26AS and TIS, and can be claimed as a tax credit when filing the income tax return.
Why does TDS exist?
TDS ensures tax is collected at the point of income - rather than waiting for the recipient to pay tax later. It helps the government collect revenue throughout the year and reduces tax evasion.
Common TDS sections and rates
| Section | Nature of Payment | TDS Rate |
|---|---|---|
| 192 | Salary | As per income tax slab |
| 194C | Payment to contractors | 1% (individuals) / 2% (others) |
| 194J | Professional or technical fees | 10% |
| 194H | Commission and brokerage | 5% |
| 194I | Rent (land, building, furniture) | 10% |
| 194IA | Purchase of immovable property | 1% |
| 194A | Interest (other than bank) | 10% |
| 194Q | Purchase of goods (above ₹50 lakh) | 0.1% |
| 195 | Payment to non-residents | Rate per DTAA / 20%+ |
How do I check if TDS has been deducted and deposited?
Log in to the Income Tax Portal (incometax.gov.in) and:
- View your Form 26AS - shows all TDS deducted against your PAN by various deductors.
- View your Annual Information Statement (AIS) - a more comprehensive view of all reported income and TDS.
If TDS appears in 26AS, it is credited to you and reduces your final tax liability.
What if excess TDS is deducted?
If more TDS is deducted than your actual tax liability, you are entitled to a refund. File your ITR accurately showing the TDS credit from 26AS - the excess will be refunded to your bank account, usually within 2–6 weeks of ITR processing.
What if TDS is deducted but not deposited by the deductor?
You can still claim TDS credit if it appears in 26AS. However, if TDS was deducted but not deposited (and does not appear in 26AS), you must follow up with the deductor to deposit it. The Income Tax Department has been strict about holding TDS deductors accountable for deposit failures.
