TDS Calculator: How to Calculate Tax Deducted at Source

• TDS calculation formula: Payment amount x Applicable TDS rate (varies by payment type and section)
• Common TDS sections: 192 (salary), 194-I (rent), 194J (professional fees), 194-IA (property purchase above Rs. 50 lakh)
• Each section has its own threshold below which no TDS applies
• PAN availability affects the rate — a higher rate applies if the recipient's PAN isn't provided
• TDS deducted is claimable as credit against final tax liability when filing your ITR
• Home loan applicants often need to reconcile TDS on salary (Form 16) against Form 26AS and AIS as part of income verification.

Tax Deducted at Source (TDS) is tax collected upfront by the payer at the time of making specified payments, rather than the recipient paying the full tax liability later. A TDS calculator estimates the amount to be deducted for a specific payment, based on the applicable section and rate.

TDS rates and thresholds vary meaningfully by the type of payment — there is no single flat rate, which is exactly why a calculator specific to your payment type is more useful than a general assumption.

The mechanism exists to reduce tax evasion and spread tax collection across the year rather than concentrating it at annual filing time — from the government's perspective, collecting smaller amounts continuously from many payers is more reliable than depending entirely on taxpayers to self-report and pay in full after the fact.

Different types of payments fall under different sections, each with its own rate and threshold.

Below the stated threshold, no TDS applies at all — a landlord receiving Rs. 20,000 a month in rent (Rs. 2.4 lakh a year) sits exactly at the 194-I threshold, and even a small increase pushes the full year's rent into TDS-applicable territory, not just the amount above the threshold.

These thresholds and rates are periodically revised through the annual Finance Act, so a calculator or reference table more than a year or two old may not reflect the current figures — always confirm the specific section's current threshold and rate before relying on a calculation for an actual transaction.

1. Identify the correct section for your payment type (salary, rent, professional fees, property purchase, and so on).
2. Confirm whether the payment exceeds the section's threshold — if not, no TDS applies.
3. Confirm the recipient's PAN is available — a higher rate (20%, in most cases) applies under Section 206AA if PAN is missing.
4. Enter the payment amount and apply the section's specified rate.
5. For salary specifically, the calculation is more involved — it factors in the employee's total projected annual income, deductions, and regime choice, rather than a flat percentage on each payment.
6. Deduct the calculated TDS before making the payment, and deposit it with the government within the prescribed timeline.

For most non-salary payments, the calculation is a straightforward percentage; salary TDS is the one meaningful exception, requiring a fuller annual projection.

Property purchase carries its own TDS provision — Section 194-IA — relevant to almost anyone buying property above a certain value.

Unlike salary or rent TDS, buyer and seller here are often individuals unfamiliar with TDS compliance, which makes this one of the most commonly missed TDS obligations — a buyer who forgets to deduct and deposit this 1% before completing the sale faces potential interest and penalty for the oversight. This is a real, easy-to-overlook risk precisely because the amount is modest relative to the overall transaction value, which can make it feel like a minor formality rather than a mandatory legal step.

Consider Anjali, a 38-year-old consultant in Bengaluru with a monthly income of Rs. 1.5 lakh and a CIBIL score of 759, who rents out a commercial property for Rs. 45,000 a month and is separately buying a flat for Rs. 68 lakh.

As the property buyer, Anjali is responsible for deducting the Rs. 68,000 TDS and depositing it via Form 26QB before completing the sale — her tenant, in turn, is responsible for deducting Rs. 54,000 from her rental income across the year and depositing it against her PAN, which she later claims as credit when filing her own return. Anjali keeps both TDS certificates (Form 16B from the property transaction, and the equivalent from her tenant) filed together with her other tax documents, since she'll need to reconcile both figures against her Form 26AS and AIS when she files her ITR.

If you're buying property above Rs. 50 lakh, factor the 1% TDS deduction into your total funding requirement alongside your down payment, since this is a buyer obligation separate from the loan amount itself. This TDS amount is deducted from the sale consideration you pay the seller, not added on top, but the compliance step (depositing it via Form 26QB and issuing Form 16B) is entirely yours to complete as buyer, regardless of how the purchase is financed. Check your home loan eligibility before finalising your purchase budget.