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Learn how TDS works across salary, rent, interest, and contracts; see rates, thresholds, PAN impact, and steps to claim credit or refunds while filing.
Last updated on: April 29, 2026
For individuals who are unsure of what TDS is and are asking themselves, "What is TDS?," it is the income tax that is subtracted from an amount during a certain payment. The Income Tax Act of India, 1961, states that if an individual or organization's income exceeds the predetermined threshold, they must pay the tax. TDS applies to various payments, including wages, commissions received, rent, interest paid by banks, and professional or consulting fees, among others.
Depending on your tax bracket, the income tax is a direct tax applied to your income. TDS, or Tax Deducted at Source, is a crucial taxation term that significantly impacts taxpayers under the Indian tax system.
TDS was implemented to obtain tax from the source of income itself. Typically, the recipient of such payment is required to pay income tax. After deducting TDS, the beneficiary receives the entire amount. Their final tax liability is calculated by adding the gross amount to their income and adjusting the TDS accordingly. After the individual submits their income tax return, the total TDS can be claimed as a tax refund.
The TDS amount can be computed by using the Form 26AS on the income tax portal. It is a tax credit statement with a detailed report of TDS deducted during a financial year. Here is a step-by-step guide to know the deducted TDS amount.
The page will have all the details of your tax liabilities, including any advance tax paid, TDS, and other relevant information.
A TDS deduction is applicable when the taxpayer either gets the payment in parts or receives the entire payment at once. Let’s understand its application through examples.
Let’s assume Mr. Satish is a self-employed professional who received Rs.40,000 in advance and Rs.20,000 after completing his work. In this case, the payee will deduct Tax Deducted at Source from the advance and the amount received after completion of work. Here, the TDS rates will be 10% of the amount, i.e. Rs.4,000, and 10% of Rs.20,000, i.e. Rs.2,000. The total amount of payable tax will be Rs.6,000.
In another scenario, if Mr Satish receives the full payment of Rs.60,000 after completing his work, he will be taxed Rs.6,000 from the total amount by his payee, earning him a total of Rs.54,000 for his work.
You can check your TDS refund status through either of these steps:
Through the refund processing email from the IT department
Check the TDS refund status using your PAN number on the official income tax e-filing website
| Section | Payment Type | TDS Rates (in %) |
|---|---|---|
Sec 192 |
TDS on Salary Income |
No specific rate; TDS on salary is deducted as per applicable income‑tax slab rates. |
Sec 194 |
TDS on Dividend u/s 2(22) |
10% |
Sec 194 A |
TDS in Interest Income |
10% |
Sec 194 C |
TDS on Credit/Payment to a sub-contractor or resident contractor |
1% (for HUF and individuals) |
Sec 194 D |
TDS on Insurance Commission |
5% |
Sec 194G |
TDS on Lottery tickets Sale Commission |
5% |
Sec 194H |
TDS on Brokerage or Commission |
5% |
Sec 194-I |
TDS on Income received via rent |
2% (from plant, machinery or equipment) |
Sec 194- IA |
TDS on Immovable property Transfer |
1% applicable only when the property value exceeds ₹50 Lakhs. |
Sec 194 J |
TDS on Professional fees, Royalty, Technical fees or director remuneration a |
10% |
Sec 194LA |
TDS on Acquisition of any specific immovable property |
10% |
Section 194N |
TDS on Cash withdrawal |
2% on withdrawals above ₹20 lakh (for non‑filers) and 5% above ₹1 Crore. |
Under section 244A of the Income Tax Act, the Income Tax department pays you a simple interest of 6% on your TDS refund amount, for the applicable period. However, interest is paid only if the refund exceeds 10% of total tax liability.
If your TDS refund is delayed or there are issues with verification, you can raise a complaint directly through the e‑Nivaran grievance redressal system on the Income Tax e‑filing portal. Log in to the portal, navigate to ‘Grievances’. Submit your grievance, choose the relevant department such as CPC‑ITR or CPC‑TDS, and submit supporting documents. If you are not registered, you can still file a grievance using the ‘I do not have a PAN/TAN’ option.
Before the end of the fiscal year, you should inform the bank if you do not have any taxable income.
However, you will need to submit an ITR if the bank continues to deduct tax from interest generated through FDs.
Up to ₹50,000 in interest from FDs is not subject to taxation for those 60 and older. This exemption is provided under Section 80TTB.
You can give your bank Form 15H if you don't have taxable income. If the bank has nonetheless deducted the tax, you can file your ITR to request your TDS refund.
Typically, you claim your TDS refund when you file your income tax return. The investments you had planned at the start of the fiscal year frequently differ from your investments at the end. After completing your ITR, the difference between the tax charged and the payment amount will be credited to your account.
To expedite the TDS refund procedure, it is advised that you supply your bank account information, including your IFSC code. You will need to complete an e-verification when you file the ITR. You will need an e-signature with either your net banking account or an OTP, depending on your Aadhaar. You can complete this verification offline by signing a paper copy of your ITR and mailing it to the Income Tax division. You can check the status of your TDS refund online in three simple steps if you've already submitted your ITR.
You can follow either of these steps to check the status of your TDS refund:
Through the IT department's email about processing refunds.
Use your PAN number to check your TDS refund status on the official income tax e-filing website.
Reviewer
Income‑tax refunds are no longer issued through physical cheques; they are transferred electronically to the bank account provided in your ITR. If your refund has failed or been returned, you can submit a ‘Refund Re‑issue Request’ by visiting the Income Tax e‑filing portal and navigating to the ‘Refund Reissue’ option under the ‘Services’ section.
Yes. You can update your email ID and mobile number anytime by going to the ‘Profile Settings’ section on the Income Tax e‑filing portal and selecting the ‘Update Contact Details’ option.
Refunds are issued only to the bank account provided in your Income Tax Return, not the TDS certificate. If bank details are missing or incorrect in the ITR, your refund will fail and must be re‑issued.
TDS means Tax Deducted at Source. It is deducted by the payer when making specified payments such as salary, interest, rent, commission or professional fees, and deposited with the Central Government.
TDS applies when a payer (individual, business, or organization) makes a payment that falls under TDS provisions of the Income Tax Act and crosses the prescribed threshold. The payer must deduct TDS before releasing the payment.
You can check TDS deposited against your PAN by viewing Form 26AS on the Income Tax e‑filing portal. The deductor must also issue you a TDS certificate (Form 16/16A/16B).
If your total taxable income is below the exemption limit, you may submit Form 15G (non‑senior citizens) or Form 15H (senior citizens) to the bank to request non‑deduction of TDS on FD interest.
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