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About the TDS Calculator
Tax Deducted at Source shifts collection to the payer: whoever makes a specified payment withholds tax and deposits it against the payee's PAN. The rate depends entirely on the nature of the payment, and each section carries its own threshold below which nothing is deducted.
Two traps catch businesses regularly. Where the payee has not furnished a PAN, Section 206AA forces deduction at 20% or the section rate, whichever is higher. And thresholds apply to aggregate annual payments, not just the single invoice in front of you.
The formula
The payee claims the deducted amount as credit in their return, based on Form 26AS and the TDS certificate.
Things worth knowing
Frequently asked questions
Tax Deducted at Source — the payer withholds tax from a specified payment and deposits it with the government against the payee's PAN. The payee claims it as credit when filing their return.
Section 194J applies at 10% on professional or technical fees where aggregate annual payments exceed the threshold. Without PAN, the rate rises to 20%.
The expense is disallowed to the extent of 30% when computing business income, and interest plus penalty applies on the amount that should have been deducted.
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