As an Amazon Associate, we earn from qualifying purchases — at no extra cost to you. This article is for general informational purposes only and is not financial advice.
If you’re a salaried employee in India, you’ve seen TDS deducted from your salary every month. If you’ve received income from a bank FD or won a prize, TDS may have been deducted there too. TDS (Tax Deducted at Source) is India’s mechanism for collecting income tax before it reaches you — understanding how it works helps you plan better and avoid surprises when you file your return.
What is TDS?
TDS stands for Tax Deducted at Source. Instead of the income earner paying tax at the end of the year, the person making the payment (employer, bank, client) deducts a percentage of the amount at the time of payment and deposits it with the Income Tax Department on your behalf. This is credited against your total tax liability for the year.
Common TDS rates in India (FY 2025–26)
| Payment type | Section | TDS rate | Threshold |
|---|---|---|---|
| Salary | 192 | As per slab | Basic exemption limit |
| Bank interest (FD) | 194A | 10% | ₹40,000/year (₹50,000 for seniors) |
| Rent (property) | 194I | 10% | ₹2.4 lakh/year |
| Professional fees | 194J | 10% | ₹30,000/year |
| Contract payments | 194C | 1% / 2% | ₹30,000 per payment / ₹1 lakh/year |
| Lottery/prize | 194B | 30% | ₹10,000 |
| Property purchase (buyer deducts) | 194IA | 1% | ₹50 lakh+ |
TDS and your salary
Your employer deducts TDS from your salary every month under Section 192. The amount depends on your estimated total income for the year, less any deductions you’ve declared (80C investments, HRA, home loan interest, etc.). This is why submitting your investment proofs (Form 12BB) to your employer by December–January is important — it reduces TDS deducted for the remaining months of the financial year.
How to check how much TDS has been deducted
Your TDS is visible in Form 26AS and Annual Information Statement (AIS) on the income tax portal. This is the definitive record of all TDS deducted under your PAN.
- Log in to incometax.gov.in
- Go to Services → Annual Information Statement (AIS) or View Form 26AS
- Download or view the statement — all TDS credited appears here
What if too much TDS was deducted?
If your employer deducted more TDS than your actual tax liability (because you didn’t submit all investment proofs on time, for example), you’ll get a tax refund when you file your ITR. File your return accurately and on time — the excess TDS is refunded by the Income Tax Department, usually within a few weeks to months.
How to avoid excess TDS on FD interest
If your total income is below the taxable limit, you can submit Form 15G (for individuals under 60) or Form 15H (for senior citizens) to your bank at the start of the financial year. This tells the bank your income is below taxable limits and instructs them not to deduct TDS on your FD interest.
Learn more about Indian taxation
Browse personal finance and tax books on Amazon India — TDS, income tax filing, deductions and tax planning explained simply. Also see global personal finance resources.
Frequently Asked Questions
What is TDS in salary?
TDS on salary is the income tax deducted by your employer from your monthly salary under Section 192. The employer calculates your estimated annual tax liability and deducts it in equal instalments throughout the year. The amount reduces if you declare investments and deductions to your employer.
How do I get a TDS refund?
File your income tax return (ITR) accurately. If the total TDS deducted exceeds your actual tax liability, the difference is refunded by the Income Tax Department to your bank account linked to your PAN. Usually processed within a few weeks to months of filing.
What happens if I don’t submit investment proofs to my employer?
Your employer will deduct higher TDS (without accounting for your 80C investments, HRA, etc.). You can still claim these deductions when filing your ITR and receive the excess TDS as a refund — you won’t lose the deductions, but you’ll have to wait for the refund instead of having the benefit upfront.
The bottom line
TDS is tax paid in advance on your behalf — not an extra charge. Whatever is deducted is credited against your annual tax liability. Submit your investment proofs to your employer by December–January to reduce monthly TDS. Check Form 26AS and AIS to verify all TDS credited. File your ITR on time to claim any refund.