TDS & Withholding Tax Guide

Tax deducted at source is money your employer, bank, tenant, or client keeps back before paying you. If they deduct more than your tax for the year, you get the extra back when you file your ITR. The rates and thresholds on this page are for FY 2026-27. The Act text is on the Income-tax Act, 2025 hub. A CBDT threshold page labelled AY 2026-27 is not the same year as FY 2026-27.

Official sources

Income-tax Act, 2025 (CBDT hub)
Threshold limits (page labelled AY 2026-27, not FY 2026-27), including TDS thresholds for Sections 192, 192A, 194, 194A, 194-I, 194-IA, 194-IB, 194J, 194-O, and 194S
Form 26AS, how to view it from the e-filing site
Annual Information Statement
Link Aadhaar (status and steps)
Income-tax return forms

What is TDS?

The payer deducts tax and deposits it with the government before the money reaches you. That payer can be your employer, your bank, your tenant, or your client. You do not wait until the end of the year to pay the whole tax. The government collects it through the year.

shield Collected before payment

Tax is cut before the income is paid to you.

calendar_month Through the year

Deduction is monthly, or at the time of the payment, rather than one lump sum.

autorenew Refund if excess

If TDS is more than your tax, claim the difference when you file the ITR.

TDS IS ADVANCE TAX

TDS is advance collection of your income tax, not a separate tax. Your final tax is worked out when you file the ITR. If TDS is higher, you get a refund. If TDS is lower, you pay the difference.

TDS on Salary (Section 192)

Your employer estimates your income for the year, applies the slab rates, and deducts the tax in 12 equal monthly instalments. The other sections on this page use a flat rate. Salary TDS uses the slab rates of either regime.

Section	Rate	Threshold	Who Deducts
192	Slab rates (both regimes)	Salary > basic exemption limit	Employer

FORM 16

Form 16 is the annual TDS certificate from your employer. Part A shows the TDS: PAN, amount deducted, and the quarter-wise break-up. Part B shows the salary break-up and taxable income. Match it with Form 26AS and AIS. If those statements do not match, the department can ask about the difference.

TDS on Interest (Section 194A)

On interest from a bank fixed deposit, a recurring deposit, or another deposit, the bank deducts TDS before it credits the interest. Budget 2025 raised the threshold.

Section	Rate	Threshold	Who Deducts
194A	10%	₹50,000 (₹1,00,000 for senior citizens)	Bank / Post Office

GENERAL

₹50,000

Interest below ₹50,000 per year from a single bank is not subject to TDS.

SENIOR CITIZEN (60+)

₹1,00,000

Budget 2025 doubled the limit for senior citizens from ₹50,000 to ₹1,00,000.

TDS on Rent (Section 194I / 194IB)

Above the limits in the table, the tenant deducts TDS before paying the landlord. Section 194I is for a tenant that is not an individual or an HUF. Section 194IB is for an individual or HUF paying residential rent. Under Section 194I, the rate also depends on what is rented.

Section	Rate	Threshold	Who Deducts
194I(a)	10%	₹6,00,000 per annum (Budget 2025 raised from ₹2,40,000)	Tenant (non-individual/HUF)
194I(b)	2%	₹6,00,000 per annum (plant & machinery)	Tenant (non-individual/HUF)
194IB	5%	₹50,000 per month (individual/HUF residential rent)	Individual / HUF tenant

BUDGET 2025 THRESHOLD

The Section 194I(a) threshold was raised from ₹2,40,000 to ₹6,00,000 per annum. A small business paying rent below that figure may not have to deduct TDS on the rent.

TDS on Professional Fees (Section 194J)

If you pay a freelancer, consultant, or other professional, TDS applies above ₹50,000 in a year. Budget 2025 raised this threshold from ₹30,000.

Section	Rate	Threshold	Who Deducts
194J(a)	10%	₹50,000 per year (professional / technical fees)	Payer
194J(b)	2%	₹50,000 per year (technical services, call centre)	Payer

2% OR 10%

194J(b) at 2% is for technical services and fees paid to call centres. 194J(a) at 10% is for other professional and technical fees. If the work covers both, the payer may apply 10%.

TDS on Dividend (Section 194)

Since FY 2020-21, dividend is taxed in your hands. The company deducts TDS before it credits the dividend to your bank account.

Section	Rate	Threshold	Who Deducts
194	10%	₹10,000 per company per year	Company / Issuer

If you hold shares of 5 different companies and each pays you a ₹5,000 dividend, no TDS is deducted, because each is below ₹10,000. If one company pays ₹12,000, TDS applies on the full ₹12,000, not only the ₹2,000 above the threshold.

TDS on Crypto & VDA (Section 194S)

Virtual digital assets (crypto, NFTs, and similar assets) have TDS at a flat 1% on transfers above ₹50,000 in a year. For specified persons (non-filers), the threshold is ₹10,000.

Section	Rate	Threshold	Who Deducts
194S	1%	₹50,000 (₹10,000 for specified persons)	Exchange / Buyer

1% IS NOT THE FULL TAX

Crypto income is taxed at 30% flat (Section 115BBH) plus 4% cess. The 1% TDS is the amount already collected. You still owe about 29% when you file the ITR. A loss from crypto cannot be set off against any other income.

TDS on E-Commerce (Section 194O)

An e-commerce operator (Amazon, Flipkart, Meesho, and similar platforms) deducts TDS on the net sales of people selling through it. That covers sellers, service providers, and affiliate marketers on the platform.

Section	Rate	Threshold	Who Deducts
194O	1%	₹5,00,000 (net of returns and commissions)	E-commerce operator

If you sell goods worth ₹8,00,000 on Amazon and returns are ₹3,00,000, TDS is worked on the net ₹5,00,000, which is the threshold. GST collected is left out of the TDS calculation.

TDS on Property Sale (Section 194IA)

When you buy immovable property, other than agricultural land, worth ₹50 lakh or more, you deduct TDS before paying the seller. The same rule covers residential and commercial property.

Section	Rate	Threshold	Who Deducts
194IA	1%	₹50,00,000	Buyer

SELLER'S PAN

If the seller does not provide a PAN, TDS is 20% under Section 206AA. On a ₹60L property, that is ₹12,00,000 deducted instead of ₹60,000. Collect the PAN before you close the deal.

TDS on EPF Withdrawal (Section 192A)

If you withdraw your Employee Provident Fund (EPF) before 5 years of continuous service, the EPFO trustee deducts TDS on the accumulated balance.

Section	Rate	Threshold	Who Deducts
192A	10%	₹50,000 (if withdrawn before 5 years of service)	EPFO Trustee

No TDS is deducted if you withdraw after 5 years of continuous service, if you submit Form 15G or Form 15H (for low-income earners), or if the withdrawal is for a listed exemption such as house construction or medical illness.

PAN-Aadhaar Link Penalty

Under Section 206AA, if your PAN is not linked to Aadhaar, TDS is the higher of the prescribed rate, 20%, or twice the prescribed rate. On most of the sections above, that works out to 20% TDS instead of the usual 1% to 10%.

NORMAL RATE (PAN LINKED)

1% – 10%

PENALTY RATE (PAN UNLINKED)

20%

block ITR filing blocked

You cannot file an income-tax return with an inactive PAN.

block Refunds held back

A refund is not credited until the PAN is linked and active.

CHECK AND LINK

Check status: incometax.gov.in, then Profile, then PAN-Aadhaar status.
Link: Aadhaar e-KYC on incometax.gov.in, or an Aadhaar enrolment centre. Linking is free if you do it before the deadline. Steps are on the Link Aadhaar page.

How to Verify TDS

The Income Tax Department keeps three statements of tax deducted and of financial transactions. Check them against Form 16 and your own records before you file.

description Form 26AS ANNUAL STATEMENT

Annual tax statement of TDS deducted, TCS collected, refunds issued, and self-assessment tax paid. Use it to check TDS claimed by your employer, bank, and clients.

info AIS — Annual Information Statement COMPREHENSIVE

Lists salary, interest, dividends, mutual fund purchases, property, and foreign remittances. This is the set of transactions the department can see. Report income that appears here even when no TDS was deducted.

summarize TIS — Taxpayer Information Summary SIMPLIFIED AIS

A shorter version of AIS, with totals by category. Compare those totals with the figures in your ITR.

WHEN THE FIGURES DIFFER

If Form 16 shows ₹8,00,000 of salary and AIS shows ₹10,00,000, the department can ask about the gap. Check Form 16, Form 26AS, AIS, and the ITR against each other. Report the income even if no TDS was deducted.

TDS Refunds

If TDS for the year is more than your tax, the extra is refundable. The department does not send that money on its own. You file your ITR to claim it.

WHEN YOU GET A REFUND

check_circle Total TDS > actual tax liability
check_circle Self-assessment tax paid > final liability
check_circle Advance tax instalments exceeded final tax

REFUND PROCESS

check_circle File ITR, then verify within 30 days
check_circle CPC processes the return and issues a refund order
check_circle Refund is credited to your bank account

INTEREST ON A DELAYED REFUND — SECTION 234D

If the department delays the refund past the processing timeline, you get 0.5% interest per month (or part of a month) on the refund under Section 234D. That interest is taxable as income from other sources.