What is TDS on salary?

TDS on salary under Section 192 is deducted based on your applicable income tax slab rate — there is no fixed TDS percentage for salary. Your employer estimates your annual tax liability based on salary, deductions and regime choice, divides by 12 and deducts monthly. You receive Form 16 at year end as TDS certificate.

🇮🇳 India · TDS · FY 2026-27

TDS Calculator India 2026-27: Rates, Calculation & How to Avoid TDS

Q: What is TDS and how does it work?

TDS (Tax Deducted at Source) is a system where the payer deducts tax before making payment to the recipient. The deducted amount is deposited with the government on behalf of the recipient. The recipient gets credit for TDS when filing ITR. TDS applies on salary, FD interest, rent, professional fees, contractor payments and more.

Q: What is TDS rate on FD in 2026-27?

TDS on FD interest is 10% if PAN is provided and 20% if PAN is not provided. TDS is deducted only when total FD interest from one bank exceeds ₹40,000 per year (₹50,000 for senior citizens). Submit Form 15G (below 60) or Form 15H (senior citizen) to avoid TDS if your total income is below the taxable limit.

Q: How do I claim TDS refund?

File your Income Tax Return (ITR) — if total TDS deducted exceeds your actual tax liability, the excess is refunded. Verify all TDS entries in Form 26AS match your Form 16 and Form 16A before filing. The refund is credited to your bank account within 2-6 months after ITR processing. For faster refund, pre-validate your bank account on the IT portal.

Q: What is TDS on rent above ₹50,000 per month?

TDS on rent under Section 194-IB is 2% (reduced from 5% from October 2024) when monthly rent exceeds ₹50,000. The tenant must deduct TDS once — either in the last month of the financial year or the last month of tenancy, whichever is earlier. File Form 26QC within 30 days and issue Form 16C to the landlord.

Q: What happens if TDS is not deducted?

If TDS is not deducted when required, the payer (not the recipient) faces penalties: interest at 1% per month for non-deduction and 1.5% per month for deducted but not deposited. Additionally, 30% of the payment made without TDS deduction is disallowed as business expense under Section 40(a)(ia). The recipient still has to pay the tax while filing ITR.

Updated May 26, 2026·11 min read·India Tax

✍️ Written by Akshay Potnis, Founder of CalVerse

TDS is deducted before you receive salary, FD interest, rent or professional fees. Knowing the exact rates, thresholds and how to submit Form 15G/15H can save you thousands every year.

✅ Quick Answer — Key TDS Rates FY 2026-27

Salary → As per slab | FD Interest → 10% (above ₹40,000/yr) | Rent → 2% (above ₹50,000/mo) | Professional Fees → 10% | No PAN → 20% on everything. Submit Form 15G/15H to avoid TDS on FD if your income is below taxable limit.

What Is TDS — Tax Deducted at Source Explained

TDS is India's mechanism for collecting tax at the source of income — before money reaches you. Instead of waiting for you to pay tax at year end, the government collects it upfront through whoever pays you.

Who deducts: Employer (salary), bank (FD interest), tenant (rent), company (professional fees)
Who gets credit: You — the TDS deducted shows in Form 26AS and is credited against your tax liability when filing ITR
What if TDS > actual tax: You get a refund when you file ITR
What if TDS < actual tax: You pay the balance as advance tax or self-assessment tax

All TDS Rates FY 2026-27 — Complete Reference

Payment Type	Section	Threshold	TDS Rate (PAN)	TDS Rate (No PAN)
Salary	192	Basic exemption limit	As per slab	Higher rate
FD / Bank Interest (General)	194A	₹40,000/yr	10%	20%
FD / Bank Interest (Senior)	194A	₹50,000/yr	10%	20%
Rent — Individual/HUF Tenant	194-IB	₹50,000/mo	2%	20%
Rent — Company/Firm Tenant	194-I	₹2.4L/yr	10%	20%
Professional Services	194J	₹30,000/yr	10%	20%
Technical Services	194J	₹30,000/yr	2%	20%
Contractor (Individual)	194C	₹30K single / ₹1L annual	1%	20%
Contractor (Company)	194C	₹30K single / ₹1L annual	2%	20%
Commission / Brokerage	194H	₹15,000/yr	5%	20%
Winnings (Lottery, Games)	194B	₹10,000	30%	30%

⚠️ No PAN = 20% TDS on everything. Always provide your PAN to every payer — bank, employer, tenant, client. Without PAN, even your FD interest gets deducted at 20% instead of 10%. A simple PAN submission saves you 10% on every payment.

TDS on Salary — How It's Calculated

Unlike other TDS categories, salary TDS has no fixed rate. Your employer calculates it like this:

Estimate annual gross salary — CTC minus employer PF, gratuity etc.

Apply deductions — Standard deduction ₹75,000 (new regime) or ₹50,000 + 80C + HRA + others (old regime)

Calculate annual tax — Apply slab rates on taxable income + 4% cess

Divide by 12 — Monthly TDS = Annual tax ÷ 12. This is deducted every month from your salary

Adjust at year end — If salary changed, bonus paid or deductions added, employer adjusts TDS in February-March

Calculate exact TDS on salary, FD, rent and professional fees instantly.

Use Free TDS Calculator →

TDS on FD Interest — Complete Rules

Category	Threshold	TDS Rate	How to Avoid
General (below 60)	₹40,000/yr	10%	Form 15G
Senior Citizen (60–80)	₹50,000/yr	10%	Form 15H
Super Senior (80+)	₹50,000/yr	10%	Form 15H
No PAN provided	Any amount	20%	Provide PAN

Form 15G & 15H — How to Pay Zero TDS on FD

If your total income is below the taxable limit, you can submit these forms to your bank and pay zero TDS on FD interest:

Form	Who Submits	Condition	Submit When
Form 15G	Below 60 years	Total income below basic exemption + total tax liability is nil	Start of every financial year (April)
Form 15H	60 years and above	Total tax liability for the year is nil	Start of every financial year (April)

💡 Submit at every bank separately. If you have FDs at SBI, HDFC and Post Office — submit Form 15G/15H at all three. TDS threshold of ₹40,000 applies per bank, not across all banks combined.

TDS on Rent — Section 194-IB Rules

Applies when monthly rent exceeds ₹50,000
Rate: 2% (reduced from 5% from October 2024 onwards)
Who deducts: Tenant — individual or HUF paying rent
When to deduct: Once a year — last month of tenancy or March, whichever is earlier
Filing: Form 26QC within 30 days of deduction
Certificate: Issue Form 16C to landlord within 15 days of filing 26QC
No TAN required for individual tenants under 194-IB

How to Claim TDS Refund

Check Form 26AS — Login to incometax.gov.in → View Form 26AS → Verify all TDS entries are correct

Collect Form 16 / 16A — Employer gives Form 16 (salary TDS). Banks/others give Form 16A (other TDS)

File ITR on time — Include all income and claim all TDS credits. If TDS > tax liability, excess becomes refund

Pre-validate bank account — On IT portal, pre-validate your bank account for faster refund credit

Track refund — Check status on incometax.gov.in → Refund/Demand Status. Refunds credited in 2–6 months

Penalties for Non-Deduction of TDS

Violation	Penalty
TDS not deducted at all	Interest 1% per month from due date to deduction date
TDS deducted but not deposited	Interest 1.5% per month from deduction date to deposit date
Expense disallowance	30% of payment disallowed as business expense u/s 40(a)(ia)
Late TDS return filing	₹200 per day late fee under Section 234E
Wrong TDS return filed	Penalty ₹10,000 to ₹1,00,000 under Section 271H

TDS Calculator — Frequently Asked Questions

What is TDS and how does it work?

TDS (Tax Deducted at Source) is tax collected by the payer before making payment. The deducted amount is deposited with the government. You get credit for TDS deducted when filing ITR. If TDS deducted exceeds your actual tax liability, you get a refund.

What is TDS rate on FD in 2026-27?

10% TDS on FD interest when annual interest exceeds ₹40,000 (₹50,000 for senior citizens) and PAN is provided. 20% if PAN is not provided. Submit Form 15G or 15H at the start of the financial year to avoid TDS if your total income is below taxable limit.

How do I calculate TDS on salary?

TDS on salary = Annual estimated tax liability ÷ 12 per month. Employer estimates total annual tax based on salary, deductions and chosen tax regime, then deducts one-twelfth each month. No fixed percentage — it depends entirely on your income level and deductions claimed.

How do I claim TDS refund?

File your ITR — if total TDS deducted exceeds actual tax liability, the excess is refunded to your pre-validated bank account within 2-6 months. Verify all TDS entries in Form 26AS match your Form 16 and 16A before filing to avoid discrepancies.

What is TDS on rent above ₹50,000 per month?

2% TDS under Section 194-IB when monthly rent exceeds ₹50,000. Tenant deducts TDS once — in the last month of tenancy or March, whichever is earlier. File Form 26QC within 30 days and issue Form 16C to landlord.

What happens if TDS is not deducted?

The payer faces: interest at 1% per month for non-deduction, 1.5% per month if deducted but not deposited, and 30% of the payment disallowed as business expense. The recipient must still pay the full tax when filing ITR. Always deduct and deposit TDS on time.

For educational purposes. TDS rules and rates subject to change. Consult a CA for specific tax advice.