Estimate the monthly TDS your employer deducts from your salary.
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Formula
Annual tax liability is computed on projected annual income (using new or old regime slabs and applicable deductions). TDS per month = (Annual tax + 4% cess) ÷ 12.
Employers re-calibrate this monthly TDS at year-end based on actual investment proofs and may deduct higher TDS in February-March if the projection was off.
Worked Examples
Annual salary ₹12,00,000 under new regime. Standard deduction ₹75,000. Taxable income ₹11,25,000.
Tax = 5% on (7-3)L + 10% on (10-7)L + 15% on (11.25-10)L = 20,000 + 30,000 + 18,750 = ₹68,750.
Cess 4% = ₹2,750. Total annual tax = ₹71,500. Monthly TDS ≈ ₹5,958.
About the TDS Calculator
TDS (Tax Deducted at Source) is the primary method used by the Government of India to collect income tax 'at the point of origin.' Whether it's your monthly salary, the interest on your FD, or the payment for a freelance project, a portion is deducted before it reaches you. This TDS calculator helps you understand how much should be deducted under various sections of the Income Tax Act for FY 2025-26.
TDS on Salary (Section 192)
This is the most common form of TDS for Indians. Unlike other sections, there is no fixed percentage for salary TDS. Your employer estimates your total annual income, subtracts all declared deductions (like 80C, HRA, Home Loan), and then divides the total annual tax by 12. This is the amount deducted every month. If you join a new company mid-year, it is crucial to provide your previous salary details to your new employer; otherwise, they might under-deduct TDS, leading to a large tax bill and interest (Section 234B/C) at the end of the year.
Common TDS Rates for Businesses and Freelancers
If you are a professional or a business owner in India, these are the sections you deal with most:
- Section 194J (Professional Fees): 10% for professional services like CA, Legal, or Technical consultancy. 2% for 'Royalties' or 'FTS' (Fees for Technical Services) in some cases.
- Section 194C (Contractors): 1% for individuals/HUFs and 2% for other entities (like private limited companies).
- Section 194H (Commission/Brokerage): 5%.
- Section 194-I (Rent): 10% for rent on land/building and 2% for rent on plant/machinery.
TDS on Interest and Dividends
- Fixed Deposits: Banks deduct 10% TDS (Section 194A) if your interest exceeds ₹40,000 (₹50,000 for seniors).
- Dividends: Companies deduct 10% TDS (Section 194K/194) if dividend paid to a resident individual exceeds ₹5,000 in a year.
- PAN is Mandatory: If you do not provide your PAN, the TDS rate for almost all sections jumps to a flat 20%.
How to Claim Your TDS Back
TDS is not a 'final tax'; it's just an advance payment.
1. Form 26AS & AIS: This is your consolidated tax credit statement. You should regularly check this on the Income Tax portal to ensure that the TDS deducted from you has actually been deposited by the deductor. If it doesn't show up in 26AS, you won't get credit for it.
2. Filing ITR: When you file your annual ITR, you calculate your total tax. If the TDS already paid is more than your total tax, you will receive a refund from the department with interest.
TDS for NRIs (Section 195)
TDS for Non-Resident Indians is significantly higher and more complex. For example, when an NRI sells a property in India, the buyer must deduct TDS at 20% (plus surcharge and cess) on the capital gains, or in some cases, on the total sale value. This often results in large refund claims for NRIs. Our calculator provides the basic rates, but NRIs should always consult a tax professional for property transactions.
Frequently Asked Questions
How is TDS on salary calculated?
The employer projects your annual income, computes the annual tax under your chosen regime (after standard deduction and any declared investments), adds 4% cess, and divides by 12 to arrive at monthly TDS.
Why does my TDS suddenly jump in February?
Employers true-up TDS in the last two months of the financial year based on actual proofs of investment. If you declared but did not invest, the deduction is reversed and the additional tax is collected.
Can I reduce TDS by submitting investment proofs?
Yes. Submit Form 12BB along with proofs (rent receipts, ELSS statements, life insurance premium, home loan interest certificate) to your employer in January-February. The TDS will be re-calibrated for the remaining months.
Is TDS the same as final tax liability?
Not necessarily. TDS is an estimate; the final liability is determined when you file your ITR. If TDS exceeded actual tax, you get a refund. If it fell short, you pay the balance.
Does TDS apply on bonus and arrears?
Yes. Bonus and arrears are taxable as salary in the year of receipt, and the employer deducts TDS on them at the marginal rate.