Updated for FY 2025-26 (AY 2026-27) · Cross-checked against Finance Act 2025 and the Income Tax Department’s official TDS guidance

Every payday, every FD maturity, every rent transfer — a little bit of your money disappears before it even reaches your account. That’s TDS. Most of us have seen it on a payslip or a bank statement without really knowing why the number is what it is, or whether it’s even correct.

This calculator does the maths for you. Below it, we’ve broken down exactly how each number is arrived at — with real numbers, not textbook jargon — so you can double-check your employer or bank instead of just trusting the deduction blindly.

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What is TDS, in Plain Terms

Think of TDS as the government collecting its share upfront, through whoever is paying you, rather than waiting for you to file a return and pay at year-end.

Your employer does it with your salary. Your bank does it with your FD interest. Your tenant (if you’re a landlord earning ₹50,000+ a month in rent) does it too. The payer deducts a fixed percentage, deposits it with the Income Tax Department against your PAN, and hands you the rest.

The upside: if the amount deducted is more than your actual tax liability for the year — which happens often, especially for lower-income earners — you get it back as a refund when you file your ITR.

⚠️ Important timeline correction: You may have seen articles claiming TDS is “now under Section 393 of the new Income Tax Act.” That’s true only from 1 April 2026 onward (FY 2026-27). For the current financial year, FY 2025-26, every TDS deduction on income paid before 31 March 2026 is still governed by the old Income Tax Act, 1961 (Sections 192, 194A, 194C, etc.). Don’t let anyone tell you otherwise on your Form 16 or 26Q filing for this year.

How TDS is Calculated — The Actual Formula

Salary TDS (Section 192):

Taxable Salary = Gross Salary – HRA Exemption – Standard Deduction (₹75,000, new regime)
                  – Other Exemptions – 80C/80D/NPS Deductions (old regime only)

Tax on Taxable Salary = Apply slab rates + 4% Health & Education Cess – Section 87A Rebate (if eligible)

Monthly TDS = Annual Tax ÷ Remaining Months

FD/Bank Interest TDS (Section 194A):

TDS = Annual Interest × 10% (PAN furnished)
TDS = Annual Interest × 20% (no PAN — Section 206AA)

Rent TDS (Section 194-I / 194-IB):

TDS = Monthly Rent × 2%   (deducted monthly if rent crosses ₹50,000/month)

New Tax Regime Slabs — FY 2025-26 (AY 2026-27)

Section 87A rebate: If your net taxable income (after standard deduction) is up to ₹12,00,000, you get a rebate of up to ₹60,000 — bringing your tax to zero. This is why a salaried person can earn up to ₹12.75 lakh gross (₹12L + ₹75K standard deduction) and pay no income tax at all under the new regime. Marginal relief applies if you’re just slightly above ₹12L, so the tax doesn’t jump sharply.

TDS Rate Chart — FY 2025-26

Note the split under 194-I: 10% for land, buildings, and furniture, but only 2% for plant and machinery — a common confusion point. If you’re a company renting an office (building) and separately leasing equipment from the same landlord, the two components are taxed differently even on the same invoice.

⚠️ No PAN, double the deduction. If you don’t submit your PAN, Section 206AA kicks in and TDS jumps to 20% (or the applicable rate, whichever is higher) — almost always worse than furnishing your PAN.

Worked Example 1 — Salary TDS (Corrected)

Meet Rahul, a software engineer in Pune earning ₹12,00,000 CTC, on the new tax regime.

The rebate is applied before cess, not after — since Rahul’s tax-before-cess (₹52,500) is fully within the ₹60,000 rebate cap, it’s wiped out entirely, and cess on a zero base is also zero. Because his taxable income (₹11.25L) falls under the ₹12 lakh rebate ceiling, his employer should not deduct any TDS at all, provided he’s declared his regime choice correctly at the start of the year.

Contrast this with Priya, a marketing manager earning ₹15,00,000 CTC:

Priya crosses the ₹12L threshold, so no rebate applies — she pays tax on the full slab-wise calculation.

Worked Example 2 — TDS on FD Interest

Sharmaji, a 65-year-old retiree in Lucknow, earns ₹1,40,000 annual interest from an FD with SBI.

• Senior citizen threshold under Section 194A: ₹1,00,000/year
• Interest earned: ₹1,40,000 → exceeds threshold
• TDS deducted: 10% of ₹1,40,000 = ₹14,000

If Sharmaji’s total income (after all deductions, including the ₹50,000 exemption under Section 80TTB) is below the taxable limit, he should submit Form 15H to the bank at the start of the financial year to avoid this deduction entirely — rather than paying it and claiming a refund months later.

5 Practical Ways to Reduce Your TDS Burden

1. Submit Form 15G/15H early — before your bank credits the first quarter’s interest, not after. This is one form per bank branch, every April.
2. Declare your investments to your employer by April-end — under the old regime, 80C, 80D, and HRA proofs submitted late mean your employer deducts TDS assuming zero deductions, and you overpay every month until you fix it.
3. Furnish your PAN everywhere — bank, employer, tenant, client. Missing PAN doubles your TDS rate under Section 206AA.
4. Choose your regime deliberately — if you have significant HRA, 80C, or home loan interest, run the numbers under both regimes before your employer locks in your TDS calculation for the year.
5. File your ITR even if your income is below the taxable limit — it’s the only way to get excess TDS refunded, and refunds after July 31 attract no additional benefit, so filing on time matters.

TDS Deposit Due Dates (For Deductors)

This article is for general informational purposes and reflects rules applicable as of 17 July 2026. Tax rules change with each Union Budget — verify current thresholds against the official Income Tax Department portal (incometax.gov.in) or consult a chartered accountant before making filing decisions.