What is TDS and who deducts it?+
TDS (Tax Deducted at Source) is a tax collection mechanism where the payer deducts tax from the payment before giving it to the recipient. The deductor deposits this tax with the government on behalf of the recipient. It applies to salary payments (employer), FD interest (banks), rent payments above ₹2.4 lakh/year (tenants), professional fees, contractor payments, and many other transactions.
What is the TDS rate on FD interest?+
TDS rate on FD interest (Section 194A): 10% if you provide your PAN. 20% if PAN is NOT provided. TDS threshold: ₹40,000 per year for regular customers (aggregate from all FDs in one bank). ₹50,000 per year for senior citizens (60+ years). No TDS if annual interest is below the threshold. Submit Form 15G (below 60) or 15H (senior citizen) if your total income is below taxable limit to avoid TDS.
How to avoid TDS on FD interest?+
Submit Form 15G (for individuals below 60 with total income below basic exemption) or Form 15H (for senior citizens 60+) to your bank at the start of each financial year. These declare that your total income is below the taxable limit and request nil TDS. Submit a fresh form every financial year. Even with these forms, you must include FD interest in your ITR and pay tax if applicable.
What is the TDS rate on house rent?+
TDS on rent under Section 194I: 10% for rent of land, building, or furniture. 2% for rent of plant, machinery, or equipment. Threshold: ₹2,40,000 per year (₹20,000 per month). Individual/HUF tenants with turnover below audit threshold: No TDS on rent below ₹50,000/month (Section 194IB at 5%). Tenant deposits TDS by 30th April for March; otherwise 7th of following month.
What is the TDS on professional fees Section 194J?+
Section 194J TDS: 10% on fees to doctors, lawyers, architects, engineers, consultants. 2% on fees to technical service providers (IT services, software development, call centers). Threshold: ₹30,000 per year per payee (aggregate payments to same person). For royalty and non-compete fees: 10%. Note: After Budget 2020, technical services fee TDS reduced to 2% to reduce compliance burden.
How to check if TDS has been deducted correctly?+
Check TDS deduction in Form 26AS: Login to income tax e-filing portal (incometax.gov.in), go to 'My Account' → 'View Form 26AS'. It shows all TDS deducted by various deductors against your PAN, along with the deductor's TAN, amount paid, and TDS amount. If TDS is missing or incorrect, contact the deductor (bank/employer) to rectify by filing a correction TDS return.