1. What is TDS?

TDS (Tax Deducted at Source) is a method of collecting income tax in India, under the Indian Income Tax Act of 1961. It is an advance tax that is deducted at the time of making specified payments such as salary, commission, professional fees, interest, rent, etc.

2. How Does the Calculator Work?

The calculator uses the TDS calculation formula:

Where:

• \( TDS \) — Tax Deducted at Source amount
• \( Gross\ Pay \) — Total payment amount before tax deduction
• \( TDS\ Rate \) — Applicable tax deduction rate as percentage

Explanation: The formula calculates the tax amount that needs to be deducted at source from the gross payment based on the specified TDS rate.

3. Importance of TDS Calculation

Details: Accurate TDS calculation ensures compliance with tax laws, prevents under-deduction or over-deduction of taxes, and helps in proper tax planning and cash flow management for both deductors and deductees.

4. Using the Calculator

Tips: Enter gross pay amount in your local currency, enter the applicable TDS rate as a percentage. Both values must be valid (gross pay > 0, TDS rate between 0-100%).

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between TDS and income tax?
A: TDS is tax deducted at source during payment, while income tax is the total tax liability calculated annually. TDS is adjusted against the final income tax liability.

Q2: Who is responsible for deducting TDS?
A: The person making the payment (deductor) is responsible for deducting TDS and depositing it with the government.

Q3: What are the common TDS rates in India?
A: TDS rates vary based on the nature of payment - salary (as per income tax slabs), interest (10%), professional fees (10%), rent (2-10%), etc.

Q4: When should TDS be deposited?
A: TDS must be deposited by the 7th of the following month, except for March TDS which can be deposited by April 30th.

Q5: Can I get TDS refund?
A: Yes, if the total TDS deducted exceeds your actual tax liability, you can claim refund while filing your income tax return.