TDS Calculation: Formula & Process to Calculate TDS

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What Is TDS Calculated on?

Calculating TDS depends on various natures of payments.

Therefore, individuals wondering how to calculate TDS on salary, bill amount or fixed deposits first need to know the different TDS rates.

In the table given below, you will find the detailed list with the relevant sections and rates of TDS.

TDS Calculation Formula With Example (as Per New Regime)

Typically, the employer deducts TDS from his employee’s salary at the ‘average rate’ of his income tax.

The general formula is:

Average Income Tax Rate = Income Tax Payable (computed through slab rates) / Estimated income for the financial year.

Let’s say you receive a monthly salary of ₹1,00,000 during the financial year 2019-20.

Nature of Payment	Relevant Section	TDS rate from 1 April 2021
Salaries	Section 192	At applicable rates of income tax
Receiving accumulated taxable part of PF	Section 192A	10.00%
Interest received on securities	Section 193	10.00%
Dividends received on the company's shares and on mutual funds	Section 194 and 194K	10.00%
Interest other than interest on securities (fixed deposit interest)	Section 194A	10.00%
Winnings from crosswords, lotteries or any game	Section 194B	30.00%
Winnings from horse races	Section 194BB	30.00%
Winnings from horse races	Section 194BB	30.00%
Payment of contractors and sub-contractors	Section 194C	1% (individual/HUF), 2% (others)
Insurance commission received by an individual	Section 194D	5.00%
Life insurance policies not exempt under Section 10(10D)	Section 194DA	5.00%
Payment in respect of deposits under National Savings Scheme	194EE	10.00%
Payments on account of repurchase of units by mutual funds or UTI	194F	20.00%
Commission, prize etc., on sale of lottery tickets	Section 194G	5.00%
Commission received except for Insurance Commission	Section 194H	5.00%
Payment done while purchasing property or land	Section 194IA	1.00%
Rent payment by HUF or individual exceeding ₹50,000 per month	Section 194IB	5.00%
Payment made to professional or commission or brokerage of more than ₹50 lakh and above	194M	5.00%
Cash withdrawal	194N	2.00%
Cash withdrawal	194N	2.00%
Payment of professional fees, etc.	194J	2% (royalties, FTS, call centre), 10% (others)
Rent for machinery and plant	194- I(a)	2.00%
Rent for property that is immovable	194-I(b)	10.00%
TDS on e-commerce participants (w.e.f. 1.10.2020)	Section 194-O	1.00%

Total income	₹12,00,000
Estimated deduction (under Chapter VI A)	₹1,00,000
Income chargeable to tax	₹11,00,000

How to Calculate TDS: Calculation & Formula Explained

What Is TDS Calculated on?

TDS Calculation Formula With Example (as Per New Regime)

Scenarios of TDS Exemptions

How Can You Save TDS?

Leave Travel Allowance

Mediclaim Premium

House Rent Allowance

Residential Loan Interest

Food Coupons

Tuition Fees

Donations

National Pension System (NPS)

Section 80C Benefits

How Interest is Calculated for Late TDS Payment

Frequently Asked Questions

✓ How to know the quantum of tax deducted from your income?

✓ What to do if the TDS credit is not reflected in Form 26AS?

Important articles about TDS

More article about Income Tax in India

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