How to Use a TDS Calculator?

Income Tax

TDS (Tax Deducted at Source) refers to a specific amount deducted by anyone who pays rent, salary, commission, professional fees, etc. A TDS calculator helps calculate the TDS amount in a fast and easy way. This indispensable tool is accurate, handy and user-friendly. Read on to know the steps to use a TDS calculator online.

TDS Calculator: How To Calculate TDS Online?

You can locate this calculator on various websites or can directly visit the official website of the Income Tax Department. After that, follow these steps:

• Step 1: Enter the financial year for which you want to calculate the TDS.
• Step 2: Enter your residential status and recipient type.
• Step 3: If you do not have PAN, tick the box.
• Step 4: Enter the section under which TDS will be applicable.
• Step 5: Enter the amount of payment you made towards that particular section.

Upon entering these details, the calculator will compute your TDS along with applicable surcharges and health and education cess.

TDS calculation will depend on the type of payment you make. The rate of TDS deduction will vary on the nature or type of payment. So, make sure to know the exact TDS deduction rates before you proceed with calculations. 

Also Read: How To Use Online Income Tax Calculator?

Understanding TDS Calculation

TDS is the income tax deducted from the corpus paid when making certain payments, such as commission, rent and professional fees. 

Here, the income receiver gets the net amount (after TDS is deducted). The recipient then adds the gross amount towards his/her income and will adjust the TDS amount against final tax liability.

The one paying the TDS will be eligible to get a credit for the deducted amount.

Let us understand this with an example: 

Suppose XYZ Pvt Ltd paid a rent of Rs. 90,000 to the property owner. The applicable TDS rate is 10%. XYZ will have to deduct Rs. 9,000 from the entire rent amount and pay Rs. 81,000. Thus, the recipient, i.e., the property owner, receives a net amount of Rs. 81,000 after TDS. The property owner will then add the gross amount (Rs. 90,000) to his/her income and can ask for credit for the TDS amount (Rs. 9,000) against his/her final tax liability.

Calculation of TDS on Salary

TDS on salary calculation is done by deducting the exemption amount from the total annual salary of an employee. The IT Department provides the exemption limit. During TDS calculation on salary, an employer must obtain a declaration and proof from the employee to approve the exemption amount.

The following incomes are eligible for tax exemption:

• House rent allowance (HRA)
• Children education allowance
• Standard deduction
• Leave travel allowance

Note that the employer’s status as a HUF or company holds no relevance to TDS on salary.

Also Read: How To Save Income Tax On Salary?

Applicable TDS Rates for Indians

Here’s a tabular representation of TDS rates applicable for different payment sections – 

Apart from residents of India, NRIs, domestic and international companies are also liable to pay a specific amount of TDS.

Also Read: A Detailed Guide For Checking TDS Status Using Your PAN Card

Final Word

Since Tax Deducted at Source is a vast concept, manual calculations can leave room for some errors. To steer clear of miscalculations, errors or discrepancies in the calculation, use an online TDS calculator. 

FAQs on TDS Calculator

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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.