Question 1

What is TDS and why is it deducted?

Accepted Answer

TDS (Tax Deducted at Source) is advance tax collected by payer before making payment. Government collects tax at source to prevent tax evasion. Common TDS scenarios: Salary (employer deducts), FD interest > ₹40K (bank deducts 10%), Rent > ₹50K/month (tenant deducts 5-10%), Professional fees > ₹30K (client deducts 10%). TDS is not additional tax - it's advance payment of your income tax. You get credit in Form 26AS and can claim refund if TDS > actual tax liability. File ITR to claim TDS credit.

Question 2

What are the TDS rates for FY 2025-26?

Accepted Answer

TDS rates for FY 2025-26 / Tax Year 2026-27 (Income Tax Act 2025): Salary (Section 192): As per income slab | Interest on FD/Savings (194A): 10% above ₹40K (₹50K for senior citizens) | Professional fees (194J): 10% above ₹30K | Rent (194I): 10% above ₹2.4L/year | Contract payments (194C): 1% for individuals, 2% for companies | Commission (194H): 5% | Dividend (194): 10%. Without PAN: 20% TDS | If no ITR filed for 2 years: Higher TDS rates apply. Always provide PAN to avoid higher deduction.

Question 3

How to calculate TDS on salary?

Accepted Answer

Salary TDS calculation steps: (1) Calculate gross salary (Basic + HRA + Allowances), (2) Add perquisites and taxable benefits, (3) Subtract exempt allowances (HRA exemption, LTA), (4) Subtract Section 80C, 80D deductions, (5) Calculate tax as per chosen regime (old/new), (6) Divide annual tax by 12 for monthly TDS. Employer uses Form 12BB for investment proofs. Submit investment declarations before March to avoid high TDS. TDS deducted monthly but can be adjusted till March. Mismatch between actual tax and TDS? File ITR for refund.

Question 4

When is TDS not applicable?

Accepted Answer

TDS is not deducted when: (1) Payment is below threshold limit (e.g., FD interest < ₹40K), (2) Form 15G/15H submitted (if no tax liability), (3) Lower/Nil TDS certificate obtained from Income Tax (valid reason needed), (4) Payment to government or specified entities. Form 15G/15H: For people with income below taxable limit. 15G for below 60 years, 15H for senior citizens. Submit to bank/payer before interest credit. Valid for 1 financial year. Can't submit if you have tax liability.

Question 5

How to check TDS deducted and claim refund?

Accepted Answer

Check TDS: (1) Form 26AS on Income Tax portal (shows all TDS), (2) Form 16 from employer (salary TDS), (3) Form 16A from other deductors (non-salary TDS), (4) AIS (Annual Information Statement) - comprehensive view. Claim refund: (1) File ITR before deadline, (2) All TDS shown in 26AS gets auto-populated, (3) If TDS > actual tax liability, you get refund, (4) Refund credited to bank in 1-2 months. Mismatch in 26AS? Contact deductor to file correction statement. Always verify PAN in 26AS matches deductor's records.

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