TDS in India: Complete Guide for Salaried and Freelancers

What Is TDS?

TDS (Tax Deducted at Source) is a mechanism where the payer deducts income tax from a payment before giving the money to the receiver. The deducted amount is deposited with the Income Tax Department on behalf of the receiver.

Example: An employer deducts TDS from your monthly salary. When you file ITR, the TDS already paid is credited against your total tax liability.

How TDS Works

Step 1: Payer (employer, client, bank) deducts tax from the payment.

Step 2: Payer deposits TDS with the Income Tax Department.

Step 3: Payer issues Form 16 (salary TDS) or Form 16A (other TDS) as proof.

Step 4: Receiver files ITR and claims TDS credit. If TDS exceeds tax liability, the excess is refunded.

Common TDS Rates (2026)

Payment Type

TDS Rate

|---|---|

Salary	As per tax slab
Bank FD interest (above Rs 40,000/year)	10%
Professional fees (above Rs 30,000/year)	10%
Rent (above Rs 50,000/month)	5%
Contractor payments (above Rs 30,000)	1-2%
Commission and brokerage	5%

Checking Your TDS: Form 26AS

Form 26AS (Annual Information Statement) shows all TDS deducted against your PAN. Access it from the Income Tax portal: Login → e-file → Income Tax Returns → View Form 26AS.

Always reconcile your Form 16 with Form 26AS before filing ITR. Discrepancies need to be resolved with the deductor.

TDS for Freelancers and Consultants

Clients who pay you more than Rs 30,000 per year for professional services must deduct 10% TDS from each payment. You receive the remaining 90%. The 10% is your advance tax payment.

At ITR time: if your total tax liability is less than the TDS already deducted, you get a refund. If more, you pay the balance.

Avoiding TDS on FD (Form 15G/15H)

If your total income is below the taxable limit: Submit Form 15G (below 60 years) or Form 15H (above 60 years) to your bank. The bank will not deduct TDS on FD interest.