TDS calculator: Simplifying your tax deduction

Have you ever noticed that a part of your salary or other income disappears before reaching a bank account? This part of your income or salary that disappears is known as the TDS amount. If you look at your salary slip you will notice that there are different sections like house rent allowance, dearness allowance TDS calculator etc. Whether you are a salaried person freelancer or a managing rental person you need to know about all these terms, especially TDS payment. TDS calculator salary is not calculated over the wage but the TDS calculator on the bill is also applied. You also need to pay the TDS on property, the TDS on gross salary, TDS on late payment. This article will help you understand the basics of TDS, the TDS calculator, and its benefits.

What is TDS?

TDS stands for Tax Deducted at Source, which is a part of the income tax. But another context PDF is a total dissolved solid which is used for TDS calculators in water. But here we are talking about tax deducted at the source which is in the context of income tax.

This is the money that is deducted from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest, etc. by the persons making such payments. Not only in these places but mutual fund TDS calculators come under TDS charge.

TDS full form is Tax Deducted at Source. Under this mechanism, if a person (deductor) is liable to make payment to any other person (deductee) will deduct tax at source and transfer the balance to the deductee. The rates for every transfer differ according to the Indian tax system. It is important to ensure the regular flow of tax collection over the year to reduce the tax evasion chances. This simple TDS calculator helps to simplify the tax filing process by deducting TDS that will be reflected in Form 16 for the salaried individual while it is mentioned in Form 26AS for all other taxpayers.

What are TDS Calculation Rates and laws?

The Indian Tax System has around 20 to 25 sections that govern different types of payments on which TDS is applicable. Some common types of payments on which tax is to be deducted at source along with the relevant section and TDS rates applicable are as follows:

• Section 192: The TDS under section 192 mandates the employee to deduct TDS from the salary according to the rate prescribed with investment declaration and tax slab.
• Section 194: It is the section that covers the wide range of income sources with the common example of interest for late payment of tds, interest on Bank deposits, bonds and taxable investments according to law. It also includes rent payments, professional fees paid to doctors, lawyers and consultants along with commission payment under this section. This action covers TDS Rates on professional fees.
  • Section 194 A: Interest Income except the one invested on securities is 10%.
  • Section 194 C: Payment/ credit to a resident contractor or sub-contractor (1% for HUF and individuals, 2% for others)
  • Section 194 D: Insurance Commission (5% for HUF and individuals, 10% for others)
  • Section 194 G: Commission on sale of lottery tickets (10%)
  • Section 194H: Commission or Brokerage (5%)
  • Section 194-I: Rental Income received (2% from plant, machinery or types of equipment, 10% from furniture or fixtures, land and building)
  • Section 194-IA: Transfer of any immovable property (other than rural land) (1%)
  • Section 194 J: Royalty, technical or Professional fees or remuneration to a director (10%)
  • Section 194LA: Acquisition of any specific immovable property (10%)
• Section 195: In this section the payment made to nonresidents for services rendered in India or according to the income law of India. The sec 195 TDS can check the variant rate according to the income nature and tax treaty applied to them.

TDS Payment Due Dates

Every employer or deductor, who deducts the TDS from any employee or individual providing any professional service, is required to credit the tax deducted at source to the Central Government’s account before the specified due date. The monthly due date for TDS payment is on or before the 7th of next month. It should be paid for the previous month for example the TDS for April month should be paid on or before the 7th of May.

TDS Returns

TDS returns need to be filed every quarter. In case of late or non-filing of the return, a fine or fee of Rs. 200/- per day as interest on late payment of TDS calculator under section 234E of the Income Tax Act, 1961 until you finally file the return. However, this sum should not exceed the TDS amount of tax to be paid. The due dates for filing TDS returns are

• For the first quarter April to June, you need to file a TDS return on 31 July of the same financial year.
• For July to September, the TDS return will be filed on 31st October of the same financial year.
• The third quarter of October to December needs to be filed on 31 January of the same financial year.
• For the fourth quarter of January to March, the TDS filing should be supposed to be filed by 31 of May next financial year

How to determine TDS calculator income tax?

Here's a step-by-step guide to calculate TDS (Tax Deducted at Source) in terms of income tax:

Step 1: Determine the type of payment

First, you need to identify the payment type you need to make. Salary comes under Section 192, Interest is under Section 194A, Commission or Brokerage in Section 194H, Professional Fees Under Section 194J, Rent under Section 194I etc. We need to identify which type of payment we are making to understand the rate of the TDS calculator on payment.

Step 2: Check the TDS rate

You should go to the Income Tax Act or the relevant section to determine the applicable TDS rate for the type of payment. Salary: No specific rate (tax is deducted based on the employee's tax slab), Interest: 10%, Commission or Brokerage: 5%, Professional Fees: 10%, Rent: 2%. These percentages should be taken into account while calculating the TDS under the income tax law.

Step 3: Calculate the taxable amount

You need to determine the taxable amount in which TDS should be deducted. The gross salary is supposed to be paid to the employee. The interest rate should be applied to bank deposit bonds and other investments. Commission or brokerage should be paid to the middleman while TDS for professional fees is preserved for consultant lawyers and doctors. Apart from this rent paid for building land or furniture should be calculated separately from the taxable amount.

Step 4: Apply the TDS rate

Multiply the taxable amount by the applicable TDS rate. For example:

• Salary: No specific rate (tax is deducted based on the employee's tax slab)
• Interest: 10% of the interest paid (e.g., Rs. 10,000 x 10% = Rs. 1,000)
• Commission or Brokerage: 5% of the commission or brokerage paid (e.g., Rs. 10,000 x 5% = Rs. 500)
• Professional Fees: 10% of the fees paid (e.g., Rs. 10,000 x 10% = Rs. 1,000)
• Rent: 2% of the rent paid (e.g., Rs. 10,000 x 2% = Rs. 200)

Step 5: Calculate the TDS amount

Round off the result to the nearest rupee. This is the TDS amount that needs to be deducted.

For example:

• Salary: Rs. 1,500 (based on the employee's tax slab)
• Interest: Rs. 1,000
• Commission or Brokerage: Rs. 500
• Professional Fees: Rs. 1,000
• Rent: Rs. 200

Step 6: Deduct TDS

Deduct the TDS amount from the taxable amount. For example:

• Salary: Pay the employee Rs. 8,500 (Rs. 10,000 - Rs. 1,500)
• Interest: Pay the interest Rs. 9,000 (Rs. 10,000 - Rs. 1,000)
• Commission or Brokerage: Pay the commission or brokerage Rs. 9,500 (Rs. 10,000 - Rs. 500)
• Professional Fees: Pay the fees Rs. 9,000 (Rs. 10,000 - Rs. 1,000)
• Rent: Pay the rent Rs. 9,800 (Rs. 10,000 - Rs. 200)

Step 7: Deposit TDS with the government

Deposit the TDS amount with the government by the specified due date. The due date for depositing TDS is usually the 7th day of the following month.

Remember to file the TDS return (Form 26Q) quarterly, stating the details of the TDS deducted and deposited with the government.

Advantages of FirstFiling TDS calculator

TDS (Tax Deducted at Source) offers advantages for both the government and taxpayers in India's income tax system. Here's a breakdown of the benefits:

Convenience: TDS simplifies tax filing by pre-collecting tax throughout the year. The deducted TDS amount is reflected in your Form 16 (salary) and Form 26AS (all taxpayers), reducing the hassle of calculating your total tax liability.

Reduced Tax Burden: TDS acts as a pre-payment of your income tax, potentially lowering your final tax liability at filing time.

Transparency: TDS promotes transparency in tax collection, as you have a clear record of tax deducted from your income sources.

Reduced Penalty Risk: A timely TDS calculator with GST and deduction helps you avoid penalties for late or underpayment of taxes.