1. What Is TDS (Tax Deducted at Source)?

TDS (Tax Deducted at Source) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by the Indian Revenue Service (IRS).

2. How Does the Calculator Work?

The calculator uses the TDS calculation formula:

Where:

• \( TDS \) — Tax Deducted at Source amount
• \( Gross Income \) — Total income before any deductions
• \( TDS Rate \) — Applicable tax deduction rate as percentage

Explanation: The formula calculates the tax amount that should be deducted at source from the gross income based on the specified TDS rate.

3. Importance of TDS Calculation

Details: Accurate TDS calculation ensures compliance with tax regulations, prevents under-deduction or over-deduction of taxes, and helps in proper tax planning and financial management.

4. Using the Calculator

Tips: Enter gross income in your local currency, TDS rate as a percentage (0-100%). Ensure all values are valid (income > 0, rate between 0-100).

5. Frequently Asked Questions (FAQ)

Q1: What is the purpose of TDS?
A: TDS helps in collecting tax at the source of income, ensuring regular inflow of revenue to the government and reducing tax evasion.

Q2: Who is responsible for deducting TDS?
A: The deductor (employer, bank, or any person making specified payments) is responsible for deducting TDS and depositing it with the government.

Q3: What are common TDS rates?
A: TDS rates vary based on the nature of payment and the payee's status. Common rates range from 1% to 30% depending on the income type.

Q4: When is TDS not applicable?
A: TDS may not be applicable if the total income is below the taxable limit or for certain exempted payments as per income tax rules.

Q5: Can TDS be refunded?
A: Yes, if the total TDS deducted exceeds the actual tax liability, the excess amount can be claimed as refund while filing income tax returns.