Why is my TDS deducted at 20% instead of the regular rate?

Section 206AA of the Income Tax Act mandates a flat 20% TDS rate when the recipient fails to furnish a valid PAN to the deductor — overriding the lower section-specific rate. The penalty applies to most TDS sections (192 salary is a separate slab-based regime). The fix is straightforward: submit your PAN to the deductor and ask them to revise the deduction going forward. You can still claim the excess back when filing your ITR, but it locks up cashflow for months.

Can I claim TDS as a refund?

Yes. TDS is treated as advance tax already paid on your behalf. When you file your income tax return, the total tax deducted (visible in Form 26AS / AIS) is credited against your final tax liability. If TDS exceeds your actual tax liability — common for low-income earners, senior citizens, or those with high deductions — the difference is refunded to your bank account, typically within a few weeks of return processing. Alternatively, eligible taxpayers can submit Form 15G / 15H to the deductor in advance to request no deduction.

What's the difference between TDS and TCS?

TDS (Tax Deducted at Source) is deducted by the payer from a payment made to the recipient — e.g. an employer withholding tax from salary, a bank withholding on FD interest. TCS (Tax Collected at Source) is collected by the seller from the buyer at the time of sale — e.g. on liquor, scrap, motor vehicles above ₹10 lakh, or foreign remittances under LRS. Both are advance-tax mechanisms credited against your final ITR liability, but TDS flows payer-to-government while TCS flows seller-to-government.

How do I check my TDS deducted in Form 26AS?

Log into the income-tax e-filing portal (incometax.gov.in) using your PAN, navigate to 'e-File' → 'Income Tax Returns' → 'View Form 26AS', and proceed to the TRACES portal where Form 26AS is displayed. It shows all TDS deducted on your PAN by various deductors, the section under which it was deducted, the deductor's TAN, and the amounts. The newer Annual Information Statement (AIS) and TIS provide a more comprehensive view including high-value transactions. Always cross-check Form 26AS / AIS against your own records before filing your ITR.

TDS Calculator — Tax Deducted at Source by Section (India)

TDS

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TDS Calculator

Calculate Tax Deducted at Source (TDS) under Sections 192 (salary), 194A (interest), 194C (contractor), 194H (commission), 194I (rent), and 194J (professional fees). Handles PAN / no-PAN rates and threshold-aware deductions.

Reviewed by the CalculatorKosh Editorial TeamUpdated June 2026Free · No sign-up

Deduction Details

TDS Section

Annual payment amount

₹

₹0₹1000 Cr

Total payment over the financial year (gross — before TDS)

PAN provided?

Senior citizen (60+)?

Annual TDS Amount

₹10,000

Section 194A at 10% — threshold ₹50,000

Effective TDS Rate

10%

Threshold

₹50,000

Net Annual Payment

₹90,000

Monthly TDS Equivalent

₹833.33

Rule Applied

Section 194A (Interest) — Interest other than on securities (bank FDs, post-office deposits) — Budget 2025 threshold ₹50,000 (₹1,00,000 for senior citizens). ₹1,00,000 exceeds the ₹50,000 threshold (non-senior — ₹50,000 threshold). TDS @ 10% (PAN provided) = ₹10,000.

Section	Description	Rate (PAN)	Threshold
192	Salary	Slab rate	Basic exemption
194A	Interest (FD, PO)	10%	₹40,000 (₹50,000 senior)
194C (Individual)	Contractor	1%	₹1,00,000 / ₹30,000 single
194C (Company)	Contractor	2%	₹1,00,000 / ₹30,000 single
194H	Commission / brokerage	2%	₹20,000
194I (Plant)	Rent — plant / machinery	2%	₹2,40,000
194I (Land)	Rent — land / building / furniture	10%	₹2,40,000
194J (Prof.)	Professional fees	10%	₹30,000
194J (Tech.)	Technical fees	2%	₹30,000
194Q	Purchase of goods	0.1%	₹50,00,000
194S	Crypto / VDA	1%	₹10,000
194T	Partner of firm (FY 25-26)	10%	₹20,000
No-PAN penalty (Section 206AA): flat 20% overrides all rates above.

How It Works

TDS (Tax Deducted at Source) is the mechanism by which the payer of certain specified payments deducts income tax at the prescribed rate and remits it directly to the government on behalf of the recipient. The deductee gets a TDS certificate (Form 16 for salary, Form 16A for non-salary payments) and can claim the amount as advance tax credit in their ITR.

How TDS rates and thresholds work

Each TDS section in Chapter XVII-B of the Income Tax Act prescribes its own rate and threshold. The deductor checks whether the annual payment exceeds the threshold — if it does, TDS is deducted on every payment going forward, not just on the excess. For example, Section 194A (interest other than securities) has a ₹40,000 annual threshold (₹50,000 for senior citizens). The instant a bank's FD interest payout to a customer crosses that threshold, 10% TDS is withheld from that payment.

The PAN / no-PAN distinction (Section 206AA)

Section 206AA imposes a flat 20% TDS when the recipient fails to furnish a valid PAN — this is a deliberate penalty to discourage PAN-less transactions. The 20% rate applies regardless of the section's normal rate (so even Section 194Q's 0.1% buyer-side TDS jumps to 20% without PAN).

Salary TDS (Section 192) is different

Salary TDS is not a flat percentage — it follows the income-tax slab structure with surcharge, cess, and rebate u/s 87A. For accurate salary withholding, use the Income Tax Calculator instead.

Frequently Asked Questions

TDS (Tax Deducted at Source) is the mechanism by which the payer of certain specified payments — salary (Section 192), interest (194A), contractor fees (194C), rent (194I), professional fees (194J), commission (194H), crypto transfers (194S), and others — deducts income tax at the prescribed rate and remits it to the government on behalf of the recipient. The recipient receives a TDS certificate (Form 16 for salary, Form 16A for non-salary) and can claim the deducted amount as advance tax credit when filing their ITR. TDS only kicks in once the annual payment exceeds the section-specific threshold.