TDS Formula

Tax Formula • Published on July 30, 2026 • Last updated July 30, 2026

Mathematical Equation

$$\begin{aligned} \text{TDS Amount} &= \text{Payment Amount} \times \frac{\text{TDS Rate}}{100} \\ \text{Net Payable} &= \text{Payment Amount} - \text{TDS Amount} \end{aligned}$$

Variable Definitions

Payment Amount

Gross amount of the invoice or salary payment

TDS Rate

Statutory tax deduction rate applicable under the specific section of the Income Tax Act

TDS Amount

Tax amount withheld by the payer and deposited with the tax authorities

Net Payable

Net amount paid to the recipient after tax deduction

Detailed Explanation

In-Depth Guide

Tax Deducted at Source (TDS) is a mechanism where the person responsible for making specific payments deducts income tax before releasing the funds to the payee. The tax deducted is credited to the payee's tax account (Form 26AS).

How to Calculate: Step-by-Step

1. Determine the category of payment and the applicable Section of the Income Tax Act. 2. Check if the payment amount exceeds the specified threshold limit for the fiscal year. 3. Check the PAN status of the payee (normal rate applies with PAN; 20% penalty rate applies without PAN). 4. Calculate the TDS amount by multiplying the gross payment by the TDS rate. 5. Deduct the TDS amount from the gross payment to determine the net payable amount.

Worked Calculation Example

Let's calculate TDS on a professional fee of INR 80,000 under Section 194J (TDS rate 10% with PAN): - Payment Amount = INR 80,000 - TDS Rate = 10% - TDS Amount = INR 80,000 * 10% = INR 8,000 - Net Payable = INR 80,000 - INR 8,000 = INR 72,000.

Common Use Cases

  • Compliance for corporate accounting and invoicing
  • Estimating withholding tax on rentals, interest, and consulting fees

Frequently Asked Questions

Form 26AS is an annual tax credit statement that shows the details of tax deducted at source (TDS) from your income by various deductors.

Yes, if the total TDS deducted during the year exceeds your actual tax liability, you can claim a refund by filing your income tax return (ITR).

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