Free TDS Calculator for Indian Businesses

TDS is a withholding tax — the payer cuts a percentage off the payment, deposits it with the government, and gives the recipient credit through Form 26AS. For Indian businesses, TDS compliance is routine but easy to get wrong: a missed deduction, a wrong section, an incorrect rate, or a 206AA mistake can each trigger disallowance of the underlying expense, interest, and penalty.

This calculator gives you the exact TDS amount, taxable base, applicable section threshold, and net payable in seconds. Use it as a deduction checklist before approving any vendor payment.

The most-used sections for Indian businesses:

• Section 194A — Interest other than on securities. Rate 10%. Threshold ₹40,000 (₹50,000 for senior citizens). Common for FD interest, loan interest, partner's capital interest above the partnership agreement rate.
• Section 194C — Payments to contractors. 1% for individual / HUF deductees, 2% for others. Single threshold ₹30,000 OR aggregate ₹1,00,000 per year. Catches transport contracts, construction, advertising, maintenance services.
• Section 194H — Commission or brokerage. Rate 5%. Threshold ₹15,000 aggregate. Applies to sales commissions, brokerage on transactions, etc.
• Section 194I — Rent. 2% for plant / machinery / equipment. 10% for land, building, furniture, fittings. Threshold ₹2,40,000 aggregate. Note: separate from Section 194IB which applies to individuals not covered by audit who pay ₹50,000+ rent per month.
• Section 194J — Professional / technical services. 10% for professional fees (legal, medical, engineering, accountancy, technical consultancy, advertising). 2% for technical services and royalty for film distribution. Threshold ₹30,000 aggregate.
• Section 194Q — Purchase of goods. Rate 0.1% on amount exceeding ₹50,00,000 aggregate per year per seller. Applies only to buyers with previous-year turnover > ₹10 Crore. Mutually exclusive with TCS 206C(1H) — if 194Q applies, 206C(1H) doesn't.

Other sections exist for niche scenarios — 194LA (compensation for compulsory acquisition), 194N (cash withdrawals), 194O (e-commerce operators), 194R (perquisites and benefits), 195 (payments to non-residents). Consult your CA for cross-border or specialized cases.

Section 194C's threshold is the most-misunderstood: ₹30,000 per single payment OR ₹1,00,000 aggregate per year. Once either trigger fires, TDS applies retroactively on the full year's payments — not just the excess.

Example

You pay a contractor 9 monthly installments of ₹15,000 each (total ₹1,35,000 by month 9). The aggregate has crossed ₹1,00,000. Starting from the month it crossed:

• You must deduct TDS at 1% on ₹1,35,000 (or 2% if the contractor is a firm/company) — ₹1,350.
• For all subsequent payments in the same FY, deduct on each payment regardless of amount.
• Practical approach: deduct TDS from payment 1 onwards if you reasonably expect to cross ₹1L for the year. The cost of slight over-deduction is zero — the contractor gets the credit anyway.

Section 194J — no single-payment threshold

194J has only the aggregate threshold of ₹30,000 per year. A single ₹35,000 invoice triggers TDS at 10% on the full ₹35,000.

If your deductee does not furnish a valid PAN (or furnishes a wrong one), Section 206AA mandates TDS at the higher of:

• The rate specified in the relevant section (e.g., 1% under 194C, 10% under 194J)
• The rate in force (the basic income-tax rate, currently 30% for the highest slab)
• 20% (the minimum 206AA rate for most sections)

In practice, 20% is the operative rate for most sections. So:

• Contractor without PAN: 20% TDS (vs 1% / 2% with PAN).
• Professional without PAN: 20% TDS (vs 10% with PAN).
• Landlord without PAN: 20% TDS (vs 10% with PAN).

Mitigation: verify PAN with the deductee before the first payment. Use the GST portal's "Search Tax Payer" or the income-tax e-filing portal's PAN verification tool — both free. Get a written PAN declaration on a duly-stamped letter as part of the vendor onboarding.

1. Identify the section for every payment before approval. Maintain a TDS rate card for your vendors based on the nature of services.
2. Deduct TDS at the time of credit OR payment, whichever is earlier. If you credit the vendor's account in the books on the 15th but pay on the 25th, deduct on the 15th.
3. Deposit TDS by the 7th of the following month (30 April for March). Use Challan ITNS 281 on the income-tax portal.
4. File the quarterly TDS return — Form 26Q for non-salary, Form 24Q for salary, Form 27Q for non-residents. Due dates: 31 July (Q1), 31 Oct (Q2), 31 Jan (Q3), 31 May (Q4).
5. Issue Form 16A within 15 days of the return filing due date. Download from TRACES after the return processes.
6. Reconcile annually: total TDS deducted = total TDS deposited = total credit in vendor's 26AS. Mismatches are the #1 reason vendors complain about your bookkeeping.

• Not deducting: 30% of the expense is disallowed under Section 40(a)(ia). On a ₹10L payment where 10% TDS was missed, ₹3L becomes non-deductible, costing ~₹93,000 in incremental income tax. Additionally, a penalty under Section 271C equal to the TDS amount can apply.
• Deducting at the wrong rate (too low): 30% disallowance applies on the shortfall, plus interest at 1% per month on the difference.
• Late deposit: interest at 1.5% per month from the date of deduction to actual payment under Section 201(1A).
• Late return filing: ₹200 per day late fee under Section 234E, capped at the TDS amount.
• Wrong PAN reported: the deductee does not get credit. Painful reconciliation with vendor. Correction return required.

None of these are catastrophic individually, but they accumulate. The simplest defense is a monthly TDS compliance ritual — same 30 minutes, same person, same checklist.

ReadyBooks lets you set a TDS section per vendor at onboarding. Every payment automatically computes TDS, posts the deduction as a liability, and creates the Challan ITNS 281 entry. At quarter-end the system generates the Form 26Q upload file. Free forever. Save to ReadyBooks above to start — your selected section becomes the default for that vendor.