Quick Answer: What Is TDS and How Do You Get It Back?
Tax Deducted at Source (TDS) is a mechanism where the person or entity paying you (such as your employer, bank, or client) deducts a specific government-mandated percentage of tax before transferring money into your account. For example, if your fixed deposits earn ₹60,000 interest, the bank withholds 10% (₹6,000) under Section 194A and credits ₹54,000 to your savings account. If your total annual income falls below the taxable exemption threshold, you do not owe any tax. You can claim that entire withheld amount back as an income tax refund with interest by filing your annual Income Tax Return (ITR). Check applicable thresholds instantly with our [TDS Calculator](/tds-calculator).
Common TDS Sections, Thresholds, and Rates (FY 2026-27)
Here are the primary TDS sections applicable to salaried individuals, investors, and professionals for FY 2026-27: 1. Section 192 (Salaries): Deducted by employers based on your estimated annual tax liability under your chosen tax regime. 2. Section 194A (Bank FD / Savings Interest): 10% TDS if total bank interest exceeds ₹40000 per financial year (threshold is ₹50000 for senior citizens). 3. Section 194I (Rent on Land & Building): 10% TDS by corporate/business tenants if annual rent exceeds ₹240000. 4. Section 194-IB (Rent by Individuals): 2% TDS if an individual tenant pays rent exceeding ₹50000 in any single month. 5. Section 194J (Professional / Technical Fees): 10% for professional services (2% for technical services) when annual fees exceed ₹30000. 6. Section 194DA (Life Insurance Payouts): 5% TDS on the net taxable profit portion if policy proceeds are not exempt.
The Higher Non-PAN Deduction Rule Under Section 206AA
Under Section 206AA of the Income Tax Act, if you do not furnish a valid Permanent Account Number (PAN) to the entity deducting tax, TDS is mandatorily deducted at a higher rate of 20% (or the applicable rate, whichever is higher). Always verify that your bank, employer, and clients have your correct PAN linked to your Aadhaar.
How to Prevent TDS: Form 15G and Form 15H
If your total taxable income is below the basic tax exemption limit, you can prevent banks from deducting TDS on your interest earnings by submitting statutory self-declaration forms at the start of each financial year (in April): • Form 15G: For resident individuals below 60 years of age whose total estimated income is zero tax. • Form 15H: For senior citizens aged 60 years and above. Submitting these forms instructs the bank not to deduct any TDS, eliminating the need to wait for an ITR refund.
How to Verify TDS in Form 26AS and Claim Your Refund
All TDS deducted against your PAN is officially reported to the Income Tax Department and reflected in two vital tax documents: 1. Form 26AS: The consolidated tax passbook showing who deducted tax, under which section, and the exact credit deposited with the government. 2. Annual Information Statement (AIS): Comprehensive financial summary showing bank interest, dividends, stock sales, and rent received. To claim your refund: 1. Log in to the Income Tax e-Filing portal (incometax.gov.in). 2. Download your AIS and Form 26AS to cross-verify all TDS entries. 3. File the appropriate ITR form reporting your true income. 4. If your pre-paid TDS exceeds your net tax liability, the portal automatically calculates a refund. 5. The department validates the return and dispatches the refund directly to your pre-validated bank account via direct bank transfer.