What is TDS?

The payer first determines whether the payment, payee and threshold fall within a withholding provision. If they do, tax is deducted at the applicable trigger, the balance is paid to the payee, and the deduction is deposited and reported so the payee can receive credit.

The calculation is simple only after the legal inputs are correct. A rate calculator cannot determine the nature of payment, residential status, threshold aggregation, lower-deduction certificate or whether a special condition applies. Those facts must be confirmed before entering a rate.

• Classify the payment and payee.
• Check the applicable threshold and governing provision.
• Use the confirmed rate at the correct trigger.
• Deposit, report and reconcile the credit record.

Run the arithmetic with the TDS calculator.

The Income Tax Department states that payments or credits on or before 31 March 2026 remain governed by the Income Tax Act, 1961, while amounts paid or credited on or after 1 April 2026 use the corresponding withholding provisions of the Income Tax Act, 2025.

For non-salary payments under the new Act, the department’s transition FAQ directs deductors to the relevant table item of section 393. Continuing to quote old identifiers such as 194C, 194J or 194H for post-transition transactions may cause validation errors. The underlying earlier-of-credit-or-payment trigger continues to matter.

• Through 31 March 2026: Income Tax Act, 1961 identifiers.
• From 1 April 2026: Income Tax Act, 2025 withholding provisions.
• Non-salary table reference: section 393.

See India invoice context through GST invoicing.

The department’s transition FAQ says the general deposit timeline remains the 7th of the month following deduction. For TDS deducted in March, the stated due date for a non-government deductor is 30 April; government-deductor treatment has its own conditions.

A business should still verify the rule, challan, tax year and deductor category for the actual transaction. A calendar reminder is not enough if the original payment was classified under the wrong provision or the deposit is posted against the wrong year during the transition.

• General reference: 7th of the following month.
• March deduction, non-government deductor: 30 April.
• Select the correct Act, tax year and payment code.

Start a one-off document in the invoice generator.

The Income Tax Department records interest at 1% per month or part of a month for failure to deduct when tax was deductible. It records 1.5% per month or part for failure to deposit after deduction. These figures describe interest for default; other consequences and conditions can also apply.

The operational distinction matters. A deduction made late and a deduction made on time but deposited late are different states. Finance should retain the original trigger date, actual deduction date, deposit date, amount and responsible owner instead of recording both as one generic overdue task.

• Failure to deduct: 1% per month or part.
• Failure to deposit after deduction: 1.5% per month or part.
• Retain trigger, deduction and deposit dates separately.

Review the wider Invoicing hub.

Assume the amount subject to TDS is ₹100,000 and the responsible reviewer has confirmed an applicable rate of 10% for the specific transaction. The arithmetic produces TDS of ₹10,000 and a net payment of ₹90,000.

The example demonstrates the calculation, not that 10% applies to every professional, contractual or other payment. The source record should retain the payment classification, threshold test, payee status, governing table item, rate basis and any certificate before the result enters a payment or invoice record.

• Amount subject to TDS: ₹100,000
• Confirmed illustrative rate: 10%
• TDS: ₹10,000
• Net payment: ₹90,000

Clarify indirect-tax context in what is GST.