Have you ever noticed your employer or bank deducting money from your salary or interest and wondered, “Why is money going out of my income?” If you haven’t, you’re in the right place! In this blog, we explain TDS in simple terms, show why your employer or bank deducts it, and teach you how to check it.
What is TDS?
TDS stands for Tax Deducted at Source.Simply put, your employer deducts a portion of your income as tax before you even receive it. The employer deposits the deducted amount with the government and then pays the remaining amount to you.
Whenever you earn income such as salary, interest on fixed deposits, commission, or rent, the person or entity paying you deducts a certain percentage as tax before handing over the money. This tax is then credited to the government on your behalf.
Example: Understanding TDS on Fixed Deposits
Let’s say you have a fixed deposit of INR 10 lakh in PNB Bank earning 6% per annum. Your monthly interest would be around INR 5,000 (INR 5,000 × 12 months = INR 60,000 per year). For ease of understanding, we have not considered the impact of compounding while calculating the interest amount.
If the TDS rate is 10%, here’s how it works:
- Amount deducted by the bank: INR 500 (10% of INR 5,000)
- Amount paid to you: INR 4,500
- Amount deposited to the government: INR 500
This way, the source collects your tax, which makes compliance easier and ensures you pay taxes on time.
Who Deducts TDS?
The type of income determines which entities deduct TDS.
- By Employers: On salary payments
- By Banks: On interest payments
- By Tenants: On rent payments (if applicable)
- By Companies: On professional fees, contractor payments, dividends, etc.
Why Is TDS Deducted?
TDS, or Tax Deducted at Source, means the government collects tax as soon as you earn income, instead of waiting for you to pay it later. It helps the government in multiple ways:
- Collect Tax in Advance: It ensures that the government collects tax as income is earned.
- Reduce Tax Evasion: Deducting tax at the source makes it harder to hide income.
- Ensure Regular Revenue Flow: TDS guarantees a regular flow of funds to the government throughout the year.
How to Check Your TDS
The deductor deducts TDS every month and deposits it with the government by the 7th of the next month. They file a quarterly TDS return and report all transactions linked to your PAN. After they file the TDS return, the data appears in Form 26AS within 15–30 days.
You can check your TDS in three ways:
Method 1: Via Income Tax e-Filing Portal (Form 26AS)
Form 26AS acts like a passbook for your taxes, showing all TDS deducted and deposited using your PAN.
Steps:
- Go to Income Tax Portal ( www.incometax.gov.in)
- Log in with your PAN (User ID) and password
- Navigate: e-File → Income Tax Returns → View Form 26AS
- Click Confirm to be redirected to the TRACES website
- Select the Assessment Year and View Type (HTML or PDF)
- Click View/Download
Method 2: Via AIS (Annual Information Statement)
AIS provides a detailed report of TDS and income-related information.
Steps:
- Go to Income Tax Portal (www.incometax.gov.in)
- Log in with your PAN (User ID) and password
- Click: Services → Annual Information Statement (AIS)
- Select the relevant financial year
- View or download the AIS or TIS (Taxpayer Information Summary)
Method 3: Through TDS Certificates (Form 16 / 16A)
- Form 16: Issued by your employer for salary income. It shows your total salary, TDS deducted, and deposited against your PAN. Some big companies issue it quarterly, others annually.
- Form 16A: Issued for non-salary income like bank interest, dividend, commission, or rent. It’s provided by banks, companies, or any other entity who deducts the TDS.
If your employer or bank has deducted TDS but not issued the certificate, you can request it.
Why is Checking of TDS Important?
Regularly checking your TDS ensures:
- Correct reporting of TDS against your PAN
- Avoiding overpayment of tax (you can claim refunds for excess TDS)
- Correcting errors such as:
- Wrong amount deducted
- Incorrect reporting to the government
- Missing TDS reports
Failing to check TDS promptly can lead to challenges while filing your Income Tax Return (ITR) and may result in paying extra tax or missing refunds.
Conclusion
TDS offers a simple but powerful way to collect taxes efficiently. When you understand what TDS is, who deducts it, and how to check it, you stay in control of your finances, avoid errors, and claim every rupee you deserve.
Start checking your TDS today and take control of your tax compliance, it’s easier than you think!
