TDS stands for Tax Deducted at Source. It is a mechanism in India by which the government collects tax at the source of income, rather than waiting for the taxpayer to file a return and pay the tax themselves.

How to use TDS Calculator?

TDS calculator is easy to use. You need to follow five simple steps to get your TDS amount.

Here are the steps which you need to follow:

Step 1: Payment amount

It is the first step in the process of calculating the TDS amount. In this step, you must enter the payment amount you want to calculate the TDS.

Step 2: Nature of payment

Now, in the second option, you have to select the payment’s nature. Here, the nature of payment means the type of payment you are making, whether it is for salary, rent, commissions, etc. You can select the nature of payment by clicking the dropdown option.

Step 3: Financial year

In this option, you have to choose the financial year for which you want to calculate the TDS amount.

Step 4: Type of recipient

Under this option, you have to select the category of the recipient. Here, category means whether the recipient belongs to an individual, HUF, sole proprietorship category, or any other category.

Step 5: PAN availability

Lastly, you have to enter whether the payment recipient has PAN or not.

Once you’ve entered all five variables in the calculator, it will automatically calculate the TDS amount you must deduct from the payment amount.

Our TDS calculator also helps you to understand the tax rule used to calculate the TDS amount for a particular transaction.

The purpose of TDS is to collect tax throughout the year and ensure a steady flow of tax revenue for the government. It also helps to prevent tax evasion by ensuring that some tax is collected upfront, even if the taxpayer does not ultimately file a return.

Here are some of the benefits of TDS:

• Reduces the burden on taxpayers: By paying tax throughout the year, taxpayers don’t have to make a large lump-sum payment at the end of the year.
• Increases tax compliance: TDS discourages tax evasion by ensuring that some tax is collected upfront.
• Provides a steady flow of revenue for the government: TDS helps the government to collect tax revenue throughout the year, which can be used to fund government programs and services.

Here are some of the common types of income on which TDS is deducted:

• Salary
• Interest on deposits
• Rent
• Professional fees
• Dividends
• Lottery winnings

The rate of TDS that is deducted depends on the type of income and the taxpayer’s tax bracket.