Income Tax · 6 min read
TDS Explained Simply: On Rent, Salary & Professional Fees (India 2026)
By the India Law Simplified editorial team · Verified against primary government sources (bare Acts & official portals) · Last updated 2026-05-28
TDS (Tax Deducted at Source) means tax is collected upfront when certain payments are made. If you pay rent, salary or professional fees above set limits, you may be required to deduct and deposit it.
1When do you deduct TDS?
TDS applies to specified payments above threshold limits — for example salary (Section 192), professional/technical fees (194J), rent (194I, and 194IB for individuals paying high rent), contractor payments (194C), and more. Businesses and many individuals/HUFs above audit thresholds must deduct.
2Common sections (verify current rates)
- 192 — Salary: deducted at the employee's slab rate after considering declarations.
- 194J — Professional/technical fees: typically a flat percentage above the threshold.
- 194I — Rent of land/building or plant & machinery above the annual limit.
- 194C — Payments to contractors/sub-contractors.
3How to deposit and report
- Deduct at the time of payment/credit.
- Deposit to the government by the due date (usually the 7th of the next month).
- File the quarterly TDS return (e.g. 24Q for salary, 26Q for others).
- Issue the TDS certificate (Form 16 / 16A) so the payee can claim credit.
Frequently asked questions
What happens if I don't deduct or deposit TDS?
You can face interest, penalty, and disallowance of the related expense. Late deposit attracts interest of 1.5% per month in many cases.
Where can I see TDS deducted on my income?
In your Form 26AS and the Annual Information Statement (AIS) on the income-tax portal. Reconcile these before filing your ITR.
Do individuals ever need to deduct TDS?
Yes — e.g. Section 194IB requires certain individuals paying rent above the monthly limit, and 194IA on property purchases above ₹50 lakh.
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