Tax Deducted at Source (TDS) - Meaning, Rates, Due dates and more

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What is TDS (Tax Deducted at Source) and its Objectives

TDS i.e. Tax Deducted at Source is one of the modes of collecting income tax under the Income Tax Act of 2025

TDS was introduced to collect tax directly from source of income. A person (deductor) liable to make payment of a specified nature to any other person (deductee) will deduct tax at source and remit it into the account of the Central Government.

TDS is an indirect tax collection method that follows the concepts of “pay as you earn” and “collect as it is being earned.”

Applicability of TDS

TDS applies to specific transactions as per section 393 of the Income Tax Act, 2025. Some income types where TDS is applicable are -

• Salary
• Interest on bank deposits
• Cash withdrawal transactions
• Brokerage or commission
• Dividend
• Payment of rent
• Professional / Technical Services
• Winnings from games, puzzles, lotteries, etc.

The deductee from whose income, tax is deducted at source can claim the deducted amount back, based on Form 168 (earlier form 26AS) or TDS certificate issued by deductor post filing of their TDS returns.

TDS Due Dates

Deduction: Tax is deducted at source wherever payment is made by the deductor to the deductee.

Payment:

TDS Payment due dates
Month of Deduction	Deposited to Government
April to February	7th of next month
March	30th April

TDS Return

Return: TDS Return: TDS return is filed with the Government on a Quarterly basis and reports all deductions and remittances made to the Government for that Quarter.

TDS Return filing due date
Quarter	Period	Due Date
Q1	April to June	31st July
Q2	July to September	31st October
Q3	October to December	31st January
Q4	January to March	31st May

TDS Certificate

TDS certificate is issued by the deductor to the deductee as proof of tax deducted, helping the deductee to claim the credit for the tax paid while filing their income tax returns.

Quarterly TDS certificates are issued in Form 131 (earlier form 16A) for income other than salary and in Form 130 (earlier form 16) for Income under salary issued by Employer.

Due Dates:

TDS certificate must be issued by deductor within 15 days from the due date of filing quarterly TDS returns.

Issuance of TDS Certification
Quarter	Period	Due Date
Q1	April to June	15th August
Q2	July to September	15th November
Q3	October to December	15th February
Q4	January to March	15th June

Section 393- TAX to be deducted at source

Section 393 of the Income-tax Act, 2025 (effective April 1, 2026), is a consolidated provision covering Tax Deducted at Source (TDS) on various payments to residents, including commission, brokerage, rent, and professional fees. It streamlines earlier, scattered TDS provisions (like 194A, 194N, 194J) into a single and a tabular structure. 

Section 393(1) provides for TDS on Interest Other than Interest on Securities paid by banks, financial institutions, companies, and individuals. It ensures tax is collected at the time of interest payment, and provides special provisions for specific taxpayers.

When is TDS Under Section 393(1) on Interest other than Interest on securities Deducted?

Deduction Rate

PAN holders	10%
Non-PAN holders	20%
Inoperative PAN	20%

The payer/deductor will deduct TDS if the amount of interest paid or credited or likely to be paid or credited (Projected) in a financial year, exceeds the following limits.

Deduction Threshold limit

Payer	Bank
Receiver	Senior Citizen	Other individuals
Threshold limit	1,00,000	50,000

What is TDS on Fixed Deposit?

The interest earned from an FD/RD is fully taxable and forms part of total tax liability. This interest is considered "income from other sources," under Tax Deducted at Source. Banks deduct TDS when interest is credited in the account/compound to FD.

Key points about tax on FD:

• TDS is deducted at the time of Credit/Accrual whichever is earlier

• Our bank deducts TDS on a Projection Basis.
E.g. If projected Interest Income crosses threshold limit in a financial year, TDS is deducted from first Interest credit post breach.

• TDS threshold on Fixed Deposit is Rs. 50,000 and Rs. 1,00,000 for Senior Citizens

• If Projected Interest Income stays below threshold from all FDs, TDS is not deducted

• To avoid TDS deduction the customer shall submit Form 121 (earlier form 15G/15H) to the bank at the beginning of every financial year or before first Interest event.

Is TDS applicable on savings account Interest under 393(1)?

No, only Fixed Deposit and Recurring Deposit interest will be covered under this limit. Interest on savings bank accounts is exempt from TDS for resident Indians.

Form 121 to prevent TDS on Interest Income

Form 121 is a self-declaration form submitted to prevent tax deduction at source (TDS) on income. This form helps individuals who are not liable to pay tax, avoid unnecessary TDS deductions.

Why Form 121 is Needed?

The Indian Income Tax Act of 2025 mandates TDS on incomes such as interest and other earnings above a threshold. Where total income is below the taxable limit, TDS deduction becomes extra burden on the customer and eventually leads to refund claims through ITR filing. Submitting Form 121 ensures no TDS is deducted.

Form	Eligibility	Threshold Limit
Form 121	Resident person (other than a firm or company)	4,00,000*
Form 121	Resident senior citizens aged 60 years or more	12,00,000

*Assuming the default (new) income tax regime.

Eligibility:

• You must be a resident of India.

• Your total income (including interest earnings) must not exceed basic exemption limit

• PAN is mandatory and must be operative on Income Tax portal.

Submission:

Submit these forms to Banks and Financial Institutions at the start of the financial year so TDS is not deducted on interest throughout the year.

Double Taxation Avoidance Agreement (DTAA)

DTAA is an agreement between India and other countries to ensure individuals/entities are not taxed twice on the same income.

DTAA is relevant for a person is earning income in one country but is a resident of another country without DTAA - such income can be taxed in both countries. With DTAA, you will only pay taxes in one country, not both and taxes paid in one country can be claimed as a credit in another country, avoiding double taxation.

India has DTAAs with many countries to help NRIs avoid being doubly taxed.

Methods to claim DTAA benefits:

Foreign Tax Credit (FTC)	Exemption method	Reduced rate of tax/special rates
Claimable in resident country	Taxable in one country	Taxable in one country at a special tax rate
The resident country will allow a tax deduction from the taxes paid in the source country.	The income is taxable in the resident country and exempted in the source country.	The income is taxed in one country at special tax rates.

DTAA Rates

DTAA specifies a rate at which India must deduct tax on income earned by residents of partner countries. For NRIs earning income in India, TDS applies as per the rates set in the Double Tax Avoidance Agreement with that specific country.

DTAA Applicability

DTAA applies when the transaction is taxable both in India and in another country and one party involved in the transaction is a non-resident (NR) or a foreign company (FC).

Documents required to avail DTAA benefit

Tax Residency Certificate (TRC): Issued by the tax authorities of the resident country. It serves as proof to verify your residential status.
Form 41: If TRC does not cover details like nationality, tax identification number, address outside India, etc., such information will need to be filed online through Form 41.
Expiry date to be considered as 41 or TRC end date, whichever is earlier.

Income Tax Slabs FY 2025–26 & AY 2026-27 (New & Old Tax Regime Rates)

Income Tax in India follows a tax slab system - a progressive system of taxation where people earning more income are taxed at higher slabs in proportion to their income.

New Tax Regime

The new tax regime, introduced by the finance minister Nirmala Sitharaman, offers concessional tax rates with limited exemptions and deductions.

The revised income tax slabs are as follows:

Annual Income	Tax Rate
Up to Rs. 4,00,000	0%
Rs. 4,00,001 – Rs. 8,00,000	5%
Rs. 8,00,001 – Rs. 12,00,000	10%
Rs. 12,00,001 – Rs. 16,00,000	15%
Rs. 16,00,001 – Rs. 20,00,000	20%
Rs. 20,00,001 – Rs. 24,00,000	25%
Rs. 24,00,001 and above	30%

As per Budget 2025, taxpayers with incomes up to Rs. 12 lakh will get a rebate of Rs. 60,000, bringing their tax liability to zero. Standard deduction under salary has also increased to Rs. 75,000, increasing the tax-free income threshold to Rs. 12.75 lakh for salaried employees.

Old Tax Regime

The old tax regime continues to offer various exemptions and deductions. The income tax slabs for FY 2025-26 is:

Annual Income	Tax Rate
Up to 2,50,000	0%
2,50,001 – 5,00,000	5%
5,00,001 – 10,00,000	20%
10,00,001 and Above	30%

Senior citizens (60-80 years) have a basic exemption limit of Rs. 3 lakh, and super senior citizens (above 80 years) have Rs. 5 lakhs. Deductions under chapter VI are applicable in the Old Tax Regime only

Surcharge on Income Tax

Income tax surcharge is an additional charge payable on income tax. It is an added tax on taxpayers having a higher income inflow during a particular financial year.

Net Taxable Income limit	Surcharge Rate on the amount of income tax	Surcharge Rate on the amount of income tax
Net Taxable Income limit	(under old tax regime)	(under new tax regime)
Less than Rs 50 lakhs	Nil	Nil
More than Rs 50 lakhs ≤ Rs 1 Crore	10%	10%
More than Rs 1 Crore ≤ Rs 2 Crore	15%	15%
More than Rs 2 Crore ≤ Rs 5 Crore	25%	25%
More than Rs 5 Crore	37%	25%

Surcharge has been capped at 15% on dividend income and Capital gains covered under section 111A, 112 and 112A.

Consequences of Missing the Filing Deadline for Income Tax Return

Under Section 234A of the Income Tax Act, interest at 1% per month or part thereof is levied on any unpaid tax amount from the due date until date of filing.

Under Section 234F, a late fee of Rs. 5,000 is applicable if return is filed after due date but before 31st December. If total income is below Rs. 5 lakh, the penalty is Rs. 1,000.

Belated Returns can be filed up to 31st December of next year with applicable penalties.

Form 168

Form 168, notified under Rule 245 of the Income-tax Rules, 2026, is a comprehensive annual tax information statement reflecting all tax-related and specified financial transactions linked to a taxpayer’s PAN. It enables taxpayers and the Income Tax Department to verify taxes paid, income sources, and compliance history.

Form 168 consolidates information for transparency, data accuracy, and ease of compliance, including:

• Tax Deducted at Source (TDS)

• Tax Collected at Source (TCS)

• Payment of advance, self-assessment, and regular taxes

• Specified Financial Transactions (SFTs)

• Demand and refund details

• Status of pending and completed proceedings

• Any other information as prescribed under Income Tax Rule 245.

Steps to Download Form 168 (AIS)

Step-1: Login to the Income Tax Portal,
Step-2: n the dashboard, go to the e-File menu, select Income Tax Returns, and click on View Annual Information Statement (AIS)
Step-3: Click on the "AIS" tab
Step-4: Inside the AIS dashboard, you will see options to view data. Click on the Download button, then select the format as PDF to download the Form 168 document.

393(1)/393(2)TDS on Interest on Deposits

What is TDS?

What is the time limit for depositing TDS?

What is Section 393(1) and 393(2)?

Section 393(1) covers the provision for TDS deduction on interest other than securities. This means it covers interest earned on fixed deposits, recurring deposits

This section is only applicable to a resident. Thus, the provisions of section 393(1) are not applicable in case of payment of interest to a non-resident .

Section 393(2) of the Income Tax Act, 2025, specifies the TDS provision in the case of an individual making a payment by way of interest or any other amount other than salary to an NRI or a foreign company.

What is the TDS rate on FD Interest u/s 393(1)?

For Residents, the TDS on FD interest is 10%. It is 20% for Fixed Deposits held without submission of PAN details or in case PAN is Inoperative

What is Threshold limit for TDS on Interest on Deposits?

Section 393(1)(Resident): FD interest up to Rs. 50,000 for general public and up to Rs. 1,00,000 for resident senior citizens is exempted from TDS in one financial year.

Section 393(2) (NRO): There is no threshold limit to deduct TDS under Section 393(2). However, the payer must deduct tax only when the payment made to a non-resident is taxable in India.

Where is the TDS deducted reflected?

TDS deducted will be reflected in the form 168 (earlier form 26AS) which can be accessed through the Income tax portal.

More FAQs

FAQ - 393(3) TDS on Cash withdrawal

What is Section 393(3)?

What are the implications under Section 393(3)?

Is TDS on Cash withdrawal applicable to NRO / NRE account?

Yes – If total cash withdrawal exceeded threshold limit.

From what date is the limit of Rs 1 crore has to be considered?

For a period of one financial year (April – Mar).

At what point of time will the tax be deducted?

The tax will be deducted at the time of cash withdrawal once the applicable threshold limit is breached

Are any customers exempt from the purview of Section 393(3)?

Yes, customers like Central Government, State Government, Banks, Post offices, co-operative societies engaged in banking business, business correspondents, white label ATM operators (‘WLATMO’) authorized by RBI are exempt under Section 393(3) of the IT Act.

Separately, from time to time, the Government has notified certain other classes of persons who are also eligible for exemption under Section 393(3) provided they satisfy certain specified conditions. As on date, such eligible classes of customers include Commission agent or trader, operating under Agriculture Produce Market Committee (APMC), and registered under any Law relating to Agriculture Produce Market of the concerned State, Cash Replenishment Agencies (CRAs) and franchise agents of WLATMOs, ADs (and their franchise agents and sub-agents) and full-fledged money changers (and their agents). In case any of the customers qualifies as exempt and fulfils the necessary conditions and also furnishes the proof thereof (for every FY basis), then they would not suffer any tax on cash withdrawals irrespective of the amount of cash withdrawn

What would be the rate of tax deduction at source in case the customer does not have a valid PAN?

In case the customer does not have either a valid PAN or PAN is in Inoperative status, then the rate of tax deduction will be 20%.

More FAQs

Form 121

What is Form 121?

Why is Form 121 Needed?

I am an NRI. Do I need to submit Form 121?

What is the Eligibility for filing Form 121?

• You must be a resident of India.

• Your total income (including interest earnings) must not exceed the basic exemption limit.

• PAN is mandatory and its Operative status on Income Tax portal

When to submit Form 121?

Form 121 should ideally be submitted to the Bank and Financial Institutions at the beginning of the financial year to ensure TDS is not deducted on interest payments throughout the year.

Where and How to submit Form 121?

One can submit Form 121 to IDFC FIRST Bank both online via net banking or the mobile app and offline by visiting a branch.

Online submission

Step-1: Log in to your IDFC FIRST Bank internet banking account or mobile app.

Step-2: Click on “More” on Home screen tab and select "Customer Service" section

Step-3: Click on FDs/RDs and select Submit Form 121

Step-4: Fill the required details and submit

Offline submission

Step-1: Visit your nearest IDFC FIRST Bank branch

Step-2: Collect and fill out a physical Form 121

Step-3: Submit the completed form at the branch.

More FAQs

Double Taxation Avoidance Agreement (DTAA)

What is article DTAA?

What is double tax income?

What are DTAA benefits

More FAQs

Section 393(3) - TDS on Cash Withdrawal

Section 393(3) was introduced to discourage large cash transactions.

What is TDS rate on cash withdrawal u/s 393(3) deducted?

• 2% TDS on cash withdrawals exceeding Rs. 1 crore in case of recipient being person other than a co-operative society

• 2% TDS on cash withdrawals exceeding Rs. 3 crore, in case of recipient being a co-operative society

The Rs. 1 crore limit is calculated bank-wise/post office-wise at the PAN level. Therefore, balances or deposits across all accounts linked to the same PAN within a particular bank or post office are aggregated for determining the threshold.

TDS applicable on entire amount if the withdrawal from all accounts including CASA and Credit card exceeds the threshold limit

For eg. If the cash withdrawal amount is Rs. 1.01 Cr in that case the TDS of Rs. 2.02 Lakh shall be deducted.

TDS on cash withdrawal applicable on NRO/NRE account

A. Non Resident customer
A.1 - If PAN Status is either Operative or Inoperative
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 1 Cr	0.00	0.00	0.00	0.0000
Above Rs 1Cr	2.00	25.00 (37.00 in Old regime)	4.00	2.6000 / 2.8496 (Old regime)
Note: New regime is default tax regime.
A.2 - If PAN Status is Invalid or Not Available (i.e. Form 97 earlier form 60)
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 1 Cr	0.00	0.00	0.00	0.0000
Above Rs 1 Cr	20.00	0.00	0.00	20.0000
B. Non resident Cooperative Societies
B.1 - If PAN Status is Valid
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 3 Cr	0.00	0.00	0.00	0.0000
Above Rs 3 Cr	2.00	12.00	4.00	2.3296
B.2 - If PAN Status is Invalid or Not Available (i.e. Form 97 earlier form 60)
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 3 Cr	0.00	0.00	0.00	0.0000
Above Rs 3 Cr	20.00	0.00	0.00	20.0000
C. Non-resident Firms
C.1 - If PAN Status is Valid
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 1 Cr	0.00	0.00	0.00	0.0000
Above Rs 1 Cr	2.00	12.00	4.00	2.3296
C.2 - If PAN Status is Invalid or Not Available (i.e. Form 97 earlier form 60)
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 1 Cr	0.00	0.00	0.00	0.0000
Above Rs 1 Cr	20.00	0.00	0.00	20.0000
D. Foreign companies
D.1 - If PAN Status is Valid
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 1 Cr	0.00	0.00	0.00	0.0000
Above Rs 1 Cr	2.00	5.00	4.00	2.1840
D.2 - If PAN Status is Invalid or Not Available (i.e. Form 97 earlier form 60)
Total Cash Withdrawal amount in a FY	Base rate (%)	Surcharge Rate (%)	Cess rate (%)	Effective Rate on Total cash withdrawal (%)
Upto Rs 1 Cr	0.00	0.00	0.00	0.0000
Above Rs 1 Cr	20.00	0.00	0.00	20.0000

Section 393(2) - TDS Applicability for Non-Resident

Section 393(2) of Income Tax Act, 2025 deals with TDS on payments made to Non-Resident Indians (NRIs)/foreign companies. Whenever an Indian resident makes a payment (other than salary) to an NRI that is taxable in India, TDS under Section 393(2) is deducted.

• Applies to interest, royalty, capital gains, dividends, etc.

• No threshold – TDS applies to all taxable payments.

• Rates depend on Finance Act or DTAA, and credit for taxes paid in India can be claimed under DTAA provisions.

Who is a Non-resident?

*A person will be a non-resident in India in a financial year if:

• They stay in India for less than 182 days during the financial year, OR

• They stay in India for less than 60 days during the financial year and less than 365 days during the immediately preceding four financial years.

For detailed information please refer to section 6 of the Income tax act, 2025.

TDS Applicable on Interest for Non-Residents

No TDS applies to NRIs for Interest earned from NRE/FCNR account

TDS applies to NRO savings account and FD interest.

TDS rate for NRO account is 30%, with additional surcharge and health and education cess of 4% (surcharge increases as your income increases)

Total Interest Earned	NRO Tax Rate
Less than or equal to ₹50 Lakh	31.2% (30% TDS + 0% Surcharge + 4% Cess)
Between ₹50 Lakh and ₹1 Crore	34.32% (30% TDS + 10% Surcharge + 4% Cess)
Between ₹1 Crore and ₹2 Crore	35.88% (30% TDS + 15% Surcharge + 4% Cess)
Between ₹2 Crore and ₹5 Crore	39% (30% TDS + 25% Surcharge + 4% Cess)
Beyond ₹5 Crore (Old Tax Regime)	42.74% (30% TDS + 37% Surcharge + 4% Cess)

TDS Applicable on Interest for Non-Residents

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TDS made simple

What is TDS (Tax Deducted at Source) and its Objectives

Applicability of TDS

TDS Due Dates

Payment:

TDS Return

TDS Certificate

Due Dates:

Section 393- TAX to be deducted at source

When is TDS Under Section 393(1) on Interest other than Interest on securities Deducted?

What is TDS on Fixed Deposit?

Is TDS applicable on savings account Interest under 393(1)?

Form 121 to prevent TDS on Interest Income

Why Form 121 is Needed?

Eligibility:

Submission:

Double Taxation Avoidance Agreement (DTAA)

Methods to claim DTAA benefits:

DTAA Rates

DTAA Applicability

Documents required to avail DTAA benefit

Income Tax Slabs FY 2025–26 & AY 2026-27 (New & Old Tax Regime Rates)

New Tax Regime

Old Tax Regime

Surcharge on Income Tax

Consequences of Missing the Filing Deadline for Income Tax Return

Form 168

Steps to Download Form 168 (AIS)

393(1)/393(2)TDS on Interest on Deposits

What is TDS?

What is the time limit for depositing TDS?

What is Section 393(1) and 393(2)?

What is the TDS rate on FD Interest u/s 393(1)?

What is Threshold limit for TDS on Interest on Deposits?

Where is the TDS deducted reflected?

FAQ - 393(3) TDS on Cash withdrawal

What is Section 393(3)?

What are the implications under Section 393(3)?

Is TDS on Cash withdrawal applicable to NRO / NRE account?

From what date is the limit of Rs 1 crore has to be considered?

At what point of time will the tax be deducted?

Are any customers exempt from the purview of Section 393(3)?

What would be the rate of tax deduction at source in case the customer does not have a valid PAN?

Form 121

What is Form 121?

Why is Form 121 Needed?

I am an NRI. Do I need to submit Form 121?

What is the Eligibility for filing Form 121?

When to submit Form 121?

Where and How to submit Form 121?

Double Taxation Avoidance Agreement (DTAA)

What is article DTAA?

What is double tax income?

What are DTAA benefits

From where I can check DTAA entered between India and other countries?

When is DTAA Applicable?

What are the documents required to avail DTAA benefit?

Section 393(3) - TDS on Cash Withdrawal

What is TDS rate on cash withdrawal u/s 393(3) deducted?

TDS on cash withdrawal applicable on NRO/NRE account

Section 393(2) - TDS Applicability for Non-Resident

Who is a Non-resident?

TDS Applicable on Interest for Non-Residents

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