This is Part 7 of Money Basics for Indians, our 12-part series on the everyday money systems every Indian should understand. New here? Start with Part 1: Bank Accounts and Deposit Insurance, or read the previous part, Part 6: Old vs New Tax Regime.
Most Indians pay much of their income tax without noticing. Money is deducted at source by employers, banks and others, and sent to the government on your behalf. Understanding how this works helps you avoid surprises, and claim refunds.
What is TDS?
Tax Deducted at Source (TDS) is tax that the payer cuts before paying you. Common examples:
- Salary: Your employer deducts tax each month based on your expected annual income and the regime you choose. See decoding your payslip.
- FD interest: Banks deduct 10 percent TDS once your interest from that bank crosses ₹50,000 in a year, or ₹1 lakh for senior citizens. Without a PAN, TDS is 20 percent.
- Professional fees, rent and commissions also attract TDS above certain limits. Freelancers, see Part 9: Taxes for Freelancers.
TDS is not an extra tax. It is an advance payment adjusted against your final tax when you file your return.
Forms 15G and 15H
If your total income is below the taxable limit, you can submit Form 15G (or Form 15H if you are 60 or older) to your bank to stop TDS on interest. From April 2026, a single submission through the depositories can cover all deductors. Making a false declaration is an offence.
Advance tax
If your tax due for the year, after TDS, is ₹10,000 or more, you must pay advance tax in instalments:
- By 15 June: 15 percent
- By 15 September: 45 percent
- By 15 December: 75 percent
- By 15 March: 100 percent
Missing these dates means interest of 1 percent per month on the shortfall. Senior citizens without business income do not have to pay advance tax.
Form 26AS and your AIS
- Form 26AS shows all TDS and taxes paid against your PAN.
- The Annual Information Statement (AIS) goes further: it shows interest, dividends, securities trades, property deals and other transactions the department knows about.
- The Taxpayer Information Summary (TIS) is a simplified version used to pre-fill your return.
Download them from the e-filing portal before filing. If something is wrong, such as income you never received, submit feedback on the AIS. Mismatches between your return and the AIS are a common reason for tax notices.
Claim what is yours
If more tax was deducted than you owe, you get the excess back as a refund when you file. Learn how in Part 8: Filing Your ITR.
This article is for general information and education only. It is not financial, tax or legal advice. Rules, rates and limits change often, so check official sources such as the RBI, the Income Tax Department or India Post, or speak to a qualified adviser, before acting.
Next in the series: Part 8: Filing Your ITR.
