TDS Calculator

What is a TDS Calculator?

A TDS calculator is a financial tool that is used to calculate the amount of tax deducted at source (TDS) on different types of payments such as salary, interest, rent, commission, etc. Using a Tax Deducted at Source (TDS) Calculator, an employer, individual, and business person can determine the exact amount of tax to deduct as per the Income Tax Provisions. Examples of TDS deductions are when the employee and employer can estimate the TDS to be deducted from the salary based on the income tax slab, and the bank can calculate the amount of TDS to be deducted on interest received on bank deposits.

How Can TDS Calculator Help You?

A TDS calculator can help you in various ways:

• Calculation of Tax: The TDS calculator minimizes the risk of manual errors and provides an accurate estimate of the TDS amount.
• Financial Planning Tool: Using a TDS calculator tells you the TDS amount so that you can calculate your net proceeds and plan your finances accordingly.
• Salary Deduction: The TDS calculator helps an individual calculate the net take-home salary after deducting taxes.
• Return Filling: The TDS calculator provides a breakdown of the TDS amount deducted, helping you file your TDS returns easily.

How Does a TDS Calculator Work?

The following explains how a Tax Deducted at Source (TDS) Calculator works:

1. Input: The first step in how a TDS calculator works is to enter the data, such as the type of payment, whether the PAN card is available, and the Payment Amount. 
2. Formula: The calculator applies the formula relevant to that specific type of payment and other input variables to calculate the TDS amount.
3. Output or Result: The result shows you the total TDS amount.

Formula to Calculate TDS 

The Tax Deducted at the Source of the TDS formula is mentioned below:

TDS = Payment Amount * Applicable TDS Rate 

Where, 

• TDS – Tax Deducted at Source
• Payment Amount – Total Amount to be Paid
• Applicable TDS Rate – The rate of TDS depends upon the nature of the payment and other applicable factors. 

Example of TDS Calculation

Let’s understand the TDS calculation with the help of an example. Mr A, who has a PAN card, made a payment of ₹10,00,000 to an e-commerce operator and wishes to calculate the TDS amount he needs to deduct. Now, let’s see how this TDS calculator works.

He uses Pocketful’s TDS calculator to calculate the TDS amount. To do this, he needs to enter the following details:

• Whether the seller holds a valid PAN
• Type of Payment
• Payment Amount

Then, as per Section 194O of the Income Tax Act, 1961, if a payment is made to an e-commerce operator, the TDS must be deducted from it.

The rate of TDS is 1% if the seller provides a valid PAN.

Now, using the formula of TDS.

TDS = Payment Amount * Applicable TDS Rate 

Where,

Amount Payable – ₹10,00,000 

Applicable TDS Rate – 1%

= ₹10,00,000 * 1% = ₹10,000 

Therefore, the amount of TDS deducted will be ₹10,000, and this result will be shown by the TDS calculator. 

How to Use Pocketful TDS Calculator?

The steps to use the Pocketful calculator are mentioned below:

1. To use the Pocketful calculator, one needs to visit Pocketful’s website.
2. Once you open the website, scroll down to the bottom of the page, where you will find the tools section, and click on it.
3. There, you will find a tab named “Financial Tools”; just click on it.
4. A new page opens where you can find the TDS calculator.
5. In the TDS calculator, you are required to enter a few details. First, whether payment is made by an individual or not, select whether a PAN card is available or not, the payment type, and the payment amount.
6. Once you enter the details, the calculator will display the “Total TDS” amount based on the provided information.

Benefits of Using the TDS Calculator

The significant benefits of using a TDS calculator are as follows:

• Convenient: Using the Pocketful TDS calculator helps save the time and effort required in manual TDS calculations.
• Net Salary: With the help of a TDS calculator, a salaried individual can easily calculate the TDS applicable to his salary.
• Helps in Tax Filing: The TDS Calculator provides accurate details, which helps simplify the filing of TDS returns.
• Financial Plans: TDS helps a taxpayer in calculating their tax liabilities so that informed decisions can be made about expenses, investments, etc.