Looking for tds on salary fd and property sale? Here is everything you need to know.
Tax Deducted at Source (TDS) is the government’s mechanism for collecting income tax at the point of income generation. Understanding TDS rates, when it applies, and how to claim refunds for excess deductions ensures you are neither overpaying nor underpaying taxes throughout the year.
Tds On Salary Fd And Property Sale: TDS on Salary (Section 192)
Your employer deducts TDS from salary based on your estimated annual income and declared tax-saving investments. The employer calculates tax for the full year, subtracts declared deductions (80C, 80D, HRA, etc.), and deducts 1/12th of the annual tax from each month’s salary. If you do not submit investment proofs on time, the employer may deduct higher TDS in the last few months. Submit your investment declarations at the start of the year and proofs by January to ensure even TDS distribution.
TDS on Fixed Deposits (Section 194A)
Banks deduct 10% TDS on FD interest exceeding ₹40,000 per year (₹50,000 for senior citizens) across all FDs in that bank. If your total income is below the taxable limit, submit Form 15G (or 15H for senior citizens) to the bank to avoid TDS deduction. TDS is deducted when interest is credited or at year-end, whichever is earlier — even if the FD has not matured. This is important for multi-year FDs where interest accrues annually but TDS is deducted on accrued interest.
TDS on Property Sale (Section 194-IA)
When you buy property above ₹50 lakh, you must deduct 1% TDS from the payment to the seller and deposit it with the government using Form 26QB. This applies to all property purchases: residential, commercial, and land. The buyer is responsible for deduction and deposit. Failing to deduct attracts 1% per month interest plus a penalty equal to the TDS amount. The seller can claim this TDS credit while filing their ITR.
TDS on Rent (Section 194-IB)
If you pay rent exceeding ₹50,000 per month, you must deduct 5% TDS and deposit using Form 26QC. This applies even if you are a salaried individual without a TAN — you can use your PAN to deposit. The deducted TDS appears in the landlord’s Form 26AS. Many tenants are unaware of this obligation, which can lead to penalties during assessment.
How to Claim TDS Refund
If TDS deducted exceeds your actual tax liability (common for those with multiple FDs or when employers over-deduct), file your ITR to claim a refund. The refund amount is the difference between TDS deducted (visible in Form 26AS/AIS) and actual tax payable. Refunds are processed within 3-6 months of filing and credited directly to your bank account linked on the e-filing portal.
What if TDS is deducted but not deposited by the deductor?
If TDS is deducted from your income but not deposited with the government, it will not appear in your Form 26AS. Contact the deductor (employer, bank, tenant) to rectify. Under Section 205, the tax department cannot recover such tax from you — the liability is on the deductor. However, you may need to follow up and raise a grievance on the e-filing portal.
TDS Rates for Different Income Types
TDS (Tax Deducted at Source) is the government’s mechanism for collecting tax at the point of income generation. Key TDS rates in 2026: Salary (Section 192) — based on estimated tax liability as per applicable slab rates. FD interest (Section 194A) — 10% if annual interest exceeds ₹40,000 (₹50,000 for senior citizens). Property sale (Section 194-IA) — 1% of sale consideration if the property value exceeds ₹50 lakh. Rent (Section 194-IB) — 5% if monthly rent exceeds ₹50,000. Professional fees (Section 194J) — 10% for professional services, 2% for technical services.
If you don’t provide your PAN to the deductor, TDS is deducted at 20% instead of the applicable rate — always ensure your PAN is linked with your employer, bank, and any entity paying you income. Since 2024, the Annual Information Statement (AIS) on the income tax portal captures all TDS deductions across sources, making it easier to reconcile and file your return accurately.
When TDS Results in Excess Tax Payment
TDS often results in excess tax deduction in several scenarios: your total income falls below the taxable threshold but TDS was deducted on FD interest, you have investments and deductions (Section 80C, 80D, HRA) that reduce your taxable income below the TDS-implied level, you changed jobs mid-year and both employers calculated TDS independently without considering combined income brackets, or you have business losses that offset other income.
For bank FD interest, submit Form 15G (for individuals below 60 with income below taxable limit) or Form 15H (for senior citizens whose tax liability is nil) at the beginning of each financial year to prevent TDS deduction entirely. This is preferable to getting TDS deducted and then claiming a refund, which ties up your money for 3-12 months. Use our Tax Calculator to estimate whether your total income will be taxable before deciding on Form 15G/H submission.
How to Claim TDS Refund
If excess TDS has been deducted, the only way to get it back is by filing your Income Tax Return. The process: verify all TDS deductions in your Form 26AS and AIS on the income tax portal, ensure the amounts match your Form 16 and bank TDS certificates. File your ITR declaring all income sources, claim all applicable deductions, and the system automatically computes whether you owe additional tax or are due a refund.
Refunds are typically processed within 20-45 days of e-verification for simple ITR-1 returns, but can take 3-6 months for complex returns requiring assessment. The refund includes 6% annual interest (0.5% per month) from April 1 of the assessment year until the refund date — so while waiting is inconvenient, you do earn interest on delayed refunds. If your refund is not processed within 6 months, raise a grievance on the e-filing portal. For property transactions, the buyer deducts 1% TDS — if you’re the seller and your actual capital gains tax is lower than the TDS deducted (due to exemptions under Section 54/54EC), claim the excess through your ITR filing.
