How to Calculate TDS: A Simple Formula Guide

Learn how to effectively calculate TDS using the formula: TDS Amount = Income Amount x TDS Rate.

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To deduct TDS (Tax Deducted at Source), use this formula: TDS Amount = Income Amount x TDS Rate. For example, if the income is $1,000 and the TDS rate is 10%, the TDS amount would be $1,000 x 0.10 = $100.

FAQs & Answers

  1. What is TDS? TDS stands for Tax Deducted at Source, which is a means of collecting income tax in India, where a certain percentage of an individual's income is deducted by the payer before it is paid out.
  2. How is TDS calculated? TDS is calculated by multiplying the Income Amount by the TDS Rate. For example, if you earn $1,000 and the TDS rate is 10%, the TDS to be deducted would be $100.
  3. Who is responsible for deducting TDS? Generally, the payer of the income, such as an employer or a financial institution, is responsible for deducting TDS before disbursing the payment to the recipient.
  4. Is TDS applicable for all types of income? No, TDS is not applicable for all types of income. It typically applies to salary, interest income, rent, and professional fees, among others, but certain exemptions may exist.

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