The exact amount of TDS (Tax Deducted at Source) that can be claimed by an individual is the total amount actually deducted from their income throughout the financial year by the deductor (e.g., employer, bank, etc.), based on the applicable income tax slabs and rates. There isn't a fixed maximum limit for claiming TDS; rather, it corresponds directly to the tax liability determined by your income.
Understanding How TDS Deduction Works
TDS is not a separate tax but a mechanism to collect income tax at the very source of income. When a payer (like an employer for salary, a bank for interest, etc.) makes certain payments, they are required to deduct a specified percentage as tax and deposit it with the government. This deducted amount is then reflected against the PAN (Permanent Account Number) of the person whose income it is.
The amount of TDS deducted from an employee's salary or other income is determined by estimating their total annual income and applying the prevailing income tax slab rates.
Income Tax Slabs Determining TDS for Employees
The amount of tax to be deducted at source for employees is calculated based on their taxable income falling into specific slabs. The following table outlines the income tax slabs and corresponding rates:
| Income (Annual) | Tax Rate |
|---|---|
| Upto ₹3,00,000 | Nil |
| ₹3,00,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | ₹10,000 + 20% of Income exceeding ₹5,00,000 |
| Above ₹10,00,000 | ₹1,10,000 + 30% of Income exceeding ₹10,00,000 |
Example:
If an individual's annual taxable income is ₹6,00,000, the TDS would be calculated as follows:
- Up to ₹3,00,000: Nil
- ₹3,00,001 to ₹5,00,000 (i.e., ₹2,00,000 at 5%): ₹10,000
- ₹5,00,001 to ₹6,00,000 (i.e., ₹1,00,000 at 20%): ₹20,000
- Total estimated tax (and thus TDS to be deducted): ₹10,000 + ₹20,000 = ₹30,000
This ₹30,000 would be the TDS deducted over the year and is the amount the individual can claim.
How is TDS Claimed Against Tax Liability?
When an individual files their income tax return, they declare their total income and the TDS already deducted. The "claiming" of TDS essentially involves two scenarios:
- Offsetting Tax Liability: If the total TDS deducted throughout the year is less than or equal to the actual tax liability calculated at the end of the financial year, the TDS amount is adjusted against the total tax payable. The individual then only needs to pay the remaining balance, or if TDS covers the entire liability, no further payment is required.
- Claiming a Refund: If the total TDS deducted throughout the year exceeds the actual tax liability, the excess amount can be claimed back from the income tax department as a refund. This often happens if the initial income estimate for TDS deduction was higher than the actual income, or if deductions and exemptions claimed later reduced the overall tax liability significantly.
In essence, the amount of TDS you can claim is simply the cumulative sum of all tax amounts that have been deducted from your various income sources throughout the financial year, as per the applicable tax regulations.
