TDS on salary is the income tax your employer deducts from your pay every month and deposits with the government on your behalf. From 1 April 2026 it is deducted under Section 392 of the Income-tax Act, 2025 (earlier Section 192). This guide explains how TDS deduction on salary works for FY 2026-27, how your employer calculates it, when no TDS is deducted, the new form numbers, and how to check what was deducted, with worked examples.
Quick answer: TDS on salary is not a fixed percentage. Your employer estimates your income and tax for the full year in the regime you chose, and deducts it evenly over the year. For a ₹15 lakh salary in the new regime, tax is ₹97,500, so TDS is ₹8,125 a month. Up to ₹12.75 lakh salary in the new regime, TDS is nil. Work out yours with our TDS on salary calculator.
What Is TDS on Salary?
TDS (tax deducted at source) on salary means your employer collects your income tax in instalments from your pay, instead of you paying it in one go at the end of the year. Under Section 392, the employer must deduct tax at the average rate of income tax on your estimated income for the year. The TDS is credited against your PAN, appears in your annual tax statement (Form 168, earlier Form 26AS), and is adjusted when you file your return.
- Who deducts: any employer paying salary, whether a company, firm, government or individual.
- When: when salary is paid, usually every month.
- No fixed threshold: TDS is due only if your estimated tax for the year is more than nil.
How TDS on Salary Is Calculated: 6 Steps
- Estimate salary for the year: Basic, DA, HRA, special allowance, bonus, incentives and taxable perquisites, including salary from a previous employer this year if you declared it.
- Take off exemptions and deductions allowed in your regime. New regime: ₹75,000 standard deduction and employer NPS. Old regime: ₹50,000 standard deduction plus HRA, professional tax, 80C, 80D, NPS and home loan interest, on proof.
- Add other income you declared to your employer, such as interest.
- Apply the slab rates for your regime to get tax on the taxable income.
- Apply the rebate and add cess: the rebate under Section 156 (earlier 87A) of up to ₹60,000 in the new regime, surcharge if income is above ₹50 lakh, and 4% health and education cess.
- Spread it over the months left: tax for the year minus TDS already deducted, divided by the remaining months.
The slab rates are in our income tax slabs FY 2026-27 guide, and the full tax working is in how to calculate income tax on salary.
TDS on Salary Examples for FY 2026-27
Example 1: ₹15 lakh salary, new regime
| Item | Amount |
|---|---|
| Gross salary | ₹15,00,000 |
| Less standard deduction | ₹75,000 |
| Taxable income | ₹14,25,000 |
| Tax on slabs | ₹93,750 |
| Cess 4% | ₹3,750 |
| Tax for the year | ₹97,500 |
| TDS a month (from April) | ₹8,125 |
Example 2: ₹50,000 a month salary
₹50,000 a month is ₹6 lakh a year. In the new regime, taxable income is ₹5,25,000, well under ₹12 lakh, so the rebate makes the tax nil and no TDS is deducted. In the old regime without deductions, tax would be ₹23,400, about ₹1,950 a month, which is why the new regime suits most people at this salary.
Example 3: ₹18 lakh salary with HRA and deductions
Basic ₹7,20,000, HRA received ₹2,88,000, rent ₹25,000 a month in Bengaluru, professional tax ₹2,500, 80C ₹1,50,000, own NPS ₹50,000 and 80D ₹25,000.
| Item | New regime | Old regime |
|---|---|---|
| HRA exemption | Not allowed | ₹2,28,000 |
| Standard deduction | ₹75,000 | ₹50,000 |
| 80C, NPS, 80D, PT | Not allowed | ₹2,27,500 |
| Taxable income | ₹17,25,000 | ₹12,94,500 |
| Tax for the year | ₹1,50,800 | ₹2,08,880 |
| TDS a month | ₹12,567 | ₹17,407 |
Even with ₹4.55 lakh of exemptions and deductions, the new regime gives lower TDS here, because at ₹18 lakh the old regime only wins above about ₹6.42 lakh. See old vs new tax regime.
Example 4: Catch-up in the middle of the year
Same ₹15 lakh salary, but only ₹30,000 was deducted from April to September. The balance of ₹67,500 is spread over October to March, so TDS becomes ₹11,250 a month. This is why TDS often jumps after a hike, a bonus or late investment proofs.
Is TDS Deducted on Salary Below ₹12.75 Lakh?
Not in the new regime, if salary is your only income. Taxable income up to ₹12 lakh gets a rebate of up to ₹60,000, which wipes out the tax, and the ₹75,000 standard deduction brings a ₹12.75 lakh salary down to ₹12 lakh. Just above that, marginal relief keeps the tax small: at ₹13 lakh salary, tax is ₹26,000 (about ₹2,167 a month).
The old ₹2.5 lakh and ₹5 lakh "limits" you may see in older articles no longer decide TDS in the new regime. In the old regime, the basic exemption is ₹2.5 lakh (₹3 lakh at 60 and ₹5 lakh at 80), with a rebate of up to ₹12,500 for income up to ₹5 lakh.
New vs Old Regime: How Your Choice Affects TDS
- The new regime is the default. If you do not tell your employer, TDS is deducted under it.
- To have TDS under the old regime, tell your employer at the start of the year, usually with your investment declaration.
- If you have no business income, you can still choose either regime when you file your return, so TDS in one regime is not final. Any extra tax or refund is settled in the return.
What to Give Your Employer
| Document | Why |
|---|---|
| PAN | Without it, TDS is at the average rate or 20%, whichever is higher |
| Regime choice | New regime is used if you don't choose |
| Form 124 (earlier Form 12BB) with proofs | HRA (rent receipts, landlord PAN above ₹1 lakh rent a year), LTA, home loan interest, 80C, 80D and other deductions in the old regime |
| Form 122 (earlier Form 12B) | Salary and TDS from a previous employer this year, other income, house property loss |
Check your HRA claim with our HRA exemption calculator before you submit it.
Employer Duties and Due Dates
- Deposit: TDS deducted in a month must be deposited by the 7th of the next month; TDS deducted in March by 30 April.
- Quarterly return: Form 138 (earlier Form 24Q), due by 31 July, 31 October, 31 January and 31 May.
- Certificate: Form 130 (earlier Form 16), issued to you by 15 June after the year ends. For FY 2025-26, salary paid before 1 April 2026, it is still Form 16.
- Perquisites: Form 123 (earlier Form 12BA), if you get perquisites such as a car or accommodation.
- Interest: 1% a month if TDS is not deducted, and 1.5% a month if deducted but deposited late.
See the Income Tax Department for the Act and Rules.
TDS for Senior Citizens and Pensioners
- Pension from a former employer is taxed as salary, so the employer or the pension-paying bank deducts TDS the same way, including the standard deduction.
- In the new regime, slabs are the same at every age, so a pension up to ₹12.75 lakh has nil TDS.
- In the old regime, the exemption is higher: ₹3 lakh from 60 and ₹5 lakh from 80. A ₹7 lakh pension, for example, pays ₹41,600 in the old regime and nil in the new.
- Form 15H is for interest and similar income, not salary or pension, so it cannot stop TDS on salary.
How to Check the TDS Deducted From Your Salary
- Payslip: each month's TDS is shown as "income tax" or "TDS".
- Form 168 / AIS: on the e-filing portal, check that every quarter's TDS is credited to your PAN.
- Form 130 (Form 16): match the total TDS with your payslips before filing your return.
If TDS on your payslip is missing from Form 168, read our TDS mismatch guide.
Common TDS Mistakes to Avoid
- Not declaring a previous employer's salary, so both employers under-deduct and you owe tax at filing.
- Missing the proof deadline, which raises TDS sharply in January to March.
- Choosing the old regime without checking whether your deductions beat the break-even.
- Forgetting bonus or variable pay in the yearly estimate.
- Not giving PAN, which raises TDS to at least 20%.
Related: TDS on salary calculator · income tax calculator · TDS rate chart · salary breakup calculator
Frequently Asked Questions
How is TDS on salary calculated?
Your employer estimates your salary and tax for the full year in your chosen regime, including rebate and cess, takes off TDS already deducted, and divides the balance by the months left. For ₹15 lakh in the new regime, it is ₹8,125 a month.
Under which section is TDS deducted on salary?
Section 392 of the Income-tax Act, 2025, from 1 April 2026. Earlier it was Section 192 of the Income-tax Act, 1961.
What is the TDS rate on salary?
There is no fixed TDS rate on salary. It is deducted at the average rate of tax on your estimated income for the year, worked out from the slab rates of your regime.
Is TDS deducted on a salary of ₹50,000 a month?
Not in the new regime, if that is your only income. ₹6 lakh a year leaves taxable income of ₹5.25 lakh, and the rebate makes the tax nil. In the old regime without deductions, tax would be ₹23,400 a year.
Up to what salary is no TDS deducted?
Up to ₹12.75 lakh a year in the new regime, if salary is your only income, because of the ₹75,000 standard deduction and the rebate of up to ₹60,000 on taxable income up to ₹12 lakh.
Which regime does my employer use for TDS?
The new regime, unless you tell your employer you choose the old regime. Without business income, you can still pick either regime when you file your return.
What forms are used for TDS on salary from FY 2026-27?
Form 124 for your deductions (earlier 12BB), Form 122 for previous-employer salary (earlier 12B), Form 130 for the TDS certificate (earlier Form 16), and Form 138 for the employer's quarterly return (earlier 24Q).
Why is my TDS higher in January, February and March?
Usually because investment proofs were not accepted, salary went up, or a bonus was added. The employer recovers the shortfall for the whole year in the remaining months.
Can senior citizens submit Form 15H to stop TDS on salary?
No. Form 15H is for interest and similar income, not salary or pension. TDS on salary or pension depends on your estimated tax, which is nil up to ₹12.75 lakh in the new regime.
How can I get excess TDS on salary back?
Ask your employer to reduce TDS in the remaining months. Any excess left at year-end is refunded when you file your income tax return.