Find out the details of TDS Calculator on Salary for FY 2025-26 and compare tax regimes, use our simple calculator, and plan your monthly deductions with ease.
Calculate monthly TDS on salary for FY 2025‑26 with updated slabs, ₹75K standard deduction & ₹60K rebate. Includes free tool, example breakdown & Form 16 guidance.
In the financial year 2025-26, the concept of TDS on salary continues to play a crucial role in every salaried individual’s tax planning and monthly budgeting. With the introduction of enhanced standard deductions and rebate limits under the new tax regime, understanding how Tax Deducted at Source (TDS) is calculated on your income has become more important than ever.
While most employers handle the monthly deduction process, it’s essential to know whether the TDS being deducted aligns with your actual tax liability.
This article offers a complete guide to how TDS on salary is calculated for FY 2025-26, with up-to-date slabs, deduction limits, and real-world examples. We’ve also included a powerful tool to help you compute your monthly TDS in seconds.
Old vs New Tax Regime Calculator
| Head | Details/ Amt. |
|---|---|
| Gross Income | |
| Exemptions u/s 10 A (HRA etc.) | |
| Professional Tax | |
| Net Income under Salaries | 0.00 |
| Standard Deduction (Auto Applied) | 50000 |
| Deductions u/s 80 C (PF, PPF, Ins, ELSS, NPS: Max Rs.150000) | |
| Deductions u/s 80 CCD (NPS: Max Rs. 50000/-) | |
| Deductions u/s 80 D (Health Insurance: Max Rs. 35000/- ) | |
| Deductions u/s 80 G (Eligible Donations) | |
| Deductions u/s 80 E (Education Loan Interest) | |
| Deductions u/s 80 TTA (FD/Post Office Interest: Max Rs. 40000/-) | |
| Tax Benefit u/s 24 (Home Loan Interest Paid: Max Rs. 200000/-) | |
| Total Deductions/Benefits | 0.00 |
What’s New in FY 2025-26: TDS Relevance in Light of Updated Tax Provisions
With Budget 2025 bringing significant updates to the new tax regime, the calculations for monthly salary TDS have changed. If you're earning a taxable salary, your employer is obligated to deduct TDS based on your estimated annual income. However, with shifting deductions and slab adjustments, many salaried individuals may either be over-deducted or under-deducted—leading to large refunds or penalties at the time of filing.
Here’s a quick overview of the new slab and deduction updates for FY 2025-26:
Income Tax Slabs for FY 2025-26 (New Regime)
| Annual Income Range (₹) | Tax Rate |
|---|---|
| 0 – 3,00,000 | Nil |
| 3,00,001 – 6,00,000 | 5% |
| 6,00,001 – 9,00,000 | 10% |
| 9,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
Key FY 2025-26 Updates:
- Standard Deduction under new regime: ₹75,000 for salaried individuals.
- Section 87A Rebate raised to ₹60,000 for taxable incomes up to ₹7.5 lakh.
- Surcharge and cess rates remain unchanged.
Source: Income Tax India
Understanding TDS on Salary: Meaning and Purpose
TDS (Tax Deducted at Source) is a system under which tax is deducted by the employer every month from your salary before it's credited to your account. This deduction is based on your estimated annual taxable income, including allowances, exemptions, and deductions you declare at the start of the year.
Unlike self-assessment tax, TDS is deducted periodically, which makes it easier to meet tax obligations without a large one-time outflow. However, it must be accurately calculated, as misjudgments can lead to excess deductions or tax dues later.
The concept is governed under Section 192 of the Income Tax Act, which allows employers to consider investments, housing rent exemptions, and other declarations while computing monthly tax deductions.
How TDS on Salary is Calculated for FY 2025-26
Let’s break down the calculation process using an example:
Example:
Let’s assume:
- Annual Salary: ₹12,00,000
- Chosen Tax Regime: New
- Standard Deduction: ₹75,000
- Declared Deductions under 80C: Not applicable (since new regime doesn’t allow 80C)
Step 1: Calculate Net Taxable Income
₹12,00,000 – ₹75,000 = ₹11,25,000
Step 2: Apply the New Regime Slabs
| Slab Range (₹) | Tax Rate | Tax Amount (₹) |
|---|---|---|
| 0 – 3,00,000 | Nil | 0 |
| 3,00,001 – 6,00,000 | 5% | 15,000 |
| 6,00,001 – 9,00,000 | 10% | 30,000 |
| 9,00,001 – 11,25,000 | 15% | 33,750 (for ₹2,25,000) |
Total Tax Before Cess = ₹78,750
Add Health & Education Cess (4%) = ₹3,150
Total Tax Payable = ₹81,900
Step 3: Monthly TDS Deduction
₹81,900 ÷ 12 = ₹6,825 per month
So, if you earn ₹1,00,000 per month, a monthly TDS of ₹6,825 will be deducted under the new regime.
For official tax rules and section references, consult the Central Board of Direct Taxes.
Comparing Old vs New Regime for TDS on Salary in FY 2025-26
One of the most common questions among salaried individuals is whether they should opt for the old or new tax regime when calculating TDS on salary. Since your employer calculates monthly deductions based on your declared regime, choosing the right one can significantly affect your in-hand salary.
Key Differences Between Regimes (FY 2025-26)
| Feature | Old Regime | New Regime (FY 2025-26) |
|---|---|---|
| Standard Deduction | ₹50,000 | ₹75,000 |
| 80C Deductions Allowed | Yes (up to ₹1.5 lakh) | Not Allowed |
| HRA, LTA, and other Exemptions | Allowed (as per eligibility) | Not Allowed |
| Section 87A Rebate | Up to ₹12,500 for income ≤ ₹5 lakh | Up to ₹60,000 for income ≤ ₹7.5 lakh |
| Slab Rates | Traditional Slabs | Revised Slabs (More Granular) |
If you’re claiming deductions like investments under Section 80C, HRA, home loan interest under Section 24, or education loan interest under Section 80E, the old regime might work in your favor. On the other hand, if you prefer a simplified structure without keeping proof or investing solely for tax savings, the new regime could result in higher take-home pay, especially with the enhanced standard deduction and raised rebate limit.
Employers will typically ask for your choice at the beginning of the financial year. However, even if TDS is deducted under one regime, you can switch to another when filing your Income Tax Return (ITR).
To assess which regime is suitable for you, visit the official Income Tax comparison tool.
How Employers Calculate and Deduct TDS Monthly
While the final tax is paid annually, employers deduct TDS in equal monthly installments based on your projected annual income. Here's how the deduction typically works:
- Collection of Investment Declarations: Employers ask you to declare your expected deductions (under 80C, HRA, NPS, etc.) at the beginning of the financial year.
- Estimation of Net Taxable Income: Based on your gross annual salary and eligible deductions.
- Annual Tax Liability: Calculated using the applicable regime’s slab rates.
- Monthly TDS Deduction: Total tax is divided over 12 months and deducted from your monthly salary.
- Adjustments During the Year: Employers can revise TDS if your salary changes or if you submit proofs mid-year.
It’s worth noting that TDS must be deducted only if your estimated income exceeds the basic exemption limit. For FY 2025-26, this is ₹3,00,000 under the new regime. If your income falls below this threshold, no TDS is deducted, provided you submit Form 15G/15H (if eligible).
To understand this better, you can explore TRACES by TIN-NSDL for your detailed TDS statement and related services.
Real-World TDS Illustration for Two Different Salary Levels
Let’s consider two salary levels and see how TDS will vary under the new regime for FY 2025-26.
Case 1: Annual Salary ₹6,00,000
| Component | Value (₹) |
|---|---|
| Gross Salary | 6,00,000 |
| Standard Deduction | 75,000 |
| Net Taxable Income | 5,25,000 |
| Rebate Under Section 87A | ₹60,000 (Full) |
| Final Tax Payable | 0 |
| TDS Deducted Monthly | 0 |
Case 2: Annual Salary ₹10,00,000
| Component | Value (₹) |
|---|---|
| Gross Salary | 10,00,000 |
| Standard Deduction | 75,000 |
| Net Taxable Income | 9,25,000 |
| Tax on First ₹6 lakh | ₹15,000 |
| Tax on ₹6L to ₹9L | ₹30,000 |
| Tax on ₹9L to ₹9.25L | ₹3,750 |
| Total Tax Before Cess | ₹48,750 |
| Cess (4%) | ₹1,950 |
| Total Tax Payable | ₹50,700 |
| TDS Per Month (₹) | ₹4,225 |
These examples make it clear how the updated deduction and slab structure influence monthly TDS, depending on income level and regime choice.
Use the TDS Calculator Tool to Estimate Monthly Salary Deduction for FY 2025-26
To simplify the process of calculating TDS on salary for FY 2025-26, a user-friendly tool can be extremely helpful. Instead of manually applying slab rates and deducting standard benefits, the calculator takes your gross income and selected tax regime to generate an accurate monthly TDS estimate.
If you’re unsure whether your employer is deducting the correct amount or want to proactively plan your monthly cash flow, this kind of calculator provides instant insights. All you need to do is input your:
- Gross monthly or annual salary
- Tax regime (old or new)
- Additional earnings (bonus, HRA, etc.)
- Declaration of deductions (only if under old regime)
The output shows:
- Monthly TDS deduction
- Total annual tax liability
- Tax slab summary and cess
Such calculators are designed in accordance with the official tax rules, as defined by the Income Tax Department, and reflect the latest fiscal changes for FY 2025-26.
Many private and government-backed portals offer these utilities. One such example is the comprehensive and free-to-use calculator from SBI Smart, which provides regime-based breakdowns and instant tax liability projections.
Common Mistakes in TDS Deductions & How to Avoid Them
While TDS on salary is largely automated through payroll systems, errors are not uncommon. Employees should be vigilant and periodically review salary slips and Form 16 to ensure correctness. Below are common issues faced and how to resolve them:
1. Incorrect Declaration of Regime
If you forget to declare your tax regime preference at the start of the year, employers often default to the new regime, which may not suit your situation. This could lead to over- or under-deduction of TDS.
Solution: Clearly communicate your choice when prompted by HR and confirm it's implemented in your salary structure.
2. Ignoring Bonus, Incentives or Variable Pay
Many salaried individuals overlook performance-linked bonuses or annual incentives that significantly increase taxable income, leading to under-deduction of TDS and a tax shortfall later.
Solution: Add any projected variable earnings to your annual income estimate when submitting your declaration.
3. Delay in Submitting Investment Proofs
Even under the old regime, if you fail to submit timely proof of eligible deductions (e.g., LIC, PPF, tuition fees), your employer may not consider them while computing your tax.
Solution: Track proof submission timelines in your company portal and keep receipts ready in digital format.
4. Mismatch Between Form 16 and Form 26AS
Sometimes the TDS recorded in your Form 16 doesn’t match the amount shown in Form 26AS, usually due to delay or errors in TDS return filing by the employer.
Solution: Regularly review your Form 26AS via the official income tax portal to confirm that your employer is depositing deducted TDS correctly.
Salary TDS Calculation: Ideal Timing for Year-End Adjustments
It’s a good practice to review your TDS calculations around January or February, when most companies finalise their payroll and investment declarations. If your tax outgo appears to be less than your actual liability, you can proactively request your employer to adjust the remaining amount over the next few months.
This prevents a lump-sum tax payment at the end of the year or while filing your ITR. Also, if you've made additional investments mid-year (under 80C, 80D, or home loan interest), submitting updated declarations can reduce your taxable income and lower future monthly deductions.
Companies usually share a detailed salary break-up and tax worksheet towards the end of the financial year. Make sure you compare this with your own records and the calculator’s output to identify any gaps early.
How to Reconcile TDS with Form 16 and Salary Slips
For any salaried employee, Form 16 is the most critical document to verify whether the TDS deducted by your employer has been correctly deposited with the government. Issued annually, Form 16 is a consolidated certificate that provides the details of your total income, deductions claimed, and total tax deducted at source.
If your employer has deducted TDS from your salary each month, you must ensure that:
- The total TDS in your Form 16 matches your salary slips.
- This amount reflects correctly in Form 26AS, which is your tax passbook.
Failing to reconcile these figures can lead to mismatches at the time of filing your Income Tax Return (ITR), which might delay your refund or even trigger a tax notice.
Here’s how you can perform a basic reconciliation:
| Document | What to Check For |
|---|---|
| Salary Slips | Monthly TDS deducted (visible under 'Deductions') |
| Form 16 - Part A | Total TDS deposited by employer |
| Form 16 - Part B | Detailed tax calculation and income structure |
| Form 26AS | Verify credit of TDS under your PAN |
You can download Form 26AS directly from the TRACES portal or through your net banking account under “Tax Services.”
If you spot discrepancies, immediately raise the issue with your payroll or HR team so they can revise their TDS returns (if needed) and update the corrections before you file your ITR.
Adjusting TDS Errors Before Filing ITR
If there’s a shortfall in your TDS deduction and it’s discovered only after receiving Form 16, you still have the opportunity to pay the balance tax as Self-Assessment Tax before submitting your return. On the other hand, if excess TDS has been deducted, it will automatically be processed as a refund once you file your return correctly.
To do this:
- Log in to the e-Filing Portal of Income Tax Department
- Select “e-Pay Tax” and choose “Self-Assessment Tax” under challan 280
- Pay the exact balance due and retain the challan receipt for submission along with your ITR
This approach is especially helpful for employees with:
- Late bonuses that were not accounted for in initial tax estimates
- Changes in salary structure during the year
- Missed investment declarations or last-minute ELSS/LIC payments
- House rent or home loan interest not considered initially
TDS Refunds and Interest: What You Should Know
In cases where your employer over-deducts TDS, the excess amount is claimed as a refund while filing your return. The Income Tax Department generally processes refunds within 20 to 45 days, depending on the assessment load during that cycle.
Also, under Section 244A, if the refund is delayed beyond a certain period, you are eligible for interest on the refund amount. This interest is calculated at 0.5% per month on the excess tax paid from 1st April of the relevant assessment year until the date the refund is granted.
Example Scenario:
Suppose your actual tax liability for FY 2025-26 is ₹35,000, but TDS deducted by your employer was ₹45,000. When you file your return declaring this, the excess ₹10,000 will be refunded, and if there’s a delay, interest will be credited automatically.
Make sure your bank account is pre-validated in the income tax portal to receive the refund without issues.
Questions on TDS for Salaried Employees (FY 2025-26)
Understanding TDS on salary can be confusing, especially with regime changes, rebates, and form requirements. Below are answers to some of the most common questions salaried individuals ask while navigating their monthly tax deductions.
Q1. What if my employer deducts excess TDS?
If excess TDS has been deducted by your employer, you don’t need to worry. This amount will be adjusted at the time of filing your Income Tax Return. Once you declare your actual income and deductions, the system automatically calculates the excess tax paid and initiates a refund, which is processed by the Centralised Processing Centre (CPC) of the Income Tax Department. You can track refund status at the TIN-NSDL Refund Tracking Portal.
Q2. Can I switch between old and new tax regime when filing my ITR?
Yes. Even if you chose a particular regime during the financial year and your employer deducted TDS accordingly, you are allowed to change your tax regime while filing your ITR. This flexibility is available only to salaried individuals without business income. For those with business income, regime change is permitted only once.
This means your final tax liability can be recalculated, and excess or shortfall from monthly TDS will be automatically adjusted in your return filing.
Q3. Is TDS deducted even if my income is below ₹7.5 lakh?
Under the new tax regime for FY 2025-26, if your net taxable income is up to ₹7.5 lakh, you’re eligible for a full rebate of up to ₹60,000 under Section 87A. However, to ensure no TDS is deducted, it is your responsibility to submit accurate declarations to your employer confirming your eligibility for the rebate.
Failing to do so may result in unnecessary monthly deductions, which you’ll need to reclaim later. Refer to the Income Tax e-filing FAQ section for further clarification.
Q4. How do I check whether my TDS has been correctly deposited?
To verify your TDS deposits:
- Visit the TRACES portal
- Log in with your PAN
- Navigate to “View Tax Credit (Form 26AS)”
- Download the Form 26AS PDF for the relevant assessment year
Match the “Amount Paid/Credited” and “TDS Deposited” columns with the values shown in your Form 16 and salary slips. Any discrepancy should be flagged to your employer immediately.
Q5. Is TDS deducted from non-salary income too?
Yes, TDS can be deducted from multiple sources, including:
- Fixed deposits (Section 194A)
- Rent income (Section 194I)
- Professional fees (Section 194J)
- Sale of immovable property (Section 194IA)
However, TDS on salary under Section 192 is based on estimated annual salary and applicable deductions. Each section has its own threshold and rate, which you can find in the TDS Rate Chart published by the CBDT.
Final Takeaways: Why TDS Awareness is Essential in 2025-26
As tax rules evolve, it’s important for every salaried employee to proactively understand their TDS deductions, calculate their monthly salary tax impact, and use available tools to avoid under- or overpayment. The revised slabs and standard deductions under the new regime offer meaningful savings if used wisely.
Make it a practice to:
- Review Form 16 and Form 26AS annually
- Use trusted TDS calculator tools for monthly planning
- Communicate any changes in income or deductions to your HR/payroll
- File your ITR on time with accurate reporting
These simple steps can help ensure financial clarity and peace of mind throughout the year.
Key Takeaways and Final Checklist for TDS on Salary in FY 2025-26
Managing TDS on salary for FY 2025-26 is not just a compliance requirement—it’s an essential part of personal financial planning. With updated rebates, enhanced standard deductions, and flexibility between old and new regimes, it is possible to optimise your monthly take-home salary while staying fully tax compliant.
Here’s a quick summary to ensure you're on track:
| Task | Recommended Action |
|---|---|
| Verify tax regime with employer | Declare preference early in the year; confirm it’s applied in payroll system |
| Submit deduction proofs on time (if old regime) | Ensure investment documents are provided before employer’s cut-off date |
| Check salary slips for monthly TDS | Compare deductions month-wise; investigate fluctuations or errors |
| Match Form 16 with Form 26AS | Use TRACES portal and employer records |
| Use calculator to estimate annual liability | Run inputs using salary-based calculators to identify under/over deduction |
| File ITR with correct regime and deductions | Review all numbers and switch regime if needed during return filing |
Being aware of your tax liability early helps avoid last-minute surprises in March. Employers can adjust your remaining TDS deduction if you alert them to shortfalls or excess deductions in time. This not only ensures smooth payroll processing but also reduces the risk of delays during your tax return assessment.
Additional Tools and Resources for Taxpayers
To further support accurate tax planning, the government and financial institutions offer several publicly accessible resources:
- AIS (Annual Information Statement) – This comprehensive document provides a summary of all income sources, including interest, dividends, and TDS. You can download your AIS from the Income Tax Portal.
- Tax Calculator Tools – Tools provided by trusted financial platforms, such as BankBazaar, offer updated tax calculation based on both regimes. These tools account for the FY 2025-26 slab changes, rebate limits, and latest deductions.
- PAN and Aadhaar Linking – Ensure your PAN is linked with Aadhaar to prevent processing delays in TDS credit or ITR filings. You can verify your status through this official link.
- Challan 280 – If you find that your employer under-deducted TDS, use Challan 280 on the e-Filing portal to pay Self-Assessment Tax before filing your return.
By leveraging these tools and maintaining accurate records, employees can gain better visibility over their TDS, optimise their tax outcomes, and ensure complete compliance without last-minute stress.
FAQ
What is TDS on salary for FY 2025-26?
TDS on salary is the monthly tax deducted by employers based on your estimated annual income and applicable slab rates for FY 2025-26.
How do I calculate my monthly TDS for salary?
You can use a salary TDS calculator by entering your gross income, tax regime, and deductions to get the estimated monthly deduction.
Which is better for TDS: Old or New Tax Regime?
The new regime offers higher standard deduction and fewer exemptions, while the old regime benefits those claiming 80C, HRA, and home loan interest.
Can I change tax regime while filing ITR?
Yes, salaried employees can switch between old and new regimes during ITR filing, even if TDS was deducted under a different regime.
What happens if excess TDS is deducted?
If more TDS is deducted than required, you will get a refund after filing your income tax return and verifying your Form 16 and Form 26AS.
Is there any rebate under new regime for FY 2025-26?
Yes, under Section 87A, individuals with taxable income up to ₹7.5 lakh can claim a rebate of ₹60,000 under the new regime for FY 2025-26.
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