TDS on salary has no fixed rate. Under Section 192 your employer estimates your total income for the year, computes the tax on it, and deducts that tax in equal monthly instalments — i.e. at your average rate of income tax (total estimated tax ÷ total estimated income). The new tax regime is the default; the employer uses it unless you intimate that you want the old regime. Proof of deduction is issued in Form 16 by 15 June after the year ends.
Salary TDS currently sits in Section 192 of the Income-tax Act, 1961. The Income-tax Act, 2025 renumbers it as Section 392 — the deduction mechanics (average rate, Form 16, quarterly returns) are unchanged. Most employers and payroll systems still reference "Section 192". Confirm the applicable section for the exact payroll period with your employer.
How Employers Deduct TDS on Salary
Every employer paying taxable salary must deduct tax at source under Section 192. Unlike TDS on rent or professional fees (a flat 2%/10%), salary TDS is computed on your projected annual tax and spread across the months. What the employer factors in:
| Step | What the employer does | Effect on TDS |
|---|---|---|
| Estimate income | Adds salary, perquisites, and any other income you declare | Sets the base |
| Apply deductions | Standard deduction; Chapter VI-A (80C, 80D…) only if you pick the old regime | Reduces taxable income |
| Compute tax | Applies slab rates, 87A rebate, surcharge and 4% cess | Annual tax liability |
| Average it out | Divides annual tax by remaining months in the year | Monthly TDS |
| Deposit & certify | Pays to Government by the 7th of next month; issues Form 16 | Compliance |
You can submit Form 12BB with proof of investments and rent to reduce the monthly deduction. Declaring the regime early avoids excess TDS.
From FY 2023-24 the new tax regime is the default for salary TDS. If you want the old regime (to claim HRA, 80C, 80D, home-loan interest etc.), you must intimate your employer at the start of the year. If you do not, the employer deducts under the new regime and you can still switch when filing your ITR (if you have no business income).
New vs Old Regime — Impact on Salary TDS
The regime you choose changes the deductions the employer can factor in, and therefore your monthly TDS. See the income-tax slabs for the exact rates.
New regime (default)
- Standard deduction Rs 75,000
- 87A rebate up to Rs 12L taxable income — nil tax
- Lower slab rates (nil up to Rs 4L)
- HRA / 80C / 80D not available
- Best when you have few deductions
Old regime (opt-in)
- Standard deduction Rs 50,000
- 87A rebate up to Rs 5L taxable income
- HRA, LTA, 80C, 80D, 24(b) all allowed
- Higher slab rates
- Best when deductions are large
Under the new regime, a salaried person with income up to about Rs 12.75 lakh (Rs 12L + Rs 75k standard deduction) can pay nil tax after the 87A rebate — so the employer may deduct little or no TDS. Confirm the current-year rebate and slab figures on the income-tax portal before relying on them.
Not sure which regime means less TDS for you?
Compare with our calculator →How Salary TDS Is Calculated
- 1Gross salaryBasic + DA + HRA + allowances + perks
- 2Less deductionsStd deduction; VI-A if old regime
- 3Apply slabsSlab tax − 87A rebate
- 4Add cess4% Health & Education Cess
- 5Divide by monthsMonthly TDS = annual tax ÷ months
A simplified illustration for a new-regime employee. Figures are indicative — always compute against the current-year slabs.
New regime · gross Rs 12,00,000
New regime · gross Rs 18,00,000
The employer only estimates. If too much TDS was cut (you invested more, or income dropped), you claim a refund by filing your ITR. If too little was cut, the balance is paid as self-assessment tax. TDS deducted from salary does not remove your duty to file a return if your income crosses the basic exemption limit.
Want your salary TDS and refund handled end-to-end?
Get ITR Filing Help →Form 16 — What It Is and When You Get It
Form 16 is the TDS certificate your employer issues as proof of salary TDS deducted and deposited. It has two parts:
- Part A — TDS deducted and deposited each quarter, generated from the TRACES portal (bears a TRACES watermark and unique ID).
- Part B — the detailed computation: salary break-up, exemptions, deductions and tax payable.
The employer must issue Form 16 by 15 June after the financial year ends — so for FY 2025-26, by 15 June 2026. Use it to file your return. Learn more in our Form 16 guide.
Salary TDS — Deposit & Return Due Dates
| Activity | Form / period | Due date |
|---|---|---|
| Deposit TDS to Government | Monthly (Apr–Feb) | 7th of next month |
| Deposit TDS — March salary | March | 30 April |
| Quarterly TDS return (Q1 Apr–Jun) | Form 24Q | 31 July |
| Quarterly TDS return (Q2 Jul–Sep) | Form 24Q | 31 October |
| Quarterly TDS return (Q3 Oct–Dec) | Form 24Q | 31 January |
| Quarterly TDS return (Q4 Jan–Mar) | Form 24Q | 31 May |
| Issue Form 16 to employee | Annual | 15 June |
Form 24Q is the salary-TDS quarterly return (renumbered forms may apply under the Income-tax Act, 2025 — verify for the exact period). Late deposit attracts interest under Section 201(1A); late return attracts a fee under Section 234E.
- Choose regime and intimate employer early
- Submit Form 12BB with investment & rent proof
- Check Form 26AS / AIS against your payslips
- Collect Form 16 (Part A + Part B) by 15 June
- Reconcile TDS credit before filing ITR
- Claim any refund of excess TDS in your return
Employer or employee — get salary TDS & returns done right.
Talk to a TDS Expert →- Section 192 & Form 16: incometax.gov.in
- TDS credit (Form 26AS / TRACES): tdscpc.gov.in
- New regime slabs & 87A rebate FY 2025-26: Finance Act 2025
- Income-tax Act, 2025 — Section 192 renumbered as Section 392
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.