Under Section 192, your employer deducts TDS on estimated annual taxable salary, not on gross CTC or take-home. From FY 2023-24 the new tax regime is the default. After the ₹75,000 standard deduction and the Section 87A rebate (₹60,000, income up to ₹12 lakh), a salaried person with taxable income up to ₹12 lakh pays zero tax — so no TDS on salary up to about ₹12.75 lakh a year (≈ ₹1,06,250/month) under the new regime. Above that, tax is spread evenly and deducted monthly.
New Tax Regime Slabs — FY 2025-26 (AY 2026-27)
Employers now compute salary TDS under the new regime by default. These are the slab rates used to project your annual tax and divide it across 12 months.
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Plus 4% Health & Education Cess on tax; surcharge on income above ₹50 lakh. Section 87A rebate (up to ₹60,000) makes income up to ₹12 lakh tax-free under the new regime — with ₹75,000 standard deduction, salary up to ₹12.75 lakh bears zero TDS.
A frequent surprise on the first payslip: TDS is calculated on estimated annual taxable salary (CTC minus exempt allowances, standard deduction and any declared 80C/HRA), then divided by 12 — not on gross pay or on your monthly take-home. Two people on the same CTC can have very different TDS depending on their declarations.
Monthly TDS by Salary Range (New Regime)
Approximate monthly TDS under the new regime for FY 2025-26. See the full TDS rate chart 2025-26 or run exact numbers on the income tax calculator.
| Monthly Gross | Annual CTC | Taxable Income* | Annual Tax | Monthly TDS |
|---|---|---|---|---|
| ₹50,000 | ₹6.0L | ₹5.25L | ₹0 | ₹0 (87A) |
| ₹80,000 | ₹9.6L | ₹8.85L | ~₹47,000 | ~₹3,900 |
| ₹1,00,000 | ₹12L | ₹11.25L | ~₹79,000 | ~₹6,600 |
| ₹1,25,000 | ₹15L | ₹14.25L | ~₹1,55,000 | ~₹12,900 |
| ₹1,50,000 | ₹18L | ₹17.25L | ~₹2,27,000 | ~₹18,900 |
| ₹2,00,000 | ₹24L | ₹23.25L | ~₹3,90,000 | ~₹32,500 |
| ₹3,00,000 | ₹36L | ₹35.25L | ~₹7,25,000 | ~₹60,400 |
*Taxable income = CTC − ₹75,000 standard deduction − EPF employee share (assumed 12% of basic, basic ~40% of CTC). Cess included. Figures are approximate; actual TDS depends on your exact salary structure and declarations.
New regime — ₹12L taxable salary
New regime — ₹16L taxable salary
The 87A rebate zeroes tax only up to ₹12 lakh taxable income. Cross it by even a little and slab tax kicks in from ₹4 lakh upward — though marginal relief caps the extra tax to the amount by which income exceeds ₹12 lakh, so a taxable income of, say, ₹12.10 lakh does not suddenly owe ₹61,500.
Unsure why your salary TDS looks high? Get your payslip and regime checked.
Talk to a TDS Expert →New Regime vs Old Regime for Salary TDS
The employer deducts under the new regime by default. You can opt for the old regime by a declaration (Form 12BB / regime-choice form) if your HRA, 80C, 80D and home-loan deductions make it cheaper.
New Regime (default)
- Standard deduction ₹75,000
- 87A rebate up to ₹12L income → nil tax
- No 80C / 80D / HRA / home-loan deductions
- Lower slab rates; simplest for TDS
- No declaration needed — auto-applied
Old Regime (opt-in)
- Standard deduction ₹50,000
- 87A rebate up to ₹5L income only
- HRA, 80C (₹1.5L), 80D, home-loan interest allowed
- Higher slabs but big deductions can win
- Must opt in via Form 12BB / declaration
| Monthly CTC | New Regime TDS/mo | Old Regime TDS/mo (₹1.5L 80C + HRA) | You save (old) |
|---|---|---|---|
| ₹80,000 | ~₹3,900 | ~₹1,000 | ~₹2,900/mo |
| ₹1,00,000 | ~₹6,600 | ~₹2,600 | ~₹4,000/mo |
| ₹1,50,000 | ~₹18,900 | ~₹7,000 | ~₹11,900/mo |
| ₹2,00,000 | ~₹32,500 | ~₹13,500 | ~₹19,000/mo |
| ₹3,00,000 | ~₹60,400 | ~₹27,500 | ~₹32,900/mo |
Old regime assumes 80C ₹1.5L, HRA ~40% of basic, standard deduction ₹50,000. Illustrative only — the right regime depends on your actual deductions.
Even if your employer deducted TDS under one regime all year, a salaried person may choose the other regime while filing the ITR. If old-regime tax is lower, the excess TDS is refunded; if higher, you top up as self-assessment tax. Section 206AB (higher TDS for non-filers) was omitted w.e.f. 1 April 2025, but note it never applied to salary TDS under Section 192 anyway.
Form 12BB — Declare Investments to Cut TDS
Submit Form 12BB to your employer at the start of the financial year (April) with estimated declarations, then update it with actual proofs by January so Q4 TDS is adjusted. Not declaring means TDS is computed with no deductions — a higher monthly cut that you later recover as an ITR refund.
- HRA — landlord name, address, PAN and rent paid (Section 10(13A), old regime)
- Section 80C — PPF, ELSS, LIC, home-loan principal, NSC (up to ₹1.5L, old regime)
- Section 80D — health-insurance premium
- Home-loan interest — Section 24 certificate
- Regime choice — old vs new (new is applied if you say nothing)
- Employer holds a valid TAN
- Give PAN to avoid the 20% s.206AA rate
- Submit Form 12BB with your regime choice
- TDS deposited by the 7th of next month
- Quarterly Form 24Q filed by employer
- Collect Form 16 (Part A + B) by 15 June
- Match TDS in Form 26AS / AIS before filing ITR
Form 16 is mandatory wherever TDS is deducted, but if you do not get it, download Form 26AS / AIS from incometax.gov.in — it shows the employer TAN and TDS amount — and file your ITR from that. Even if the employer deducted but did not deposit, you can claim the credit and the department recovers it from the defaulting employer.
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