Income-tax Act, 2025, section 392
Section 392, Sub-section by Sub-section
| Sub-section | Rule | Rate or figure |
|---|---|---|
| 392(1) | Any person responsible for paying income chargeable under the head Salaries deducts income-tax on the amount payable, at the time of payment, on the estimated income of the assessee under this head for the tax year. | Average rate of income-tax computed on the basis of the rates in force |
| 392(2) | The employer may, at his option, pay the tax on the whole or part of a non-monetary perquisite chargeable under section 17(1) without deducting it from the employee. The tax is determined on the salary income including that perquisite. | Average rate |
| 392(3) | An eligible start-up referred to in section 140 paying income of the nature specified in section 17(1)(d) (specified security or sweat equity shares) deducts or pays the tax within the time specified for the payee in section 289(3). | Rates in force for the tax year of allotment or transfer |
| 392(4)(a) | The employer takes into account particulars furnished by the employee, at his option, in the prescribed form: salary from any other employer during the tax year; relief under section 157; loss under the head Income from house property; income under any other head (not being a loss, other than the house property loss); tax deducted or collected at source for the same tax year. | Increases or decreases the tax to be deducted |
| 392(4)(b) | The tax deductible from salary shall not be reduced in any case except on account of loss under the head Income from house property and the tax deducted and collected under other provisions of the Chapter. | No other reduction |
| 392(5) | The employer furnishes to the employee a statement of perquisites or profits in lieu of salary with their value; obtains evidence or proof of the prescribed claims (including set off of loss); and may increase or reduce the deduction to adjust any excess or deficiency from an earlier deduction or failure to deduct during the tax year. | Adjustment within the tax year |
| 392(6) | Trustees of a recognised provident fund deduct tax on the accumulated balance where paragraph 9 of Part A of Schedule XI applies, as provided in paragraph 10 of that Part. Trustees of an approved superannuation fund deduct tax on employer contributions and interest paid to the employee, as provided in paragraph 7 of Part B of Schedule XI. | As provided in Schedule XI |
| 392(7) | Trustees of the Employees Provident Funds Scheme, 1952, or a person authorised under it, deduct tax on payment of the accumulated balance where the aggregate amount of such payment is ₹50,000 or more and the balance is includible in total income because paragraph 8 of Part A of Schedule XI does not apply. | 10% |
| 392(8) | For salary payable in foreign currency, the value in rupees is calculated at the prescribed rate of exchange. | Prescribed rate of exchange |
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Section 3(10) of the Finance Act, 2026: tax to be deducted from, or paid on, salary under section 392 (other than sub-section (7)) is computed at the rate or rates specified in Part III of the First Schedule, increased by surcharge as provided there.
Calculator
Work Out the Tax to Deduct From Salary for the Year
Enter the salary the employee is expected to earn in the tax year. The calculator takes off the standard deduction and gives the income-tax for the year that the employer spreads over the salary payments under section 392(1).
Salary income only, before any other income or loss the employee declares under section 392(4). The calculator allows the section 156 rebate because it is a deduction from the income-tax on total income; section 392 itself does not name it.
Income-tax Act, 2025, section 202(1), Table
Rates in Force: Section 202(1) Slabs
Section 202(1) applies to an individual unless the option under section 202(4) is exercised. Its marginal heading is "New tax regime for individuals, Hindu undivided family and others".
| Sl. No. | Total income | Rate of tax |
|---|---|---|
| 1 | Up to ₹4,00,000 | Nil |
| 2 | From ₹4,00,001 to ₹8,00,000 | 5% |
| 3 | From ₹8,00,001 to ₹12,00,000 | 10% |
| 4 | From ₹12,00,001 to ₹16,00,000 | 15% |
| 5 | From ₹16,00,001 to ₹20,00,000 | 20% |
| 6 | From ₹20,00,001 to ₹24,00,000 | 25% |
| 7 | Above ₹24,00,000 | 30% |
Finance Act, 2026, First Schedule, Part III, Paragraph A
Rates in Force: Finance Act, 2026, Part III, Paragraph A
Part III of the First Schedule gives the rates for deducting income-tax from salaries and for computing advance tax for the tax year commencing on 1 April 2026. These apply where section 202(1) does not.
| Assessee | Total income | Income-tax |
|---|---|---|
| Individual (item I) | Does not exceed ₹2,50,000 | Nil |
| Individual (item I) | Exceeds ₹2,50,000 but does not exceed ₹5,00,000 | 5% of the amount by which the total income exceeds ₹2,50,000 |
| Individual (item I) | Exceeds ₹5,00,000 but does not exceed ₹10,00,000 | ₹12,500 plus 20% of the amount by which the total income exceeds ₹5,00,000 |
| Individual (item I) | Exceeds ₹10,00,000 | ₹1,12,500 plus 30% of the amount by which the total income exceeds ₹10,00,000 |
| Resident individual of sixty years or more but less than eighty years (item II) | Does not exceed ₹3,00,000 | Nil |
| Resident individual of sixty years or more but less than eighty years (item II) | Exceeds ₹3,00,000 but does not exceed ₹5,00,000 | 5% of the amount by which the total income exceeds ₹3,00,000 |
| Resident individual of sixty years or more but less than eighty years (item II) | Exceeds ₹5,00,000 but does not exceed ₹10,00,000 | ₹10,000 plus 20% of the amount by which the total income exceeds ₹5,00,000 |
| Resident individual of sixty years or more but less than eighty years (item II) | Exceeds ₹10,00,000 | ₹1,10,000 plus 30% of the amount by which the total income exceeds ₹10,00,000 |
| Resident individual of eighty years or more (item III) | Does not exceed ₹5,00,000 | Nil |
| Resident individual of eighty years or more (item III) | Exceeds ₹5,00,000 but does not exceed ₹10,00,000 | 20% of the amount by which the total income exceeds ₹5,00,000 |
| Resident individual of eighty years or more (item III) | Exceeds ₹10,00,000 | ₹1,00,000 plus 30% of the amount by which the total income exceeds ₹10,00,000 |
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Finance Act, 2026 and sections 393(6), 397(2)
Surcharge, Cess, Missing PAN and Nil Declaration
| Point | Rule | Source |
|---|---|---|
| Surcharge | For an individual: 10% where total income exceeds ₹50,00,000 but not ₹1,00,00,000; 15% above ₹1,00,00,000 up to ₹2,00,00,000; 25% above ₹2,00,00,000 up to ₹5,00,00,000; 37% above ₹5,00,00,000. The 25% and 37% tiers are tested on total income excluding dividend income and capital gains under sections 196, 197 and 198. | FA 2026, First Schedule, Part III, Paragraph F, Table 1, Sl. No. 1 |
| Surcharge where income is chargeable under section 202 | The Finance Act Tables for section 202 stop at 25% for total income exceeding ₹2,00,00,000: there is no 37% tier. | FA 2026, s. 3(4)(b) Table Sl. No. 10 and s. 3(12)(b) Table Sl. No. 10 |
| Health and Education Cess | 4% of the income-tax and surcharge. The exclusion for resident payees in section 3(17)(i) covers deductions under sub-sections (7), (8) and (9) only, not salary under sub-section (10). | FA 2026, s. 3(16) and 3(17) |
| Employee does not furnish a valid PAN | Tax is deducted at the higher of the rate in the relevant provision, the rates in force, or 20%. | ITA 2025, s. 397(2)(b)(i) |
| Provident fund withdrawal under section 392(7) | A resident individual may furnish the written declaration that tax on his estimated total income is nil, and no tax is then deducted, subject to the Note under the Table in section 393(6). | ITA 2025, s. 393(6), Table, Sl. No. 1(a) |
If you miss it
Late Fee and Penalty
Interest on late deduction or payment
Simple interest at 1% for every month or part of a month from the date tax was deductible to the date it is deducted, and 1.5% for every month or part of a month from the date of deduction to the date it is paid. It is paid before the statement is filed. ITA 2025 · s. 398(3)
Late fee for the quarterly statement
₹200 for every day the statement under section 397(3)(b) is late, not exceeding the tax deductible, paid before the statement is delivered. ITA 2025 · s. 427(1) and (2)
Penalty for a late or wrong statement
₹10,000 to ₹1,00,000. Not levied for delay if the tax, fee and interest were paid and the statement is filed within one month of the due date. ITA 2025 · s. 461
Failure to deduct
The employer is an assessee in default for the tax not deducted or paid (s. 398(1)) and the Assessing Officer may impose a penalty equal to the tax not deducted. ITA 2025 · s. 398(1) and 448
Tax deducted but not paid
Simple imprisonment up to two years or fine or both where the tax exceeds fifty lakh rupees; up to six months or fine or both above ten lakh rupees; fine in other cases. Not applicable if paid by the due date of the statement. ITA 2025 · s. 476, as substituted by FA 2026
Worked examples
What You Pay in Common Cases
Resident employee, section 202(1), salary ₹15,00,000
Less standard deduction, s. 19(1)₹75,000
Income ₹14,25,000: ₹60,000 + 15% of ₹2,25,000₹93,750
Rebate: income above twelve lakh rupees exceeds the taxNil
Cess 4%₹3,750
Over 12 equal monthly payments₹8,125 a month
Tax to deduct in the year₹97,500
Resident employee, section 202(1), salary ₹12,75,000
Income after ₹75,000 standard deduction₹12,00,000
Tax at slab rates₹60,000
Rebate, s. 156(2)(a)₹-60,000
Tax to deduct in the yearNil
Resident below 60, Finance Act rates, salary ₹10,00,000
Less standard deduction, s. 19(1)₹50,000
Income ₹9,50,000: ₹12,500 + 20% of ₹4,50,000₹1,02,500
Cess 4%₹4,100
Tax to deduct in the year₹1,06,600
Provident fund balance of ₹2,00,000 paid, taxable under Schedule XI
10% under section 392(7)₹20,000
Cess: not added for a resident payee, FA 2026 s. 3(17)(i)Nil
Tax to deduct₹20,000
Procedure
How to Apply and Pay
- 1Collect the employee declarationsForm 122 for other salary, other income, house property loss and tax already deducted (rule 204); Form 124 with evidence of claims (rule 205).
- 2Deduct with each salary paymentAt the average rate on the estimated salary for the year (s. 392(1)).
- 3Deposit by the 7thWithin seven days from the end of the month of deduction; by 30 April for March (rule 218(2)). A Government office deposits the same day where no challan is used (rule 218(1)).
- 4File Form 138 each quarterBy 31 July, 31 October, 31 January and 31 May (rule 219(1) and (4)).
- 5Issue Form 130The salary TDS certificate, by 15 June after the tax year (rule 215(1), Table Sl. No. 1).
Documents to file with it
- Tax deduction and collection account number of the employer, quoted in every challan, statement and certificate (s. 397(1)(b))
- Valid Permanent Account Number of the employee; without it, tax is deducted at the higher of the rates in force or 20% (s. 397(2)(b)(i))
- Form 122 particulars from the employee, if the employee chooses to give them (s. 392(4) and rule 204(1))
- Form 124 with evidence of claims: landlord PAN where rent paid exceeds ₹1,00,000 in the year, lender PAN for home loan interest, proof of Chapter VIII investments (rule 205)
- Statement of perquisites: in Form 130 where salary is not more than ₹1,50,000, otherwise Form 123 (rule 204(2))
Practical
How to Use This Chart
- Section 2(16) defines the average rate of income-tax as the rate arrived at by dividing the amount of income-tax calculated on the total income by such total income. So the employer estimates the income for the whole tax year, computes the tax on it at the slab rates and applies the resulting rate to each payment.
- Other income, house property loss and tax already deducted or collected elsewhere are considered only if the employee furnishes the particulars under section 392(4).
- Apart from house property loss and tax already deducted or collected, nothing the employee declares can reduce the tax deductible from salary.
Not shown on this page
- How the employer finds out whether the employee is taxed under section 202(1) or has exercised the option under section 202(4) is not in section 392. It is a matter for the Income-tax Rules, 2026 and Board instructions, which are not covered here.
- Valuation of perquisites, exemptions and deductions that go into the estimated salary income are not shown.
- The full rebate under section 156 is set out in the income-tax slabs chart.
- Paragraphs 7, 8, 9 and 10 of Schedule XI, which decide when a provident fund or superannuation payment is taxable and how much is deducted, are not reproduced.
- Marginal relief on surcharge is not set out in the tables. The calculator applies it as Paragraph F, Table 2 of Part III and section 3(13) of the Finance Act, 2026 provide, assuming no dividend or capital gains in the income.
- Quarterly payment of salary TDS with the permission of the Assessing Officer (rule 218(4): 7 July, 7 October, 7 January and 30 April) is not worked into the steps.
Official documents behind this page
- Income-tax Act, 2025 (30 of 2025), as enacted, Gazette of India ExtraordinarySection 392(1) to (8); section 202(1), Table, Sl. No. 1 to 7; section 393(6), Table, Sl. No. 1(a); section 397(2)(b)(i); section 2(16) and 2(90)(a)(ii).
- Finance Act, 2026 (4 of 2026), Gazette of India Extraordinary, 30 March 2026Section 3(10), 3(12), 3(16) and 3(17); section 3(4)(b) Table Sl. No. 10; First Schedule, Part III, Paragraph A items (I), (II) and (III) and Paragraph F, Table 1, Sl. No. 1. The Act has no section amending section 392.
- Income-tax Act, 2025 as amended by the Finance Act, 2026 (consolidated copy)Used as a second reading of section 392 and section 202(1). It carries no amendment footnote against section 392 or the section 202(1) Table. Also read: section 19(1) Table Sl. No. 2 (standard deduction), section 156, section 395(4), section 397(1)(b) and (3), section 398(1) and (3), section 427(1) and (2), sections 448 and 461, and section 476(1) as substituted by the Finance Act, 2026.
- Finance Act, 2026: First Schedule, Part III, Paragraph FTable 1 Sl. No. 1 (surcharge for individuals) and Table 2 (marginal relief), with section 3(12)(b) Table Sl. No. 10 and section 3(13) for income chargeable under section 202; section 3(7) Table Sl. No. 2 (section 392(7) is deducted under sub-section (7), so the cess exclusion in section 3(17)(i) reaches it).
- Income-tax Rules, 2026 (notified 20 March 2026), with the Income-tax (Fifth Amendment) Rules, 2026 (G.S.R. 830(E), 22 September 2026)Rule 204 (Form 122 and the statement of perquisites in Form 130 or 123), rule 205 (Form 124 and evidence of claims), rule 215(1) Table Sl. No. 1 (Form 130 by 15 June), rule 218(1), (2) and (4) (time of deposit), rule 219(1) Table Sl. No. 1 and 219(4) (Form 138 and quarterly due dates). The Fifth Amendment does not change these entries.
Disclaimer: This chart reproduces fees and rates from the official documents listed above, as read on 2 October 2026. It is general information, not professional advice for your case. Fees, rates and slabs are changed by notification, and the amount the authority’s portal or challan asks for on the day you pay is the one that applies. The calculator only adds up the figures on this page; it does not know your facts or any later change. TaxClue is not responsible for a decision taken on this page alone. Check the current notification on the official website before you pay or file.