TDS on Salary —
New Tax Regime
The new regime is the default. See the FY 2025-26 slabs your employer uses to deduct monthly TDS, the ₹75,000 standard deduction, the ₹60,000 rebate that makes salary up to ₹12.75 lakh tax-free, and worked TDS examples.
Under the new tax regime (the default) for FY 2025-26, your employer deducts TDS on salary under Section 192 using slab rates — nil up to ₹4 lakh, then 5%, 10%, 15%, 20%, 25% and 30%. A ₹75,000 standard deduction and a ₹60,000 rebate under Section 87A (for taxable income up to ₹12 lakh) mean zero tax — and zero TDS — on salary up to ₹12.75 lakh. Above that, tax is computed on the slabs plus 4% cess.
New Tax Regime Slabs Used for Salary TDS
These are the Section 115BAC slab rates your employer applies to projected annual salary (after the ₹75,000 standard deduction) to work out monthly TDS. There is no HRA, 80C or 80D relief in the new regime. See the full TDS rate chart 2025-26.
| Taxable income slab | 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% |
Slabs are on income after the ₹75,000 standard deduction. Section 87A rebate up to ₹60,000 makes tax nil for taxable income ≤ ₹12,00,000. Health & Education Cess of 4% applies on the tax after rebate; surcharge applies above ₹50 lakh. Budget 2026 kept these slabs unchanged.
The ₹60,000 rebate under Section 87A applies only up to ₹12 lakh of taxable income (₹12.75 lakh salary after standard deduction). Cross that by even a rupee and the rebate is lost, so TDS jumps from nil to slab tax on the amount above ₹4 lakh — marginal relief softens the edge just past the limit.
TDS on Salary — New Regime Examples
Annual tax and indicative monthly TDS at common salary levels, using only the ₹75,000 standard deduction (no other deductions except employer NPS under Section 80CCD(2)).
| Gross salary | Taxable (after ₹75k) | Tax on slabs | 87A rebate | Cess 4% | Annual tax | Monthly TDS |
|---|---|---|---|---|---|---|
| ₹8,00,000 | ₹7,25,000 | ₹16,250 | −₹16,250 | ₹0 | ₹0 | ₹0 |
| ₹12,00,000 | ₹11,25,000 | ₹52,500 | −₹52,500 | ₹0 | ₹0 | ₹0 |
| ₹12,75,000 | ₹12,00,000 | ₹60,000 | −₹60,000 | ₹0 | ₹0 | ₹0 |
| ₹15,00,000 | ₹14,25,000 | ₹97,500 | Nil (>₹12L) | ₹3,900 | ₹1,01,400 | ₹8,450 |
| ₹20,00,000 | ₹19,25,000 | ₹2,18,750 | Nil | ₹8,750 | ₹2,27,500 | ₹18,958 |
| ₹30,00,000 | ₹29,25,000 | ₹5,18,750 | Nil | ₹20,750 | ₹5,39,500 | ₹44,958 |
Illustrative; assumes salary only and the standard deduction alone. Actual monthly TDS is re-projected each month as salary and declarations change. Surcharge (not shown) applies above ₹50 lakh.
Salary ₹12,75,000 — new regime
Salary ₹15,00,000 — new regime
Unsure how much TDS should hit your salary each month? Get a quick check.
Talk to a TDS Expert →How Employers Compute Monthly Salary TDS
Under Section 192 the employer estimates the year’s tax on projected salary and spreads it evenly across the remaining months, adjusting whenever the estimate changes.
- Hold a valid TAN before deducting
- Collect Form 12BB (regime + any old-regime proofs)
- Deduct TDS each month on payment of salary
- Deposit challan by the 7th of the next month
- File quarterly Form 24Q (salary TDS return)
- Issue Form 16 (Parts A & B) by 15 June
For FY 2025-26 the new regime applies automatically. An employee wanting the old regime for TDS must tell the employer in writing at the start of the year (via Form 12BB). The regime chosen for TDS can still be switched at ITR time for a salaried employee — excess TDS is refunded, any shortfall is paid as self-assessment tax.
File your Form 24Q and issue Form 16 correctly and on time.
Get TDS Return Filing →New vs Old Regime — What Changes for Salary TDS
The regime you declare decides which deductions your employer can consider before computing TDS. The new regime trades away most exemptions for lower slab rates and a bigger rebate.
New regime (default)
- Standard deduction ₹75,000
- Section 87A rebate ₹60,000 (income ≤ ₹12L)
- Zero tax up to ₹12.75L salary
- No HRA / 80C / 80D / home-loan interest
- Employer NPS 80CCD(2) still allowed
Old regime (via Form 12BB)
- Standard deduction ₹50,000
- Section 87A rebate ₹12,500 (income ≤ ₹5L)
- HRA, LTA & home-loan interest allowed
- 80C up to ₹1.5L, 80D health cover
- Best where deductions are large
| Feature | New regime | Old regime |
|---|---|---|
| Standard deduction | ₹75,000 | ₹50,000 |
| HRA exemption | No | Yes |
| 80C / 80D | No | Yes |
| Home-loan interest (24b) | No | Yes |
| Employer NPS 80CCD(2) | Yes | Yes |
| 87A rebate | ₹60,000 (≤₹12L) | ₹12,500 (≤₹5L) |
Regime declared to the employer only fixes TDS; a salaried employee can still choose the other regime when filing the ITR.
If the employer fails to deduct or short-deducts salary TDS, it becomes an assessee-in-default — interest at 1% per month (non-deduction) / 1.5% (non-payment) under Section 201, plus a penalty equal to the tax under Section 271C. On joining mid-year, give the new employer Form 12B so previous salary and TDS are counted.
TDS on Salary (New Regime) — Frequently Asked Questions
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