TDS on Salary — Section 392 (Earlier 192)
Updated June 2026 · VerifiedHow Does an Employer Deduct TDS on Salary?
Every employer paying salary to an employee is required to deduct tax at source under Section 392 of the Income-tax Act, 2025. The employer estimates the employee's total income for the Tax Year, applies the applicable slab rates, and deducts TDS proportionately each month.
- The employer considers salary, perquisites, profits in lieu of salary, and any other income declared by the employee.
- Deductions under Chapter VI-A (if old regime is chosen) and standard deduction of ₹75,000 are factored in.
- TDS is deducted at the average rate of income tax — total estimated tax divided by total estimated income.
- The deducted amount is deposited to the government by the 7th of the following month.
How Does the New vs Old Regime Impact Salary TDS?
From Tax Year 2026-27, the new tax regime is the default. The employer will deduct TDS as per new regime slab rates unless the employee specifically opts for the old regime by intimating the employer.
| Factor | New Regime (Default) | Old Regime (Opt-in) |
|---|---|---|
| Standard deduction | ₹75,000 | ₹50,000 |
| HRA exemption | Not available | Available |
| 80C / 80D deductions | Not available | Available |
| Rebate threshold | ₹12,00,000 | ₹5,00,000 |
| Tax rates | Lower slab rates | Higher slab rates |
How Is Salary TDS Calculated?
Follow these steps to compute TDS on salary:
- Compute gross salary: Basic pay + DA + HRA + special allowance + bonus + perquisites.
- Deduct exemptions: Standard deduction (₹75,000 new regime / ₹50,000 old regime), HRA exemption (old regime only), LTA, etc.
- Deduct Chapter VI-A: 80C, 80D, 80E, etc. (old regime only).
- Arrive at taxable income: Apply the applicable slab rates.
- Add surcharge & cess: Surcharge if income exceeds ₹50 lakh; 4% Health & Education Cess on tax + surcharge.
- Less rebate: Rebate u/s 87A if eligible.
- Divide by 12: Monthly TDS = Annual TDS ÷ number of remaining months.
What Is Form 16 and When Is It Issued?
Form 16 is a TDS certificate issued by the employer to the employee. It contains:
- Part A: Details of TDS deducted and deposited — generated from TRACES.
- Part B: Detailed computation of salary income, deductions, and tax payable.
The employer must issue Form 16 by 15th June following the end of the Tax Year. For Tax Year 2026-27, Form 16 is due by 15th June 2027.
What Are the Key Deadlines for Salary TDS?
| Activity | Deadline |
|---|---|
| Deposit TDS to government | 7th of the following month |
| File Form 138 (Q1: Apr–Jun) | 31st July |
| File Form 138 (Q2: Jul–Sep) | 31st October |
| File Form 138 (Q3: Oct–Dec) | 31st January |
| File Form 138 (Q4: Jan–Mar) | 31st May |
| Issue Form 16 | 15th June |
Frequently Asked Questions
What is the TDS rate on salary?
There is no flat TDS rate on salary. TDS is deducted at the average rate of income tax based on the employee's estimated total income and the applicable slab rates for the Tax Year.
Can I avoid TDS on salary if my income is below the taxable limit?
Yes. If your estimated total income for the Tax Year is below the basic exemption limit, you can submit a declaration to your employer. The employer will not deduct TDS if no tax is payable.
What happens if excess TDS is deducted from my salary?
You can claim a refund by filing your Income Tax Return (ITR). The excess TDS will be refunded to your bank account after processing by the Income Tax Department.
Is Section 192 still valid after 01-Apr-2026?
No. The Income-tax Act, 1961 (including Section 192) was repealed on 01-Apr-2026. The corresponding provision for TDS on salary is now Section 392 of the Income-tax Act, 2025.
Do I need to file ITR if TDS is already deducted from salary?
Yes. TDS deduction does not exempt you from filing your ITR. If your gross total income exceeds the basic exemption limit, filing an ITR is mandatory regardless of TDS.
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