Page last updated:

TDS on Salary: How Much Your Employer Deducts

Your employer deducts TDS on salary every month based on your estimated tax for the whole year, split across the remaining months. Under the default new tax regime, salary up to ₹12.75 lakh a year has no TDS because of the ₹75,000 standard deduction and the Section 87A rebate.

Quick answer (FY 2025-26 and FY 2026-27)

TDS rate
Slab rates (average)
Threshold
Taxable income above ₹12 lakh (new regime)

TDS on salary: rate chart

Payment Section (1961 Act) New section (2025 Act) Rate Threshold
Salary, bonus, allowances and perquisites 192 392 Average rate of tax on estimated annual income Income above the basic exemption (no TDS if tax is nil after rebate)
Salary to a non-resident employee 192 392 Slab rates, no 87A rebate Income above the basic exemption

New regime tax slabs used for salary TDS (FY 2025-26 and FY 2026-27)

Up to ₹4 lakh: Nil. ₹4–8 lakh: 5%. ₹8–12 lakh: 10%. ₹12–16 lakh: 15%. ₹16–20 lakh: 20%. ₹20–24 lakh: 25%. Above ₹24 lakh: 30%. A 4% health and education cess is added to the tax.

A resident individual with taxable income up to ₹12 lakh gets a rebate of up to ₹60,000, so the tax is nil. Salaried employees also get a ₹75,000 standard deduction, which takes the no-TDS limit to ₹12.75 lakh of salary. Budget 2026 did not change these slabs.

How the employer calculates monthly TDS

The employer estimates your salary for the full year, subtracts the standard deduction (and, in the old regime, the deductions and HRA you declare), works out the annual tax, and divides it over the months left in the year. If your salary changes or you declare investments late, the remaining months are adjusted.

The new regime applies unless you tell your employer you want the old regime. That choice for TDS can be changed when you file your return. Proofs for old-regime deductions are given in Form 12BB.

Form 16 and the new section

Employers issue Form 16 by 15 June after the year ends, showing salary and TDS. From 1 April 2026 salary TDS is governed by Section 392 of the Income-tax Act, 2025 instead of Section 192; the method of deduction is unchanged.

TDS on salary calculator

Runs in your browser. Nothing you enter is sent anywhere.

Taxable salary (after ₹75,000 standard deduction)₹0
Annual tax incl. 4% cess (new regime)₹0
Monthly TDS (12 equal months)₹0

Estimate for a resident under the new regime. Marginal relief is applied above ₹12 lakh; surcharge (above ₹50 lakh) is added without surcharge marginal relief. Your employer may spread tax differently if your salary changes during the year.

Frequently Asked Questions

How much salary is tax-free in FY 2026-27?
Under the new regime, salary up to ₹12.75 lakh has no tax: ₹12 lakh of taxable income is covered by the 87A rebate, plus the ₹75,000 standard deduction.
How is TDS on salary calculated?
The employer estimates your annual taxable salary, computes tax at slab rates (with rebate and cess), and deducts it in equal monthly instalments over the rest of the year.
Which section covers TDS on salary from April 2026?
Section 392 of the Income-tax Act, 2025. It replaces Section 192 of the 1961 Act from 1 April 2026.
Is the new tax regime applied by default for salary TDS?
Yes. Employers apply the new regime unless you choose the old regime by informing them.
Why is TDS deducted even though my salary is below ₹12.75 lakh?
Usually because the employer has counted bonuses or other income that take your estimated income above the limit, or applied the old regime. Check the computation with HR and claim any excess as a refund in your return.
What are the new regime slabs for FY 2026-27?
Nil up to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% for each ₹4 lakh band up to ₹24 lakh, and 30% above ₹24 lakh, plus 4% cess.
What is marginal relief for salary just above ₹12 lakh?
If taxable income is slightly above ₹12 lakh, the tax cannot exceed the income above ₹12 lakh. For example, at ₹12,10,000 taxable income the tax is limited to ₹10,000 plus cess.
When do I get Form 16?
Employers must issue Form 16 by 15 June following the end of the financial year.
When does the employer deposit TDS on salary and file the return?
TDS is deposited by the 7th of the following month (30 April for March). The employer files a quarterly TDS return in Form 24Q and issues Form 16 to the employee by 15 June after the year ends.
What happens if TDS on salary is not deducted or deposited on time?
Interest is charged at 1% a month (or part of a month) from the date TDS was deductible until it is deducted, and 1.5% a month from deduction until deposit. Late filing fees, penalties and disallowance of the expense can also apply.
How can the payee check the TDS deducted?
In Form 26AS and the Annual Information Statement (AIS) on the income tax portal. The TDS is then claimed as a credit against tax in the income tax return, and any excess is refunded.
Did the Income-tax Act 2025 change TDS rates from April 2026?
No. From 1 April 2026 the new Act renumbered the provisions (TDS is mainly in Sections 392 and 393), but the rates and thresholds carried over. Returns and challans for payments from that date use the new section references.

New section references are to the Income-tax Act, 2025, in force from 1 April 2026. Verify the table serial number against the official text before quoting it in a return or notice reply.

TDS on other payments

TDS on Rent
TDS on Purchase of Goods
TDS on Property Purchase
TDS on Sale of Property
TDS on Commission
TDS on Professional Fees
TDS on Contractor Payments
TDS on Partners' Remuneration
TDS on FD Interest
TDS on GST (TDS under GST)
TDS on Cash Withdrawal
TDS Section Finder
Full TDS rate chart for every section
Income Tax Calculator
New vs old regime for FY 2025-26 and 2026-27