TDS Calculator on Salary

What TDS on salary means

Section 392 asks an employer to take income tax out of salary as it is paid. You do not settle the whole bill at year end. The employer works out your tax for the year, spreads it over the months left, and pays it to the government against your PAN.

Unlike other TDS rules, section 392 has no flat rate and no threshold. Tax comes out at your average rate. That rate moves as your income and your declarations change through the year.

Section 192 is now section 392

The Income-tax Act, 2025 came into force on 1 April 2026 and replaced the Income-tax Act, 1961. Salary TDS moved from section 192 to section 392, the rebate from section 87A to section 156, and the standard deduction from section 16(ia) into the table under section 19. The Act also drops the previous year and assessment year pair in favour of a single tax year, so the year running from April 2026 is tax year 2026-27 and its return is filed in 2027.

None of this changes the arithmetic. The Finance Act 2026 kept the slabs, the ₹75,000 standard deduction, the ₹60,000 rebate, the surcharge bands and the 4 per cent cess exactly as they were. Salary paid up to 31 March 2026 stays under section 192, so a Form 16 or payslip from last year citing the old number is not wrong.

How monthly TDS is calculated

The employer runs four steps at the start of the year, and again whenever your inputs change.

• Estimate gross salary for the full year, including any bonus or rise already known.
• Apply the standard deduction. Under the old regime, apply the deductions and exemptions you have declared.
• Work out tax on what is left at slab rates. Apply the section 156 rebate, then add surcharge if it applies, plus 4 per cent health and education cess.
• Spread the yearly tax over the months left to get the monthly cut.

This is why TDS jumps in the last quarter. Declare investments in April and never make them, and the employer redoes the sums in January, then recovers the gap over the final three months.

Choosing a regime for TDS

Under FY 2026-27 (AY 2027-28), the new regime is the default. To use the old one, tell your employer at the start of the year. Salaried staff can still switch between the two each year when they file.

What you declare to your employer only sets how much comes out each month. Pick wrong and the difference is settled as a refund or a top-up when you file. That affects your cash flow rather than your final tax bill.

Reducing TDS legitimately

• Send investment declarations in April, not January, so the benefit spreads over twelve months instead of three.
• Give rent receipts and your landlord's PAN where yearly rent tops ₹1,00,000, to claim HRA exemption under the old regime.
• Declare interest on a self-occupied home loan. The old regime allows up to ₹2,00,000.
• Report pay from a previous employer in the same year, so your current employer cuts the right amount rather than leaving a large bill at filing.
• Send Form 12BB with proof before your employer's cut-off. Undeclared investments cannot be counted.

Verifying what was deducted

Every cut your employer makes should show in Form 26AS and the Annual Information Statement against your PAN. It is also summed up in the Form 16 you get after year end. Check that the TDS in Form 16 Part A matches Form 26AS before you file.

Where an employer takes the money but does not pay it over, the credit will not show in Form 26AS and you cannot claim it. Better to spot that during the year than at filing.