TDS on Salary – Section 192 Explained (FY 2026-27)
Under Section 192 of the Income Tax Act, every employer is required to deduct Tax Deducted at Source (TDS) from the employee's salary if the estimated annual income exceeds the basic exemption limit. The TDS is deducted monthly and deposited with the government on behalf of the employee.
New Tax Regime Slabs (FY 2026-27)
| Income Range | Tax Rate |
|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% (Rebate u/s 87A if total ≤ ₹7L) |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Standard Deduction: ₹75,000 available for salaried employees under the new regime.
Old Tax Regime Slabs (FY 2026-27)
| Income Range | Tax Rate |
|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% (Rebate u/s 87A if total ≤ ₹5L) |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Standard Deduction: ₹50,000 for salaried employees. Additional deductions: 80C (₹1.5L), 80D, HRA, home loan interest.
Frequently Asked Questions
How is TDS on salary calculated?▼
TDS on salary = (Annual Income Tax Liability) ÷ 12. The employer estimates your annual income, applies applicable deductions, computes income tax as per the chosen regime, adds 4% health & education cess, and divides by 12 to get the monthly TDS amount.
When is TDS on salary not deducted?▼
TDS is not deducted if your estimated annual income is below the basic exemption limit (₹3 Lakhs under new regime, ₹2.5 Lakhs under old regime), or if your net taxable income is below ₹7 Lakhs under the new regime (due to 87A rebate).
Can I reduce my TDS deduction?▼
Yes. Submit Form 12BB to your employer declaring your investments and deductions (80C, 80D, HRA, home loan interest). This reduces your employer's estimate of taxable income, lowering the monthly TDS. Under the new regime, only the standard deduction and PF are considered.
What is Form 16 and how is it related to TDS?▼
Form 16 is the TDS certificate issued by your employer after the financial year end. It shows total salary paid, total TDS deducted, and tax computation. Part A shows TDS details; Part B shows salary breakup. You need Form 16 to file your income tax return.