How does an employer calculate TDS on salary?

Under Section 192 the employer estimates the employee's salary for the whole year, deducts the standard deduction and declared deductions, computes tax at slab rates with rebate, surcharge and cess, and deducts one-twelfth each month. The estimate is revised whenever salary or declarations change.

Which regime does the employer use by default?

The new regime. From FY 2023-24 an employee who wants the old regime must inform the employer, usually through the annual declaration; otherwise TDS is computed under Section 115BAC.

Why did my TDS jump in the last quarter?

Because the year's estimate changed late: a bonus, a hike, or proofs that were not submitted for declared deductions. The shortfall is recovered over the remaining months, so a January change is spread across only three slips.

Is TDS deducted if salary is below ₹12 lakh under the new regime?

If the estimated total income is ₹12 lakh or less (₹12.75 lakh of salary after the ₹75,000 standard deduction), rebate under 87A makes the tax nil and no TDS is deducted, provided there is no special-rate income.

What if I switch jobs mid-year?

Give the new employer Form 12B with the previous salary and TDS. The new employer then deducts on the combined income; otherwise both employers apply the exemption and you end up with a shortfall and interest at return time.

TDS on Salary Calculator

How much your employer should deduct each month under Section 192, for the new or old regime, with mid-year catch-up.

Switch tool

Regime declared to employer

Annual gross salary (₹)

₹

Other income declared (₹)

₹

Months left in the year (incl. this one)

TDS already deducted this year (₹)

₹

Section 192 deduction

Taxable incomeafter ₹75,000 standard deduction

₹ 0

Tax at slab rates

₹ 0

Cess 4%

₹ 0

Annual TDStotal tax for the year

₹ 0

Monthly TDS from nowbalance ÷ 12 months

₹ 0

Flat monthly deduction if spread over all 12 months: ₹ 0.

Indicative only. FY 2025-26 rates. Assumes income is spread evenly and the declared figures are accepted by the employer. Perquisite valuation, relief under 89 and TDS on other employers' salary are not modelled.

How it works

Estimate the year

Gross salary less the standard deduction, plus other income you declared, less deductions (old regime only) gives taxable income.

Tax for the year

Slab tax, rebate 87A, surcharge and 4% cess give the year's liability. That is the annual TDS the employer must collect.

Spread the balance

Whatever has not yet been deducted is divided across the remaining months, which is why TDS jumps after a late declaration.

Why the TDS on your payslip changes mid-year

Section 192 asks the employer to deduct tax on the estimated salary for the whole year, averaged over the months. Any change in the estimate, such as a bonus, a hike, proofs submitted or missed, or a switch of regime, is caught up over the months that remain. A proof submitted in January therefore produces a large refund in that month's slip, and a bonus in March can wipe out the net pay. This calculator shows the annual figure and the monthly figure from any point in the year.

New regime is the default

From FY 2023-24 the employer deducts under the new regime unless the employee opts for the old one in writing.

Standard deduction

₹75,000 under the new regime and ₹50,000 under the old regime is applied by the employer automatically.

Form 12BB

Other income and deductions enter the estimate only when declared in Form 12BB with proofs; the employer may ignore undeclared ones.

Previous employer

Salary and TDS from a previous employer in the same year should be declared in Form 12B so the new employer deducts on the combined figure.