TDS Calculator

TDS or Tax Deducted at Source is the process through which the government collects income tax at the source of generation of income. This system ensures that tax collection is done at a regular frequency, rather than leaving it till the end of the year. The employer will deduct an estimated monthly tax payable and deposit it with the Income Tax Department. In the case of salaried individuals, TDS calculation will depend on their expected annual income, investment under the old system, and applicable tax slab. At the end of the year, the employer will provide you with a Form 16 containing the details of TDS deducted.

Your employer calculates TDS by projecting your annual salary, subtracting applicable exemptions and deductions, and applying the tax slab rates. Here are the rates under both regimes.

• Surcharge: 10% on income above Rs 50 lakh, 15% above Rs 1 crore, 25% above Rs 2 crore
• Health and education cess: 4% on total tax + surcharge
• Standard deduction: Rs 75,000 (new regime), Rs 50,000 (old regime)
• Section 87A rebate: No tax if taxable income up to Rs 12 lakh (new) or Rs 5 lakh (old)

Here's how your employer calculates TDS each month.

Step 1: Calculate total annual gross salary

Calculate the sum of all the salaries, like basic salary, HRA, special allowance, bonuses, and other taxable incomes. The Employer's contribution to PF and gratuity will not be considered here.

Step 2: Deduct exemptions (only applicable to the old regime)

In the case of the old regime, the deductions would include HRA (as per actual rent paid), LTA (as per actual travel), and a standard deduction of Rs 50,000. In the case of a new regime, only the Rs 75,000 standard deduction is considered.

Step 3: Subtract deductions (old regime only)

Section 80C (up to Rs 1.5 lakh for PF, ELSS, insurance, PPF), Section 80D (Rs 25,000 for health insurance, Rs 50,000 for senior parents), home loan interest under Section 24 (up to Rs 2 lakh), NPS under Section 80CCD(1B) (additional Rs 50,000). None of these applies under the new regime.

Step 4: Apply tax slabs and calculate annual tax

Apply the applicable slab rates to the net taxable income. Add 4% cess. Divide by 12 to get the monthly TDS. Your employer adjusts this monthly as you submit investment proofs or declarations.

Under the old tax regime, these deductions can significantly reduce your TDS burden.

Most companies follow a standard timeline for investment declarations and proof submission. Missing these deadlines means higher TDS throughout the year, even if you've made the investments.

• April-May: Submit your investment declaration (Form 12BB) at the start of the financial year. This is a projection of investments you plan to make, and your employer uses it to calculate estimated TDS.
• January-February: Submit actual investment proofs (receipts, certificates, rent agreements). Your employer verifies these and adjusts TDS for the remaining months.
• March: Final TDS adjustment. If you submitted proofs late or your actual investments differ from declarations, the March salary may see a large TDS deduction or refund.
• After March 31: If excess TDS was deducted, file your income tax return (ITR) by July 31 to claim a refund. Refunds typically arrive within 2-6 weeks of e-verification.