TDS Calculator
TDS Calculator
Estimated TDS Amount
₹10,400
What Is TDS (Tax Deducted at Source)?
TDS or Tax Deducted at Source is the government's way of collecting income tax at the point where income is generated. Instead of waiting for you to pay tax at year-end, your employer deducts an estimated monthly tax amount from your salary and deposits it with the Income Tax Department. For salaried employees, TDS is calculated based on your projected annual income, declared investments (under the old regime), and the applicable tax slab. Your employer issues Form 16 at year-end summarizing all TDS deductions. If excess TDS was deducted, you claim a refund when filing your income tax return.
TDS on Salary: Tax Slab Rates for FY 2025-26
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)
| Income Slab | New Regime (Default) | Old Regime |
|---|---|---|
| Up to Rs 4,00,000 | Nil | Up to Rs 2,50,000: Nil |
| Rs 4,00,001 - Rs 8,00,000 | 5% | Rs 2,50,001 - Rs 5,00,000: 5% |
| Rs 8,00,001 - Rs 12,00,000 | 10% | Rs 5,00,001 - Rs 10,00,000: 20% |
| Rs 12,00,001 - Rs 16,00,000 | 15% | Above Rs 10,00,000: 30% |
| Rs 16,00,001 - Rs 20,00,000 | 20% | |
| Rs 20,00,001 - Rs 24,00,000 | 25% | |
| Above Rs 24,00,000 | 30% |
How to Calculate TDS on Salary: Step by Step
Here's how your employer calculates TDS each month.
Step 1: Compute gross annual salary
Add up all salary components: basic, HRA, special allowance, bonuses, and any other taxable income. Exclude employer PF and gratuity provision (these are employer costs, not your income for tax purposes).
Step 2: Subtract exemptions (old regime only)
Under the old regime, subtract HRA exemption (based on actual rent paid), LTA (for actual travel), and standard deduction of Rs 50,000. Under the new regime, only the Rs 75,000 standard deduction applies.
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 apply 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 monthly TDS. Your employer adjusts this monthly as you submit investment proofs or declarations.
Key Tax Exemptions and Deductions for Salaried Employees
Under the old tax regime, these deductions can significantly reduce your TDS burden.
| Section | Deduction For | Maximum Amount | Available in New Regime? |
|---|---|---|---|
| 80C | PF, ELSS, PPF, life insurance, tuition fees | Rs 1,50,000 | No |
| 80D | Health insurance premium | Rs 25,000 (self) + Rs 50,000 (parents 60+) | No |
| 80CCD(1B) | NPS contribution | Rs 50,000 (additional) | No |
| 80CCD(2) | Employer NPS contribution | 14% of basic (central govt) / 10% (others) | Yes |
| 24(b) | Home loan interest | Rs 2,00,000 | No |
| 10(13A) | HRA exemption | Based on actual rent, salary, city | No |
| 10(5) | LTA (Leave Travel Allowance) | Actual travel cost, twice in 4 years | No |
| Standard Deduction | Flat deduction from salary | Rs 75,000 (new) / Rs 50,000 (old) | Yes (Rs 75K) |
When Should You Submit Investment Proofs to Your Employer?
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.
Frequently Asked Questions
What is TDS on salary and who deducts it?
How is TDS on salary calculated?
What is the difference between the old and new tax regime for TDS?
What happens if excess TDS is deducted from salary?
How can I reduce TDS deduction on my salary?
Written by Adithyan RK