TDS on Salary: Slabs, Calculation & How to Reduce It (FY 2025–26)
Tax Deducted at Source on salary is your employer withholding income tax from your monthly pay. Getting TDS calibrated correctly means no March shock and no large refund wait — your take-home is predictable all year.
What is TDS on Salary?
Under Section 192 of the Income Tax Act, every employer paying salary must deduct income tax at the applicable rate before disbursing pay. The deducted tax is deposited with the government by the 7th of the following month (30th April for March). At year-end, the employer issues Form 16 summarising all TDS deducted.
New Tax Regime Slabs FY 2025–26 (Default)
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹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% |
Old Regime Slabs (Optional)
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
How Employers Calculate Monthly TDS
How to Reduce TDS Legally
- Submit investment declarations at year start via Form 12BB (PPF, ELSS, LIC, NPS)
- Claim HRA exemption with rent receipts from landlord
- Declare home loan interest (Section 24(b), up to ₹2L — old regime)
- Maximise Employer NPS contribution — Section 80CCD(2), over and above ₹1.5L 80C cap
- Submit Form 12BB with actual investment proofs by February
Form 16: Your Annual TDS Certificate
Issued by employer by 15th June after year-end. Part A shows quarterly TDS deposits; Part B shows full income computation. Used to file ITR-1 for most salaried employees.
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