TDS on Salary Calculator: Complete Guide to Tax Deduction at Source
Are you puzzled by the TDS deductions in your salary slip every month? You're not alone. Understanding how Tax Deduction at Source works on your salary is essential for financial planning and avoiding tax surprises. Our comprehensive guide and salary calculator will help clear your confusion.
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What is TDS on Salary?
TDS (Tax Deduction at Source) on salary is a method where your employer deducts tax directly from your monthly income before paying you. This system ensures regular tax collection throughout the financial year rather than a lump sum payment during tax filing season.
Think of it as paying your taxes in installments—the government collects a portion of what you owe each month instead of waiting for a single payment at year-end.
How is TDS on Salary Calculated?
The calculation process isn't as complicated as it might seem:
- Your employer first determines your annual income, including basic salary, allowances, perquisites, and other benefits.
- Then they subtract eligible deductions like HRA, LTA, professional tax, and investments under various sections.
- The remaining amount is your taxable income, on which tax is calculated as per the applicable tax slab rates.
- This annual tax amount is divided by 12 to find your monthly TDS.
For accurate calculations, you can use this comprehensive salary calculator to determine your exact TDS amount.
TDS Calculator for Salary: Tools to Help You
Using a TDS calculator for salary can save you time and ensure accuracy. These online tools require just a few inputs:
- Your gross monthly salary
- Eligible deductions and exemptions
- Tax regime choice (old vs. new)
- Investment declarations
Within seconds, you'll know exactly how much TDS should be deducted from your salary.
TDS Rates on Salary: Latest Tax Slabs (FY 2025-26, AY 2026-27)
Your TDS rate depends on your income bracket and the tax regime you choose. For the financial year 2025-26 (Assessment Year 2026-27), the latest tax slabs are:
New Tax Regime:
| Income Slab | Tax Rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4 lakh - ₹8 lakh | 5% |
| ₹8 lakh - ₹12 lakh | 10% |
| ₹12 lakh - ₹16 lakh | 15% |
| ₹16 lakh - ₹20 lakh | 20% |
| ₹20 lakh - ₹24 lakh | 25% |
| Above ₹24 lakh | 30% |
Under Budget 2025, individuals with income up to ₹12,00,000 will have zero tax liability for FY 2025-26 (AY 2026-27) under the new tax regime, thanks to standard deduction and rebates.
To calculate your exact tax liability under the new regime, try this user-friendly salary calculator.
Old vs New Tax Regime: Which Should You Choose?
The old tax regime offers various deductions and exemptions but has higher tax rates, while the new tax regime offers lower tax rates but fewer deductions. Your choice depends on your individual financial situation and investment patterns.
Use our comprehensive salary calculator to compare both regimes and determine which is more beneficial for you.
Understanding Surcharge and Marginal Relief
What is Surcharge?
A surcharge is an additional tax levied on taxpayers with income above certain thresholds. It's calculated as a percentage of the income tax amount, not on the total income.
What is Marginal Relief?
Marginal relief is provided to ensure that the increase in tax liability due to surcharge isn't more than the increase in income that pushed you into a higher surcharge bracket.
Deductions and Exemptions: Old vs New Regime
Exemptions Not Available Under New Regime:
- House Rent Allowance (HRA)
- Leave Travel Allowance (LTA)
- Standard Deduction
- Professional Tax
- Income from Minor Child
- Certain allowances under Section 10
Deductions Not Available Under New Regime:
- Section 80C investments (PPF, ELSS, Life Insurance, etc.)
- Section 80D (Medical Insurance)
- Section 80TTA/TTB (Interest on Savings Account)
- Home Loan Interest Deduction under Section 24
- Other deductions under Chapter VI-A
To understand how these differences affect your take-home salary, use our detailed salary calculator.
Common Questions About TDS on Salary
Can I Avoid TDS on My Salary?
Not entirely, but you can reduce it by:
- Submitting investment proofs to your employer
- Declaring eligible tax-saving investments under Section 80C (if opting for old regime)
- Claiming deductions for home loan interest (if applicable and opting for old regime)
- Providing rent receipts for HRA exemption (if applicable and opting for old regime)
Calculate potential savings using the TDS on salary calculator.
What If Excess TDS is Deducted?
If too much TDS is deducted, don't worry! You can claim a refund when filing your income tax return. The excess amount will be returned directly to your bank account.
When Should I Submit Investment Proofs?
Most companies ask for investment declarations at the beginning of the financial year and proof submission by January or February. Timely submission ensures accurate TDS calculation for the last quarter of the financial year.
Benefits of Using a TDS on Salary Calculator
A good TDS calculator helps you:
- Plan your finances better by predicting take-home salary
- Identify tax-saving opportunities in advance
- Avoid last-minute tax-saving rushes
- Compare different tax regimes to choose the most beneficial one
When Can I Opt for Old vs New Regime?
For Salaried Individuals:
- You can choose between the old and new tax regimes each year at the time of filing your ITR
- You can communicate your choice to your employer at the beginning of the financial year for TDS purposes
For Self-Employed Individuals:
- Once you opt for the new tax regime, you can switch back to the old regime only once
- After switching back, you cannot opt for the new regime again unless you cease to have business income
Use our salary calculator to see the impact of your regime choice on your overall tax liability.
Final Thoughts
Understanding TDS on salary isn't just about compliance—it's about taking control of your finances. By using a TDS calculator and planning your investments strategically, you can optimize your tax outgo while staying fully compliant with tax laws.
Remember, tax planning is an integral part of financial planning. The more you understand how TDS works, the better equipped you are to make informed financial decisions.
Do you have questions about TDS on your salary? Which tax regime works better for your situation? Try our comprehensive salary calculator to find out!
Frequently Asked Questions
Is TDS applicable on pension income?
Yes, TDS is applicable on pension income just like salary income. The employer (or pension disbursing authority) is responsible for deducting TDS as per the applicable tax slabs.
How can I check my TDS deduction details?
You can check your TDS details in Form 26AS, which is available on the income tax e-filing portal. You can also find TDS details in your salary slip provided by the employer.
Can I claim a refund if TDS is deducted even when my income is below taxable limit?
Yes, if your total income falls below the taxable limit but TDS has been deducted, you can claim a refund by filing your income tax return.
How is TDS calculated for multiple income sources?
If you have multiple income sources, each employer will deduct TDS based on the salary they pay. However, you're responsible for paying additional tax (if any) on your total income from all sources at the time of filing your return.
Is TDS calculated on gross salary or net salary?
TDS is calculated on your taxable income, which is your gross salary minus eligible deductions and exemptions based on the tax regime you choose. Use our salary calculator to determine your exact taxable income.
