Who Should Use This TDS on Salary Calculator?

This calculator is designed for:

• Employees receiving salaries in India
• HR professionals managing payroll and tax compliance
• Freelancers transitioning to employment
• Taxpayers comparing Old and New Regimes

FAQs – TDS on Salary in India

1. What is TDS on Salary?

It’s the tax deducted by your employer from your monthly salary and paid to the government based on your total taxable income.

2. When is TDS deducted?

It is deducted either at the time of payment or credit of salary, whichever is earlier.

3. Can I save tax under both regimes?

Yes. The Old Regime allows deductions like 80C, 80D, HRA, etc., while the New Regime offers lower slab rates but fewer deductions.

4. What if excess TDS is deducted?

You can claim a refund by filing your Income Tax Return (ITR).

5. Is PAN required?

Yes. Without a PAN, TDS is deducted at 20% flat rate.

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How to Save Tax – Old vs New Regime

Old Tax Regime

• 80C investments (PPF, ELSS, LIC) – up to ₹1.5 lakh
• 80D – medical insurance up to ₹25,000
• HRA exemption for rent paid
• LTA exemption (on leave travel)

New Tax Regime

• Lower tax rates for various slabs
• Only Standard Deduction of ₹50,000 is allowed
• No 80C, 80D, HRA, or LTA deductions

Recommendation: Use the calculator above to compare both regimes before deciding.

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How TDS on Salary is Calculated

1. Estimate total annual income
2. Apply eligible deductions based on regime
3. Calculate net taxable income and tax liability
4. Divide by 12 for monthly TDS deduction
5. Employer deducts and deposits TDS monthly

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TDS Due Dates for Employers

• Monthly TDS: Deposit by 7th of next month
• March Salary TDS: Deposit by 30th April
• TDS Return (Form 24Q): File quarterly

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Consequences of Non-Deduction or Non-Payment of TDS

• Interest @ 1% per month for non-deduction
• Interest @ 1.5% per month for non-payment
• Disallowance of salary expenses under Section 40(a)(ia)
• Penalty for late TDS return filing under Section 271H

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Who is Required to Deduct TDS on Salary?

As per Section 192 of the Income Tax Act, 1961, any person responsible for paying salaries is required to deduct TDS at the time of payment. This includes:

• Private Companies
• Public Sector Companies
• Government Bodies
• Partnership Firms
• LLPs (Limited Liability Partnerships)
• Proprietorship Firms (only if subject to Tax Audit)
• Individuals or HUFs (only if covered under Tax Audit provisions in the preceding financial year)

Important Points to Note:

• TDS must be deducted only when the estimated salary income exceeds the basic exemption limit.
  • ₹2.5 Lakhs for individuals below 60 years (Old Regime)
  • ₹3 Lakhs under the New Regime (from FY 2023-24)
  • ₹3 Lakhs for senior citizens (60–79 years)
  • ₹5 Lakhs for super senior citizens (80+ years)
• If the employee has submitted investment declarations or Form 12BB, the employer must consider all eligible exemptions/deductions before calculating TDS.
• Individuals and HUFs not covered under tax audit (i.e., turnover less than ₹1 crore for business or ₹50 lakhs for profession in the previous year) are not required to deduct TDS.
• The employer must obtain the employee’s PAN. If not provided, TDS must be deducted at the higher rate of 20% under Section 206AA.
• TDS deduction is applicable even if salary is paid in cash, cheque, or bank transfer.
• TDS must be deposited to the government by the 7th of the following month (except for March, which is due by April 30).
• The employer must issue a Form 16 (TDS certificate) to the employee by 15th June of the next financial year.

Example:
If a sole proprietor whose turnover exceeded ₹1 crore in the previous year pays ₹40,000 per month to an accountant, they must deduct TDS under Section 192.