Updated on: January 6th, 2025 3:55 PM

TDS on Salary under Section 192 - Rates, Forms, & Calculation

TDS (Tax Deduction at Source) on Salary is the amount deducted from an employee's income at the source by an authorized deductor and deposited to the Income tax department. Section 192 is synonymous with the TDS on salary section. It outlines guidelines for employers to deduct the TDS from the salary of an employee before an actual payment. Calculating TDS under Section 192 involves considering your gross salary, applicable TDS deduction on salary and exemptions, and arriving at an estimated tax amount. This article gives comprehensive information regarding the salary TDS section, what is TDS in salary, rates, how to calculate it, TDS on salary limit, new TDS rules and forms.

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What is Tax Deduction at Source (TDS)?

TDS, or "Tax Deduction at Source", involves the deduction from salary income and remittance of income tax by the person paying the income. The person deducting the tax is known as "Tax Deductor", the person from whom the tax is deducted at source is called "Tax Deductee". TDS is usually required on the following transactions:

• Salary payments
• Interest on securities
• Dividend payments
• Interest other than interest on securities
• Winning from Lottery or Crossword Puzzle
• Winning from Race Horse
• Payment to Contractor and Sub-Contractors
• Insurance Commission
• Deposits under NSS
• Repurchase of Units by Mutual Fund or UTI
• Commission on the sale of Lottery Tickets
• Commission or Brokerage
• Rent
• Transfer of immovable property
• Fees for professional or technical services
• Income with respect to units
• Compensation on acquisition of immovable property

Also read: Difference between TDS and Income tax return

What is TDS in Salary?

To answer the question, what is TDS in salary, it is essentially means that a portion of your income tax is deducted by your employer when they pay your salary. This amount is then deposited with the government on your behalf. Before the deduction of TDS, the employer must first obtain TAN Registration. A TAN number, or Tax Deduction and Collection Account Number, is a 10-digit alphanumeric number used by the Income Tax Department to track all TDS deduction on salary and remittances. The employer will not deduct the TDS if it is below or on the specified TDS deduction on salary limit.

Who deducts TDS on salary?

The responsibility to deduct the salary as per TDS rates falls upon every employer who pays a taxable salary to their employees, as per the salary TDS section. This includes:

• Individuals
• Companies (Private and Public)
• Hindu Undivided Families (HUFs)
• Trusts (Societies, charitable institutions, etc.)
• Partnership firms
• Co-operative Societies

Employers must obtain a Tax Deduction and Collection Account Number (TAN). This number is used to deduct TDS from employee salaries based on the applicable tax slabs and investment declarations submitted by the employees. The deducted TDS must be deposited with the Income Tax Department. Finally, at the end of the financial year, employers are responsible for issuing Form 16 to each employee. This form details the total TDS deducted from their salary throughout the year.

When is the TDS deducted from salary?

TDS is generally deducted when your salary is paid, regardless of whether it's early, on time, or late. This applies to both monthly and yearly salaries. However, there are exceptions. If your annual salary is below the basic exemption TDS on salary limit ( ₹2,50,000 for FY 2024-25), then no TDS will be deducted. Additionally, if you don't have a Permanent Account Number (PAN), TDS may be deducted at a higher rate of 20%.

TDS rate on Salary

TDS deduction on salary is based on the income tax slab rates for the applicable financial year. Your rates for deduction from salary income depend upon which tax regime you belong to. Below are the TDS rates chart on salary for both the old and new tax regimes. In the table below, we have given the TDS rate on Salary slab for the Old Tax Regime

For Individuals Below 60 years:

Income Slabs	TDS rate on salary
Up to ₹2.5 lakh	NIL
₹2.5 lakh – ₹5 lakh	5%
₹5 lakh – ₹10 lakh	20%
Above ₹10 lakh	30%

For Senior Citizens (Between 60-80 years of age):

Income Slabs	TDS rate on salary
₹0 – ₹3 lakh	NIL
₹3 lakh – ₹5 lakh	5%
₹5 lakh – ₹10 lakh	20%
Above ₹10 lakh	30%

For Super Seniors ( Above 80 years of age):

Income Slabs	TDS rate on salary
₹0 – ₹5 lakh	NIL
₹5 lakh – ₹10 lakh	20%
Above ₹10 lakh	30%

TDS rate on Salary for New Tax Regime

Income Slab	TDS rate on salary
Upto ₹3,00,000	Nil
₹3,00,001 - ₹6,00,000	5%
₹6,00,001 - ₹9,00,000	10%
₹9,00,001 - ₹12,00,000	15%
₹12,00,001 -₹15,00,000	20%
₹15,00,000 and above	30%

Since the new tax regime became the default from the FY 2023-24, use Form 10IEA to continue with the old income tax regime. Learn more: TDS Rate Charts for FY 2024-2025

How to Calculate TDS on Salary Section 192?

The following steps can be used by employers to calculate TDS on an employee’s salary, Step 1: Estimate Employee's Annual Salary - The employer considers the employee's estimated salary for the entire financial year. Step 2: Account for Exemptions - Exemptions under Section 10 of the Income Tax Act are factored in. These may include House Rent Allowance (HRA), Leave Travel Concession (LTC), etc. The employee must submit investment proofs or relevant documentation to claim these exemptions. Step 3: Calculate Taxable Income - The estimated annual exemptions are subtracted from the gross annual salary to arrive at the taxable income amount. Step 4: Determine Tax Rate - The applicable tax slab rate for the employee's taxable income is determined based on their income tax regime (old or new) and age. Step 5: Calculate Annual Tax Liability - The tax rate is applied to the taxable income to determine the employee's estimated annual tax liability. Step 6: Divide by Remaining Months - The annual tax liability is divided by the number of months remaining in the financial year for which TDS applies. This gives the monthly TDS amount the employer should deduct from the employee's salary. It will give the answer for how much TDS is deducted on salary per month. Our IndiaFilings tax experts help you calculate the TDS amount accurately and file it on time.

How much TDS is deducted on salary per month?

The amount of TDS deducted on salary per month depends on an individual’s total annual income, applicable income tax slabs, and eligible deductions under the Income Tax Act. Employers calculate the TDS based on the employee’s estimated annual taxable income and deduct it proportionally each month. As we detailed in the TDS calculation section, to determine how much TDS is deducted on salary per month, the employer considers factors such as exemptions (e.g., HRA, LTA), deductions (e.g., under Sections 80C, 80D), and any declared investments. Employees can request their employer to adjust the TDS by submitting proof of investments and eligible deductions during the financial year.

Tax Deduction News: Adjustment of TDS on Non-Salary Income for Salaried Employees

New TDS rules: From October 1, 2024, the government introduced a provision to reduce the TDS liability for salaried employees by adjusting the TDS/TCS already deducted on non-salary income when calculating the TDS to be deducted from salary income. This new TDS on salary change ensures that salaried individuals are not subjected to double taxation. Previously, if an employee earned both salary and non-salary income (like interest or dividends), the employer had to deduct TDS on the entire amount, irrespective of the TDS already paid on the non-salary income. With the amendment, the employer can now adjust the TDS already deducted on the non-salary income, thereby reducing the overall TDS deducted from the salary. This new TDS on salary change was implemented in the TDS software by Protean (formerly NSDL e-Governance) from December 27, 2024, and the updated TDS certificates reflecting these changes will appear from the Q4 of the 2024-25 financial year onwards. Therefore, starting in January 2025, salaried employees will be eligible for normal TDS deductions instead of the extra deductions they had been subjected to previously, as per new TDS rules.

Is it possible to claim back TDS?

Yes, you can claim back TDS (Tax Deducted at Source) if the amount deducted was more than your actual tax liability. This can happen for various reasons like claiming exemptions you weren't aware of earlier or not submitting investment proofs on time. To claim the refund, you must file your Income Tax Return (ITR) and accurately report your income and deductions. The Income Tax Department will process your return and initiate a refund if applicable. Also read: How to check ITR refund status?

Forms for TDS deduction on Salary

In the context of Tax Deducted at Source (TDS) on salary, the primary form involved is Form 24Q. Employers utilise this form to declare the TDS deducted from employee salaries to the government every quarter. Employees themselves generally do not need to complete any forms for salary-related TDS. However, they will receive Form 16 (TDS Certificate) after the financial year. This document details the total salary earned and the corresponding TDS deducted by the employer. Here’s the Form 24Q for your reference, 

Form No.16 - TDS Certificate

Below, we have given the format of Form No.16A (TDS Certificate) for your reference,  Also read: Section 192A of the Income Tax Act

TDS on Salary - Due Dates

For salaried employees, the due dates for depositing TDS and filing returns are crucial to ensure compliance with tax regulations.

Deposit of TDS

• Generally, TDS must be deposited by the 7th of the month following the deduction from salary income.
• For TDS deducted in March, the deposit is due by April 30, or March 31 for certain government deductors.

TDS Return filing

In the below table, we have given the due dates for TDS return filing,

Quarter	Period	Due Date
Q1	April - June	July 31
Q2	July - September	October 31
Q3	October - December	January 31
Q4	January - March	May 31

Non-compliance for TDS Deduction on Salary Section

If an employer deducts TDS but fails to deposit it with the government, the employee is not responsible for paying the tax. However, if the employer doesn't deduct TDS, the employee must pay the tax themselves. In case of late deduction from salary income, interest is charged at 1% per month, while late remittance to the government attracts 1.5% interest per month. If TDS returns are filed late, a fee of ₹200 per day is applied, up to the total amount of TDS. Additionally, the employer may face a penalty equal to the amount of TDS not deducted or remitted, along with interest and fees.

Know more about income tax penalties.

Tax Rebate in New Tax Regime

Utilising the Tax rebate in New Tax regime, individuals can significantly reduces their income tax liability. The eligibility and maximum rebate limits vary between the old and new tax regimes, providing notable advantages under the latter for eligible taxpayers.

Rebate Under Section 87A:

1. Income Up to ₹5 Lakh:
   • Tax rebate in Old Tax Regime: A tax rebate of up to ₹12,500 is applicable, effectively reducing the tax liability to zero for resident individuals earning up to ₹5,00,000.
   • Tax rebate in New Tax Regime: The rebate limit is enhanced to ₹25,000 for resident individuals, but this applies to total incomes not exceeding ₹7,00,000, ensuring no tax liability within this threshold.
2. Income Between ₹5 Lakh and ₹7 Lakh:
   • Tax Rebate in Old Tax Regime: No rebate is applicable for income exceeding ₹5,00,000.
   • Tax rebate in New Tax Regime: The rebate under Section 87A is applicable for incomes up to ₹7,00,000, making it more favorable for middle-income taxpayers.

Conclusion

This article provides a comprehensive guide to TDS (Tax Deducted at Source) on salary in India. It explains the concept, who deducts it, when it's deducted, and how it's calculated. The article also covers claiming TDS refunds, the relevant forms (Form 24Q for employers and Form 16 for employees), and the potential consequences of non-compliance for employers. Calculate and file the TDS returns effortlessly with IndiaFilings experts!! [shortcode_35]

FAQs on TDS on Salary under Section 192

1. What is TDS on Salary?

TDS on Salary is the tax deducted at source from an employee's income by the employer, who is authorized to do so, before making the actual salary payment. It ensures tax is collected in advance and helps reduce tax evasion.

2. What are the responsibilities of the employer under TDS on Salary?

Employers must deduct TDS based on the applicable income tax slabs, deposit the deducted amount to the Income Tax Department, and issue Form 16 detailing the TDS deducted throughout the year.

3. When is TDS deducted from the salary?

TDS is deducted at the time of payment of the salary to the employee, whether paid monthly or annually. If the salary falls below the basic exemption limit of ₹2,50,000 for FY 2024-25, no TDS is deducted.

4. How is TDS on Salary calculated?

The calculation involves estimating the annual salary, accounting for exemptions under Section 10 (like HRA, LTA), subtracting these from the gross salary to determine taxable income, and applying the relevant tax slab rates.

5. What are the rates for TDS on Salary?

TDS rates are determined by the income tax slabs which vary based on the tax regime (old or new) and the taxpayer's age. Rates range from 5% to 30% depending on the income slab.

6. What forms are involved in TDS on Salary?

Form 24Q is used by employers for quarterly TDS declarations, and Form 16 is issued to employees annually, detailing total salary earned and TDS deducted.

7. Can you claim back TDS?

Yes, if the TDS deducted exceeds your actual tax liability, you can claim a refund by filing your Income Tax Return (ITR), where you declare your income and deductions accurately.

8. What happens if the employer fails to deduct or deposit TDS?

If TDS is deducted but not deposited, the employer faces penalties, and the employee isn't liable for payment. If not deducted, the employee must pay the tax, and the employer faces disallowed expense claims and increased tax liability.

9. Is it mandatory for all employers to deduct TDS on salary?

Yes, all employers paying taxable salaries are required to deduct TDS if the payment exceeds the basic exemption limit and must have a TAN (Tax Deduction and Collection Account Number) for this purpose.

10. What is the role of TAN in TDS on Salary?

A TAN is necessary for employers to deduct TDS and is used by the Income Tax Department to track all TDS deductions and remittances made by the employer. 11. What are the new TDS rules for salaried employees? The tax deduction news from the government now allows employers to adjust the TDS deducted on non-salary income (like interest or dividends) against salary income, preventing double taxation. 12. When did the new TDS adjustment rule come into effect? As per the official tax deduction news, The new TDS on salary rule became effective on October 1, 2024, and the updated TDS software implementation began on December 27, 2024.