TDS Calculator on Salary for FY 2025–26 in India – Monthly Breakdown Guide

Learn how TDS is deducted from your monthly salary under the new and old tax regimes for FY 2025–26. Real-life examples, downloadable tools, updated tax slabs, and a complete TDS calculator guide for salaried individuals in India.

With the rollout of the FY 2025–26 income tax provisions, salaried employees in India are keen to understand exactly how much TDS (Tax Deducted at Source) will be cut from their monthly pay. While most income tax calculators give you an annual estimate, TDS deduction is a monthly activity done by employers—making it essential to know your monthly outflow well in advance.

Income Tax Calculator

(Old vs New Tax Regime Calculator)

This guide simplifies that process. Whether you are an employee trying to plan your finances or an HR executive looking for clarity, this detailed and structured post will walk you through:

• Monthly and annual TDS calculations on salary
• Updated new and old tax regime slabs for FY 2025–26
• Real examples and practical scenarios
• A downloadable and interactive calculator (coming up in later sections)

Understanding TDS on Salary in FY 2025–26

What is TDS on Salary?

TDS (Tax Deducted at Source) on salary is the advance income tax collected every month by your employer and deposited with the Income Tax Department. It helps spread your annual tax liability evenly across the year and avoids a bulk payment at the end of the financial year.

Under Section 192 of the Income Tax Act, TDS on salary is mandatory once your estimated annual income exceeds the basic exemption limit, after considering all deductions and exemptions.

Key Features of TDS on Salary:

• Deducted every month based on estimated annual taxable income
• Adjusted in March, if actual income varies from projections
• Includes Cess @4% on total income tax
• TDS not applicable if annual income after deductions is below taxable threshold

New vs Old Tax Regime – Slabs for FY 2025–26

The government has continued with dual tax regimes for FY 2025–26. The new regime is now the default, with enhanced deductions and a broader 87A rebate. Let’s look at the key slab rates.

Income Tax Slabs for FY 2025–26

New Regime (Default Option)

Rebate under Section 87A: For individuals with income up to ₹7 lakh (after deductions), full tax rebate up to ₹25,000 is available.

Standard Deduction: ₹75,000 available for salaried individuals and pensioners.

Old Regime (With Deductions)

Rebate under Section 87A: Full tax rebate for income up to ₹5 lakh (post deductions).

Standard Deduction: ₹50,000 available. Additional deductions like 80C (₹1.5 lakh), 80D, HRA, etc., can also be claimed.

You can view the official Income Tax Slab Notification for FY 2025–26 on the Income Tax Department’s website for more details.

How TDS is Calculated on Salary

TDS is calculated based on the annual projected taxable income. Here’s a simplified version of how it works:

1. Determine annual gross salary (Basic + DA + HRA + other allowances)
2. Apply deductions and exemptions (Standard deduction, 80C, HRA, etc.)
3. Choose regime (old vs new) that gives lower tax
4. Calculate total annual tax liability
5. Add 4% Health & Education Cess
6. Divide by number of months remaining in the financial year
7. Round off to nearest rupee (using employer guidelines)

Example: Monthly TDS on ₹12 Lakh Salary in New Regime (FY 2025–26)

Let’s assume a salaried employee opts for the new regime with no additional deductions:

• Gross Salary: ₹12,00,000
• Standard Deduction: ₹75,000
• Taxable Income: ₹11,25,000

Now apply the slab:

• First ₹3L: Nil
• ₹3L–6L → 5% of ₹3L = ₹15,000
• ₹6L–9L → 10% of ₹3L = ₹30,000
• ₹9L–11.25L → 15% of ₹2.25L = ₹33,750

Total Tax = ₹78,750
Cess @4% = ₹3,150
Total = ₹81,900

Monthly TDS = ₹81,900 ÷ 12 = ₹6,825

You can verify these tax calculations using this government-backed TDS calculator.

Note: If your salary structure includes bonuses, arrears, or one-time payments, the TDS may be adjusted accordingly by your employer, especially in March.

Step-by-Step TDS Calculation for Salary in FY 2025–26

Understanding how TDS is calculated on salary helps salaried individuals plan monthly cash flows more effectively. While employers usually take care of this computation, it’s essential for employees to verify monthly deductions and avoid surprises at year-end.

Here’s a clear step-by-step approach that employers follow for monthly TDS deduction under the new tax regime:

Step 1: Compute Annual Gross Income

This includes:

• Basic Salary
• Dearness Allowance
• HRA (if applicable)
• Special Allowance
• Bonuses (variable or fixed)
• Any other taxable perquisites

Example:
If an employee earns ₹1,00,000/month including allowances:

Annual Gross = ₹1,00,000 × 12 = ₹12,00,000

Step 2: Subtract Allowable Deductions

Under the new regime, limited deductions are allowed:

• Standard Deduction: ₹75,000
• Employer NPS Contribution: up to 10% of salary (if applicable)
• EPF Contribution: No tax up to ₹2.5 lakh interest per annum

Assume ₹75,000 deduction in most cases.

Taxable Income = ₹12,00,000 – ₹75,000 = ₹11,25,000

Step 3: Determine Applicable Tax Slabs and Calculate Tax

Apply new regime tax slabs to the taxable income. Let’s visualize this for multiple income levels:

Note: Figures are approximate for illustration and assume only standard deduction.

Step 4: Divide by Remaining Months

Let’s assume you’re calculating TDS for an employee in July 2025 (9 months remaining in FY):

• Total Tax Liability: ₹81,900
• Monthly TDS: ₹81,900 ÷ 9 = ₹9,100

Employers update TDS monthly if the projected income changes (e.g., bonus, HRA shift, LOP). The final adjustment is usually made in the March payroll.

Step 5: Apply Rounding and Deduct TDS

Employers round off TDS to the nearest rupee. Most payroll software follow guidelines from the CBDT circulars. Any excess or deficit is adjusted before March.

March Adjustment: Why It Matters

TDS isn’t always constant throughout the year. If you:

• Get a bonus
• Switch regimes mid-year
• Submit tax-saving proofs later

…your March TDS may be significantly higher (or lower) to balance the books. It’s also the last month to make declarations or corrections before Form 16 is issued.

Employers rely on employee declarations (such as under Form 12BB) to make necessary deductions under the old regime. If declarations are incomplete or missing, TDS may be calculated assuming no deductions.

You can read more about TDS adjustments and Form 12BB in the official documentation from NSDL.

Real-World TDS on Salary Examples for FY 2025–26

To better understand how monthly TDS on salary works in practice, let’s walk through several real-life examples under both tax regimes. These examples reflect how annual tax liability translates into monthly TDS deductions, adjusted for applicable rebates, deductions, and cess.

Example 1: Annual Salary ₹6,50,000 – New Regime

Income Components

• Basic: ₹30,000/month
• HRA: ₹10,000/month
• Special Allowance: ₹14,167/month
• Gross Annual Salary: ₹6,50,000
• Standard Deduction: ₹75,000
• Taxable Income: ₹5,75,000

Tax Computation

• ₹3L: Nil
• ₹3L–5.75L → 5% of ₹2.75L = ₹13,750
• Cess @4% = ₹550
• Total Tax = ₹14,300

Monthly TDS (April onwards) = ₹14,300 ÷ 12 = ₹1,191 (rounded)

This employee won’t get Section 87A rebate under the new regime since income exceeds ₹7 lakh before rebate application.

Example 2: Annual Salary ₹9,00,000 – Old Regime

Deductions Claimed

• Standard Deduction: ₹50,000
• 80C (PF, LIC, ELSS): ₹1,50,000
• HRA Exemption: ₹1,00,000
• Net Taxable Income: ₹6,00,000

Tax Computation (Old Regime)

• ₹2.5L – ₹5L → 5% of ₹2.5L = ₹12,500
• ₹5L – ₹6L → 20% of ₹1L = ₹20,000
• Total = ₹32,500
• Cess @4% = ₹1,300
• Total Tax = ₹33,800

Monthly TDS = ₹33,800 ÷ 12 = ₹2,817 (rounded)

The employee could opt for old regime as it offers higher deductions in this case. You can compare regimes using the official income tax comparison utility.

Example 3: Annual Salary ₹18,00,000 – New Regime

Standard Deduction: ₹75,000
Taxable Income: ₹17,25,000

Monthly TDS = ₹2,26,200 ÷ 12 = ₹18,850

In this case, the employee has crossed all slab thresholds and pays a significantly higher monthly deduction. Such employees should carefully evaluate exemptions under the old regime.

Bonus Case: No TDS Despite High Salary

Let’s say an employee has a gross salary of ₹6.9 lakh annually under the new regime, but due to:

• ₹75,000 standard deduction
• Zero other income

Their taxable income falls below ₹7 lakh, which qualifies them for a full tax rebate under Section 87A.

Thus, no TDS will be deducted even if the gross salary appears taxable.

You can confirm this threshold using the tax rebate calculator provided here.

Interactive TDS Calculator on Salary for FY 2025–26 – How It Works

For salaried individuals, having access to a user-friendly TDS calculator for FY 2025–26 is not just a convenience—it’s a financial planning essential. While the annual tax liability can be computed manually or via your CA, knowing your monthly TDS deduction gives a clear picture of your take-home salary and helps in proactive investment planning.

Let’s now walk through the logic and design behind a functional and intuitive TDS calculator tailored to Indian salary structures.

Key Inputs Required by the Calculator

A reliable calculator for TDS deduction should ideally ask for the following fields:

These input values help calculate net taxable income, apply appropriate slabs, add cess, and distribute the tax evenly across the remaining months.

Core Features of an Ideal TDS Calculator

• Dual-regime support with comparison
• Monthly TDS breakdown
• Option to adjust for bonuses, arrears
• Auto inclusion of cess @4%
• Updated slabs for FY 2025–26
• Exportable summary in PDF or Excel

If the calculator also allows mid-year revisions (say, if you declare investments in December), it becomes a practical tool for employees and HR teams alike.

A sample layout might look like this:

Downloadable TDS Calculator Tool (Excel Format)

In addition to online calculators, many users prefer offline tools that they can keep for record-keeping or payroll audits. For this, you can download the official income tax calculator tool in Excel provided by the Income Tax Department.

This spreadsheet is regularly updated and allows you to manually input salary components, apply exemptions, and view tax impact. It’s especially useful for HR professionals managing payroll for multiple employees.

Accuracy & Compliance Assurance

Any calculator used for estimating TDS on salary should conform to the latest rules issued by the Central Board of Direct Taxes (CBDT). The formula used should follow the principles outlined in CBDT Circular No. 4/2023, which guides employers on how to compute TDS under Section 192.

Key principles include:

• Applying tax rates to estimated income at the beginning of the year
• Making adjustments in March if actual income varies
• Deducting TDS at the average rate computed from annual liability

Using compliant calculators helps avoid discrepancies in Form 16 and ensures smooth income tax return filing.

Questions on TDS Deduction for Salary – FY 2025–26

The topic of TDS deduction on salary often brings up several practical and compliance-related questions from employees. Here’s a compiled list of the most frequently asked queries that people across different salary brackets are actively searching for—answered clearly and with relevant references.

What is the minimum salary on which TDS is deducted in FY 2025–26?

If your annual taxable income after deductions (including the standard deduction) falls below the basic exemption limit under the regime you’ve opted for, no TDS is deducted.

For FY 2025–26:

• Under new regime, income up to ₹7,00,000 (after standard deduction) qualifies for full tax rebate under Section 87A.
• Under old regime, income up to ₹5,00,000 is eligible for full rebate.

This means that for most salaried individuals earning up to ₹7 lakh under the new regime, TDS should not apply, assuming no other income is added.

Can I change my tax regime in the middle of the year?

Employees are allowed to choose a tax regime at the beginning of the financial year, which informs the employer about how to compute TDS. While this selection is generally fixed for TDS computation, it does not bind the employee when filing the income tax return.

So yes, you can switch your tax regime at the time of filing ITR—regardless of what was followed for TDS during the year. More details on this are available at Income Tax Department’s e-filing portal.

What if I have not submitted my investment proofs?

If you opted for the old tax regime and failed to submit necessary documents (like proof for 80C, HRA, 80D), your employer will not consider deductions, and TDS will be calculated on gross salary minus standard deduction only.

However, if you have actually made those investments but missed submitting proofs, you can still claim them at the time of filing your ITR, and the excess TDS deducted can be claimed as a refund.

How is TDS adjusted in the last month (March)?

TDS deduction in March often varies significantly, especially if:

• There are bonuses or arrears paid in the last quarter
• Employee submits or updates investment proofs
• You resign or join a company late in the year

Employers will adjust any excess or shortfall in TDS to ensure it matches your actual tax liability for the year. This final adjustment ensures that your Form 16 reflects correct figures before filing returns.

You can learn more about how this adjustment works in CBDT’s TDS circular archive.

What if I have two employers in the same year?

In such cases, you must inform your current employer about the income earned from your previous employer. This can be done using Form 12B, which enables the new employer to calculate your total income and apply appropriate TDS.

If this step is skipped, each employer may deduct TDS assuming you’re earning below the taxable limit, leading to under-deduction and a large tax payment later.

Can I get a refund if excess TDS is deducted?

Yes. If your TDS is higher than your actual tax liability (due to deductions not being considered or lower actual income), you can claim a full refund when filing your income tax return. Refunds are usually processed within a few weeks and credited directly to your bank account.

The refund status can be checked anytime at TIN-NSDL’s refund tracker using your PAN.

TDS Compliance Tools, Downloads, and Cross-Verification for FY 2025–26

Calculating your TDS on salary for FY 2025–26 is only the first step. Ensuring that the right amount has been deducted, reported, and credited to your PAN is equally important for smooth tax filing and avoiding discrepancies during assessment. Here’s how you can stay on top of your salary-related TDS records.

How to Verify TDS Deduction from Your Salary

Once TDS is deducted by your employer, it must be deposited with the Income Tax Department and reflected in your records. The best way to verify this is by using Form 26AS, which serves as a consolidated annual tax statement.

To check your TDS entries:

1. Visit the TRACES Portal
2. Log in using your PAN via the e-filing website
3. Navigate to ‘View Form 26AS’
4. Select the relevant assessment year (e.g., AY 2026–27 for FY 2025–26)
5. Download the PDF or view online

The form will show TDS deposited against your PAN by your employer each month. Any mismatch should be immediately flagged with your payroll team.

Key TDS-Related Documents to Track

Ensure your Form 16 matches Form 26AS before filing your return. Discrepancies may lead to unnecessary notices or refund delays.

Downloadable Resources

If you prefer offline tools for quick calculations or payroll audit preparation, several verified formats are available online. These include:

• Excel-based TDS calculators tailored for FY 2025–26
• Sample templates for Form 12BB and Form 16 Part B
• Auto-populated monthly TDS trackers for HR professionals

One such trusted downloadable tool is available on the NSDL-TIN services page, which includes guides and formats frequently used in payroll processing.

How Employers Handle TDS Payroll Processing

Employers calculate and deduct TDS on a monthly basis using in-house payroll software or outsourced providers. Their process includes:

• Projecting taxable income based on salary structure
• Applying deductions submitted via proofs (if old regime)
• Choosing regime based on employee declaration
• Dividing the final tax liability over remaining months
• Depositing TDS with the government by the 7th of next month
• Issuing Form 16 by June 15th following the financial year

This deduction process is mandatory under Section 192, and failure to deduct or deposit can attract penalties on the employer.

When to Contact Your Payroll Team

You should consider raising a query with your employer if:

• TDS deducted doesn’t match what is reflected in Form 26AS
• No TDS is deducted, despite a taxable salary
• Incorrect regime is being followed for calculation
• Excess TDS was deducted, and you’re expecting a refund

Timely communication helps avoid issues at the time of return filing and reduces dependency on refund timelines from the tax department.

Final Thoughts, Action Checklist, and Resources for Salaried Taxpayers

Calculating TDS on salary for FY 2025–26 isn’t just about figuring out a number—it’s about understanding your tax responsibilities, planning investments, and making informed regime choices. Whether you’re earning ₹5 lakh or ₹25 lakh per annum, knowing how TDS is computed helps you control your finances more confidently.

To ensure you’re fully prepared, here’s a simple action checklist for every salaried individual.

Monthly TDS Compliance Checklist

Marking these items off periodically—especially before year-end—can help avoid mismatches and ensure your return filing goes smoothly.

Best Practices to Avoid TDS Issues

1. Choose the right tax regime based on actual benefits, not default preference. You can use comparison tools on ClearTax or incometaxindia.gov.in for better clarity.
2. Declare investments on time. Don’t wait till January–February to submit proofs.
3. Communicate with your HR/payroll team proactively. If you receive additional income like gratuity, encashment, or leave salary, ensure your TDS is revised accordingly.
4. Split bonuses across months if possible to manage tax slabs more efficiently.
5. Always download and cross-check Form 26AS and AIS before filing ITR, especially if you changed jobs or had freelance income.

When to Consult a Tax Professional

While most salaried individuals can use automated calculators, consult a tax advisor if:

• You switched jobs during the year and have multiple Form 16s
• Your income includes ESOPs, foreign allowances, or stock units
• You’re unsure about regime selection based on exemptions
• You received tax notices in previous years for TDS mismatch

Professional help ensures not only accurate TDS management but also long-term tax planning and refund optimization.

Recap: What This Guide Covered

✔️ Understanding monthly TDS on salary
✔️ Comparison of FY 2025–26 tax slabs
✔️ Calculation steps with real examples
✔️ Tools, portals, and downloadable formats
✔️ TDS adjustment rules and regime switching
✔️ FAQs, compliance tips, and resource links

This guide is designed to equip you with both knowledge and actionable steps to handle TDS confidently.

FAQ