Payroll & statutory · Updated September 2026
TDS on salary is the income tax your employer deducts from your pay every month and deposits with the government on your behalf. It is not a separate tax; it is your own annual tax liability, estimated up front and collected in twelve instalments so you do not face one large bill at year end. The rule that requires it is Section 192 of the Income Tax Act.
At the start of the year, payroll projects your full-year taxable income: gross salary, minus the standard deduction, minus exemptions like HRA and deductions you declare on Form 12BB, such as Section 80C investments. It applies the slab rates for your chosen regime, adds cess, subtracts any 87A rebate, and divides the result by the number of months left. That per-month figure is your TDS.
The estimate is revised whenever something changes: an increment, a bonus, a fresh investment declaration, or actual proofs submitted in the last quarter. That is why the TDS line often jumps in January to March, when unverified declarations are trued up against documents.
The deducted tax is deposited by the 7th of the next month (30 April for March), reported every quarter in Form 24Q, and certified to you once a year in Form 16. It then shows up as a credit in your Form 26AS and AIS, which you set off against your final liability when you file your return.
You can lower it legitimately by declaring eligible investments, rent and loan interest early through Form 12BB. You cannot simply ask for a lower deduction without a basis; the employer is personally liable for short deduction.
You claim the excess as a refund when you file your income tax return. The employer cannot refund TDS already deposited.
Yes. The regime only changes the rates and which deductions apply; the monthly deduction mechanism is the same.
Estimate your monthly deduction with the TDS on Salary Calculator and your full-year tax with the Income Tax Calculator. For the payroll side, see our overview of payroll software for India.