TDS on Salary Calculator

India has two personal tax regimes that employees can choose between each year. The new regime has lower slab rates but disallows most exemptions and deductions - HRA, Section 80C investments, home loan interest, and more. The old regime has higher slab rates but allows those deductions, so it can work out cheaper for employees with significant eligible deductions.

Employees must inform their employer which regime they want TDS calculated under for the year. If they don't choose, employers default to the new regime. Importantly, employees can still switch regimes when filing their own income tax return at year-end, even if a different regime was used for TDS during the year - though this flexibility has some restrictions for those with business income.

Employers estimate an employee's total annual taxable income - salary plus any other declared income, minus eligible deductions - then compute the annual tax liability on that estimate, and divide it across the remaining months of the financial year to arrive at a monthly TDS figure.

This estimate isn't fixed for the whole year. It gets refined as employees submit investment proofs under the old regime, or as salary itself changes - a bonus, an increment, a mid-year revision to CTC - so the monthly TDS amount can shift from one month to the next as the projection is updated.

TDS deducted from salary must be deposited with the government by the 7th of the following month - for TDS deducted in March, the deadline extends to 30 April. Missing this deadline attracts interest charges regardless of whether the deduction itself was correct.

Employers must also file quarterly TDS returns (Form 24Q) by 31 July, 31 October, 31 January and 31 May. At year-end, Form 16 - the annual TDS certificate summarising salary, deductions and tax deducted - must be issued to every employee by 15 June following the financial year, since employees need it to file their own income tax returns.