TDS on Salary — Section 192 Complete Guide for Employers and Employees

TDS (Tax Deducted at Source) on salary is the most common form of tax deduction in India. Every employer must deduct TDS from employee salaries and deposit it with the government. Here is the complete guide for FY 2025-26.

What is TDS on Salary?

Under Section 192 of the Income Tax Act, every employer must:

1. Estimate the employee's total income for the year
2. Calculate the tax on that income
3. Deduct TDS from salary every month (1/12th of annual tax)
4. Deposit TDS by the 7th of the following month
5. File quarterly TDS returns (Form 24Q)
6. Issue Form 16 (TDS certificate) to employees by June 15

How Employers Calculate TDS on Salary

Step 1: Estimate annual gross salary (including all allowances)

Step 2: Ask employee to declare their preferred tax regime (new or old) and deductions

Step 3: Calculate taxable income:

• New regime: Gross salary − ₹75,000 standard deduction
• Old regime: Gross salary − ₹50,000 standard deduction − HRA − 80C − 80D − etc.

Step 4: Calculate annual tax on taxable income

Step 5: Divide by 12 — deduct this amount every month

Step 6: Adjust in the last quarter if actual income differs from estimate

TDS Deposit Due Dates

Example: TDS deducted in May 2026 must be deposited by June 7, 2026.

Quarterly TDS Returns — Form 24Q

Employers must file Form 24Q every quarter:

Form 24Q contains employee-wise salary and TDS details. It is filed on the TRACES portal.

Form 16 — TDS Certificate for Employees

After filing Q4 return, employers must issue Form 16 to all employees by June 15.

Form 16 has two parts:

• Part A: TDS deducted and deposited (generated from TRACES)
• Part B: Salary breakdown, deductions, and tax computation

Important update: Under the Income Tax Act 2025, Form 16 is renamed Form 130 from FY 2026-27 onwards. For FY 2025-26 (current filing season), employers still issue Form 16.

What Employees Must Do

1. Declare your regime to your employer at the start of the year (April)
2. Submit investment declarations (80C, 80D, HRA, home loan) to your employer
3. Submit actual proofs in January–February (employers ask for this)
4. Check Form 26AS / AIS to verify TDS credited to your PAN
5. Collect Form 16 from employer by June 15
6. File ITR using Form 16 by July 31, 2026

Common TDS Mistakes by Employers

• Wrong PAN of employee — TDS not credited to employee's account
• Late deposit — attracts 1.5% per month interest
• Wrong section code — 192 for salary, not 194J
• Not adjusting for regime change — employee switches regime mid-year

What if Your Employer Deducts Too Much TDS?

If your employer deducts more TDS than your actual tax liability, you get a refund when you file your ITR. The refund is credited to your bank account within 3–6 months of filing.

What if Your Employer Deducts Too Little TDS?

If TDS deducted is less than your actual tax liability, you must pay the balance as self-assessment tax when filing your ITR. Interest under Section 234B may apply.

Frequently Asked Questions

Can I ask my employer to deduct less TDS?

Yes. If you have investments or deductions that reduce your tax, declare them to your employer. They will adjust TDS accordingly.

What if I have two employers in the same year?

Inform your second employer about salary from the first employer. They must consider total income when calculating TDS. If they don't, you may end up with a tax demand when filing ITR.

Is TDS on salary the same as advance tax?

No. TDS on salary is deducted by your employer. Advance tax is paid by you directly to the government — applicable if you have income beyond salary (freelance, capital gains, rental).

What is the penalty for not depositing TDS?

Interest at 1.5% per month from the date of deduction to the date of deposit. Plus penalty under Section 271C equal to the TDS amount.

When will I receive my Form 16 for FY 2025-26?

By June 15, 2026. If your employer hasn't issued it by then, follow up immediately — you need it to file your ITR by July 31.

---

Need help with TDS return filing (Form 24Q) or Form 16 generation? I handle complete TDS compliance for businesses. Message me on WhatsApp.