Master TDS calculation, investment declarations, and compliance for Indian payroll
Faster TDS processing
Compliance accuracy
Penalties avoided
Form 16 generation
As an employer in India, deducting TDS on employee salaries under Section 192 is one of your most critical compliance responsibilities. Mistakes can lead to penalties, interest notices, and unhappy employees. This comprehensive guide walks you through everything you need to know for FY 2025-26.
Understanding your legal obligation as an employer
Section 192 of the Income Tax Act requires every person responsible for paying salary to deduct TDS at the time of payment.
Applicability: All employers (individuals, firms, companies, trusts)
No TDS if estimated annual income is below exemption limit:
New Regime vs. Old Regime - Choose what works for your employees
| Income Slab (₹) | Tax Rate |
|---|---|
| Up to 3,00,000 | Nil |
| 3,00,001 – 7,00,000 | 5% |
| 7,00,001 – 10,00,000 | 10% |
| 10,00,001 – 12,00,000 | 15% |
| 12,00,001 – 15,00,000 | 20% |
| Above 15,00,000 | 30% |
| Income Slab (₹) | Tax Rate |
|---|---|
| Up to 2,50,000 | Nil |
| 2,50,001 – 5,00,000 | 5% |
| 5,00,001 – 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Follow these steps to accurately calculate TDS on employee salaries
Calculate Gross Salary
Add basic, DA, HRA, special allowance, bonus, leave encashmentSubtract Exemptions
HRA, LTA, Standard Deduction (₹50,000), Professional TaxApply Deductions
Section 80C, 80D, 80CCD(1B) etc. (Old Regime only)Apply Tax Slabs
Calculate tax as per chosen regime, add 4% cessAssumptions: Gross Salary ₹9,00,000 | Standard Deduction ₹50,000 | No HRA
Calculation:
Tax as per New Regime:
Assumptions: Gross Salary ₹15,00,000 | 80C: ₹1,50,000 | 80D: ₹25,000 | Standard Deduction ₹50,000
Calculation:
Tax as per Old Regime:
Critical for accurate TDS calculation
| Activity | Due Date |
|---|---|
| Submission of declarations (Form 12BB) | By February of each FY |
| Submission of investment proofs | By March 31 |
| Revised declarations | Any time before February |
| Section | Eligible Investment | Max Deduction |
|---|---|---|
| 80C | PF, PPF, ELSS, LIC, tuition fees, home loan principal | ₹1,50,000 |
| 80D | Health insurance (self & family) | ₹25,000 (₹50,000 for seniors) |
| 80CCD(1B) | Additional NPS contribution | ₹50,000 |
| 80E | Interest on education loan | No limit |
| 80TTA | Interest on savings account | ₹10,000 |
Stay compliant with these deadlines
| Compliance Item | Due Date | Form / Challan |
|---|---|---|
| TDS Deposit | 7th of next month | Challan cum Statement (ITNS 281) |
| TDS for March | April 30 | Challan cum Statement (ITNS 281) |
| Quarterly TDS Return (Q1) | July 31 | Form 24Q |
| Quarterly TDS Return (Q2) | October 31 | Form 24Q |
| Quarterly TDS Return (Q3) | January 31 | Form 24Q |
| Annual TDS Return (Q4) | May 31 | Form 24Q |
| Form 16 Issuance | June 15 | Form 16 (Part A + Part B) |
Always check the latest Finance Act before starting new FY payroll.
Professional tax is allowed as a deduction from salary, reducing taxable income.
Use the formula: Least of (a) Actual HRA, (b) 50%/40% of salary, (c) Rent paid - 10% of salary.
Apply ₹50,000 standard deduction to every salaried employee.
Stop manual calculations. Start automated compliance.
System automatically applies latest tax slabs and computes TDS monthly
One-click generation of Part A and Part B for all employees
Shows estimated tax under both regimes for informed choice
Automatic alerts for TDS deposit and return filing due dates
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