TDS Calculator

Tax Deducted at Source on salary, universally referred to as TDS, is the mechanism by which the Income Tax Department collects income tax on a pay-as-you-earn basis. Instead of waiting until the end of the financial year for you to compute and pay your full tax liability, your employer estimates your annual tax, divides it by twelve, and deducts that amount from your salary every month. The deducted tax is deposited with the government in your name and reflected in your Form 26AS and AIS. This TDS calculator estimates the monthly tax your employer will deduct, helping you anticipate your in-hand salary and plan tax-saving investments well before the year-end rush.

The calculation begins with projecting your annual gross salary — basic plus HRA plus all allowances plus expected bonus. The employer applies the standard deduction (₹75,000 under the new regime, ₹50,000 under the old regime), then any investment-based deductions you have declared (Section 80C up to ₹1.5 lakh, 80D health insurance up to ₹75,000, 80CCD(1B) NPS up to ₹50,000, HRA exemption based on actual rent paid — all available only under the old regime). The result is your projected taxable income.

This taxable income is then run through the slab table for your chosen regime. Under the new tax regime for FY 2024-25, the slabs are 0% up to ₹3 lakh, 5% from ₹3-7 lakh, 10% from ₹7-10 lakh, 15% from ₹10-12 lakh, 20% from ₹12-15 lakh and 30% above ₹15 lakh. Section 87A rebate makes the effective tax-free income ₹7 lakh. The 4% Health and Education Cess is added to the computed tax. Dividing the annual tax by 12 gives the monthly TDS.

A crucial planning insight: TDS is just an estimate, not your final liability. Your true tax is computed when you file your Income Tax Return after the financial year ends. If your employer over-deducted (because you invested more than declared or your actual income was lower), you will receive a refund typically within 30-90 days of filing. If your employer under-deducted, you must pay the balance plus interest under Sections 234B and 234C when filing the return. The interest is 1% per month for late payment, so significant under-deduction can become expensive.

The two big TDS planning levers are choosing the right regime and declaring deductions early. At the start of the financial year, your employer will ask you to declare your investment plans for the year — this is the basis on which TDS is calculated. If you declare nothing, TDS is computed on the full gross salary, leading to higher monthly deductions early in the year and a refund later. If you declare investments you don't actually make, your employer will reverse the deduction in February-March and deduct catch-up TDS, often causing a sharp drop in your in-hand salary in those months. Both extremes are avoidable with realistic upfront declaration and timely proof submission.

For regime selection, run our [income tax calculator](/income-tax-calculator-india) at the start of the year using realistic projections of your investments, HRA, home loan interest and other deductions. Declare the regime that produces the lower tax to your employer for TDS purposes. You can switch to the other regime when filing your ITR if you change your mind, but only for non-business income.

Form 12BB is the prescribed declaration form for proofs. Submit it along with rent receipts (with landlord's PAN if rent exceeds ₹1 lakh annually), ELSS or PPF statements, life insurance premium receipts, home loan interest certificate from the bank, and health insurance receipts. Submit it in January or early February to give the employer time to re-calibrate the TDS for the remaining months and avoid an unpleasant cash flow shock in March.

TDS also applies on bonus and arrears in the year of receipt. A large bonus paid in October will trigger a one-time higher TDS that month; similarly, salary arrears from a backdated promotion or revision are fully taxed on receipt and may push you into a higher slab. You can claim relief under Section 89(1) by filing Form 10E if the arrears relate to earlier years, which spreads the income across those years for slab calculation. This relief is often missed and is worth claiming.

Finally, always reconcile the TDS deducted by your employer with Form 26AS (downloadable from the Income Tax e-filing portal) and the new AIS (Annual Information Statement). Discrepancies are not uncommon, especially if your employer delayed depositing the TDS. The credit you can claim in your ITR is only for what shows in 26AS/AIS, so chase your employer to deposit and update if the numbers don't match.