TDS on Salary — How Much Tax Is Deducted Monthly? — India 2026
Calculate TDS deducted from your monthly salary by employer. Understand how investment declarations reduce TDS and increase take-home pay.
TDS (Tax Deducted at Source) on salary is your employer estimated monthly tax deduction based on your declared income and investments. If you declare Rs 1.5 lakh in 80C investments your employer reduces TDS proportionally across remaining months. Late or missing declarations mean higher TDS upfront which you reclaim as refund when filing ITR.
How to reduce TDS from salary?
Submit investment declarations to your employer at the start of the financial year: 80C investments (Rs 1.5L) health insurance premium (80D) NPS contribution (80CCD1B) HRA rent receipts and home loan details. Each declaration reduces your estimated tax and therefore monthly TDS giving you more cash in hand each month.
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Income Tax Calculator (India FY 2025-26)
How Tax Calculation Works
Income tax is calculated on your total taxable income after deducting eligible exemptions and deductions from your gross income. The tax is applied progressively — you pay a lower rate on initial income slabs and higher rates only on income that exceeds each threshold. This means moving into a "higher tax bracket" does not mean your entire income is taxed at the higher rate. Understanding marginal vs effective tax rate is crucial: your marginal rate applies only to the last rupee earned, while your effective rate is the average across all slabs.
Tax-Saving Strategies
Under the old regime, maximize deductions: Section 80C allows up to Rs 1.5 lakh through PPF, ELSS, EPF, and life insurance. Section 80D covers health insurance premiums up to Rs 25,000 (Rs 50,000 for senior citizens). Section 80CCD(1B) offers an additional Rs 50,000 deduction for NPS contributions. Home loan interest up to Rs 2 lakh is deductible under Section 24. Under the new regime, the Rs 75,000 standard deduction and lower slab rates may save you more if your total deductions are below Rs 3.75 lakh. Calculate under both regimes before choosing.
Key Information
| Parameter | Details |
|---|---|
| TDS Calculation | Estimated annual tax / 12 months |
| Investment Declaration | Reduces TDS through the year |
| Missing Declaration | Higher TDS refundable at ITR filing |
| Form 16 | Employer issues by June 15 |
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Use Calculator NowFrequently Asked Questions
How to reduce TDS from salary?
Submit investment declarations to your employer at the start of the financial year: 80C investments (Rs 1.5L) health insurance premium (80D) NPS contribution (80CCD1B) HRA rent receipts and home loan details. Each declaration reduces your estimated tax and therefore monthly TDS giving you more cash in hand each month.
What happens if too much TDS is deducted?
If actual tax liability is less than TDS deducted you get a refund when filing ITR. CRA processes refunds within 20-45 days of filing. The refund includes interest at 0.5% per month from April 1 of the assessment year. To avoid excess TDS submit investment proofs to your employer by January.
How to check TDS deducted?
Check Form 26AS on the Income Tax e-filing portal. It shows all TDS deducted by your employer and other deductors. Your employer issues Form 16 by June 15 which is the detailed TDS certificate. Both should match — if they do not contact your employer HR or payroll team immediately.
Which tax regime should I choose — old or new?
Choose the new regime if your total deductions are below Rs 3.75 lakh. Choose the old regime if you claim HRA, 80C (Rs 1.5L), 80D, home loan interest, and NPS totaling more than Rs 3.75 lakh. Salaried employees can switch every year.
Is income up to Rs 12 lakh really tax-free?
Under the new regime for FY 2025-26, income up to Rs 12 lakh is effectively tax-free due to Section 87A rebate. After Rs 75,000 standard deduction, taxable income is Rs 11.25 lakh which qualifies for full rebate. However, income even slightly above Rs 12 lakh loses this entire benefit.
How can I save more tax legally?
Under the old regime, maximize 80C (Rs 1.5L via PPF, ELSS, EPF), 80D (Rs 25K-50K for health insurance), 80CCD(1B) (Rs 50K for NPS), HRA exemption, and home loan interest (Rs 2L under Section 24).
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Last updated: March 2026