TDS Calculator - Tax Deducted at Source Calculator India
💼 Calculate TDS on Salary | Interest on Late Payment | TDS Computation for FY 2025-26
A TDS Calculator is an essential tool for calculating Tax Deducted at Source on salary income under Section 192 of the Income Tax Act, 1961. TDS (Tax Deducted at Source) is a mechanism where employers deduct income tax from employee salaries before payment and deposit it with the government. This free online TDS calculator helps employees estimate monthly and annual TDS deduction, compare Old vs New tax regime impact, calculate taxable income after exemptions (HRA, standard deduction ₹50,000) and Chapter VI-A deductions (80C ₹1.5 lakh, 80D, 80CCD(1B) ₹50,000), and determine net take-home salary. For FY 2025-26, the calculator incorporates updated tax slabs, rebates under Section 87A (₹25,000 Old, ₹60,000 New regime), and 4% Health & Education Cess. Additionally, it calculates interest on late TDS payment at 1.5% per month under Section 201(1A), helping employers avoid penalties for delayed deposits.
Calculate Your TDS on Salary
Understanding TDS on Salary
Tax Deducted at Source (TDS) is a direct tax collection mechanism mandated under Section 192 of the Income Tax Act, where employers deduct tax from employee salaries at source before payment. This ensures continuous tax collection throughout the financial year rather than lump-sum payment during ITR filing. Employers calculate TDS based on employee's projected annual income, chosen tax regime (Old vs New), declared investments and exemptions, and apply appropriate tax slab rates.
TDS on salary is mandatory for all salaried employees whose total income exceeds the basic exemption limit (₹2.5 lakh Old Regime, ₹3 lakh New Regime for below 60 years). Employers must deposit deducted TDS with the government by the 7th of the following month (April-February) and 30th May for March deductions. Employees receive Form 16 annually showing total TDS deducted, which is used for ITR filing. If TDS exceeds actual tax liability, refund is claimed through ITR filing.
TDS Calculation Formula for Salary
Calculating TDS on salary involves multiple steps considering various exemptions, deductions, and tax slab rates:
Step-by-Step TDS Calculation Formula
Net Salary = Gross Salary - Exemptions u/s 10
(HRA exemption, LTA, Standard Deduction ₹50,000, Professional Tax)
Total Income = Net Salary + Interest Income + House Property Income/Loss
Taxable Income = Total Income - 80C (max ₹1.5L) - 80D - 80CCD(1B) (max ₹50K)
Tax = Apply slab rates based on regime choice
Tax after Rebate = Tax - Rebate u/s 87A (if eligible)
Final Tax = Tax after Rebate + 4% Health & Education Cess
Monthly TDS = Annual Tax / 12
Example Calculation: Annual salary ₹12 lakh, HRA exemption ₹2 lakh, 80C investments ₹1.5 lakh (Old Regime):
Old Regime:
Gross Salary: ₹12,00,000
Less: HRA exemption: ₹2,00,000
Less: Standard deduction: ₹50,000
Net Salary: ₹9,50,000
Less: 80C: ₹1,50,000
Taxable Income: ₹8,00,000
Tax Calculation:
Up to ₹2.5L: ₹0
₹2.5L - ₹5L: ₹12,500 (5% of ₹2.5L)
₹5L - ₹8L: ₹60,000 (20% of ₹3L)
Total: ₹72,500
Add Cess (4%): ₹2,900
Annual TDS: ₹75,400
Monthly TDS: ₹6,283
Tax Slabs for TDS Calculation FY 2025-26
Tax slab rates determine TDS calculation based on chosen regime and age category:
New Tax Regime (Default from FY 2023-24)
| Income Slab | Tax Rate | Tax on Slab |
|---|---|---|
| Up to ₹3,00,000 | Nil | ₹0 |
| ₹3,00,001 - ₹6,00,000 | 5% | ₹15,000 |
| ₹6,00,001 - ₹9,00,000 | 10% | ₹30,000 |
| ₹9,00,001 - ₹12,00,000 | 15% | ₹45,000 |
| ₹12,00,001 - ₹15,00,000 | 20% | ₹60,000 |
| Above ₹15,00,000 | 30% | 30% of excess |
Rebate u/s 87A (New Regime): ₹60,000 rebate for taxable income up to ₹7 lakh. Effectively, income up to ₹7.5 lakh (including standard deduction) is tax-free under New Regime.
Old Tax Regime (Optional)
| Income Slab | Below 60 Years | 60-80 Years (Senior) | Above 80 Years (Super) |
|---|---|---|---|
| Up to ₹2,50,000 | Nil | - | - |
| Up to ₹3,00,000 | - | Nil | - |
| Up to ₹5,00,000 | - | - | Nil |
| Next ₹2.5L/₹2L | 5% | 5% | - |
| ₹5L - ₹10L | 20% | 20% | 20% |
| Above ₹10L | 30% | 30% | 30% |
Rebate u/s 87A (Old Regime): ₹25,000 rebate for taxable income up to ₹5 lakh. Effectively, income up to ₹5.75 lakh (with standard deduction + 80C) is tax-free for individuals below 60.
Interest on Late Payment of TDS
When employers fail to deposit TDS on time, interest is charged under Section 201(1A) at 1.5% per month or part of month from the date of TDS deduction to actual deposit date:
TDS Late Payment Interest Formula
Key Points:
- Interest rate: 1.5% per month (18% per annum simple interest)
- Delay period: From date of TDS deduction to actual deposit date
- Each commenced month counts as full month (e.g., 1 day = 1 month)
- TDS due dates: 7th of next month (April-Feb), 30th May (March deductions)
- Calculated on TDS amount, not salary amount
TDS Deducted: ₹50,000 on April 15, 2025
Due Date: May 7, 2025
Actual Deposit: August 7, 2025
Delay: 3 months (May, June, July)
Interest = ₹50,000 × 1.5% × 3 = ₹2,250
Exemptions and Deductions for TDS Calculation
Various exemptions and deductions reduce taxable salary and consequently TDS amount:
Exemptions Under Section 10
- HRA (House Rent Allowance): Exempt under 10(13A) - least of actual HRA, 50%/40% of salary, or rent minus 10% salary
- LTA (Leave Travel Allowance): ₹0 (suspended), two journeys in block of 4 years
- Standard Deduction: ₹50,000 automatic deduction from gross salary (both regimes)
- Professional Tax: State-wise (₹2,500 annually in most states)
- Gratuity: ₹20 lakh exempt under 10(10) (if eligible)
- Leave Encashment: ₹25 lakh exempt on retirement
Deductions Under Chapter VI-A (Old Regime Only)
| Section | Deduction | Maximum Limit | Eligible Investments |
|---|---|---|---|
| 80C | Investments & Expenses | ₹1,50,000 | PPF, EPF, ELSS, LIC, NSC, Home Loan Principal, Tuition Fees |
| 80CCD(1B) | NPS Additional | ₹50,000 | National Pension System (over and above 80C) |
| 80D | Health Insurance | ₹25,000-₹1,00,000 | Self/Family ₹25K, Parents ₹25K (₹50K if senior) |
| 80E | Education Loan Interest | No limit | Interest on education loan for self/children |
| 80EEA | Home Loan Interest | ₹1,50,000 | First-time home buyer (loan up to ₹45L, property ₹45L) |
| 80G | Donations | Varies | Donations to specified funds/charities |
New Regime Note: No deductions under Chapter VI-A allowed except 80CCD(2) (employer NPS contribution) and 80JJAA. Standard deduction of ₹50,000 available in both regimes.
Old Tax Regime vs New Tax Regime
Choosing between tax regimes significantly impacts TDS and take-home salary:
| Feature | Old Tax Regime | New Tax Regime |
|---|---|---|
| Basic Exemption | ₹2.5L (Below 60), ₹3L (Senior), ₹5L (Super) | ₹3 lakh (all ages) |
| Tax Slabs | 3 slabs (5%, 20%, 30%) | 5 slabs (5%, 10%, 15%, 20%, 30%) |
| Section 80C | Allowed (₹1.5L) | Not allowed |
| HRA Exemption | Allowed | Allowed |
| Standard Deduction | ₹50,000 | ₹50,000 |
| Section 87A Rebate | ₹25,000 (income up to ₹5L) | ₹60,000 (income up to ₹7L) |
| Default Regime | Optional (must opt-in) | Default from FY 2023-24 |
| Best For | Those with high investments/deductions | Those with low investments, simpler tax |
Comparison Example: ₹12 lakh salary, ₹2L HRA exemption:
Old Regime: With ₹1.5L in 80C, taxable = ₹7.5L, Tax ≈ ₹67,600
New Regime: No 80C, taxable = ₹9L, Tax ≈ ₹60,000
New Regime saves ₹7,600 despite not claiming 80C. Always compare both regimes before choosing.
Pro Tip - Regime Selection: New Regime is better if total deductions < ₹2.5 lakh. Old Regime benefits those with deductions > ₹3 lakh (80C + 80D + home loan interest). Calculate tax under both regimes annually. You can switch between regimes yearly if salaried (business income has restrictions). Submit declaration to employer at start of financial year or update mid-year if circumstances change.
How to Reduce TDS on Salary
Employees can legitimately reduce TDS through proper planning and declarations:
- Declare Investments Early: Submit investment proofs (80C, 80D) to employer at year start for lower monthly TDS
- Claim HRA Exemption: Provide rent receipts, rental agreement, landlord PAN (if rent > ₹1L/year)
- Declare Home Loan Interest: Submit home loan interest certificate (24b deduction + 80EEA if eligible)
- Maximize 80C: PPF, EPF VPF, ELSS, Life Insurance, Tuition fees, Home loan principal (up to ₹1.5L)
- NPS Additional ₹50K: Invest in NPS under 80CCD(1B) for extra ₹50,000 deduction
- Health Insurance 80D: ₹25,000 for self/family, ₹25,000 for parents (₹50K if senior)
- Choose Regime Wisely: Opt for regime giving lower tax based on your investments
- Update Form 12BB: Submit complete declaration of all exemptions/deductions to employer
TDS Payment and Compliance
Employers must follow strict timelines for TDS deposit and reporting:
TDS Payment Due Dates
| TDS Deduction Month | Payment Due Date | Challan |
|---|---|---|
| April to February | 7th of next month | ITNS 281 |
| March | 30th April (extended to May 7th typically) | ITNS 281 |
TDS Return Filing Due Dates (Form 24Q for Salary)
| Quarter | Period | Due Date |
|---|---|---|
| Q1 | April - June | 31st July |
| Q2 | July - September | 31st October |
| Q3 | October - December | 31st January |
| Q4 | January - March | 31st May |
Penalties for Non-Compliance
- Late Payment Interest: 1.5% per month under Section 201(1A)
- Late Filing Fee: ₹200/day under Section 234E (maximum ₹1 lakh)
- Non-Deduction Penalty: Disallowance of expense + interest + penalty
- Incorrect TDS Certificate: ₹10,000 to ₹1 lakh penalty
Warning - Common TDS Mistakes: Not updating investments mid-year leading to excess TDS (file ITR for refund). Claiming ineligible exemptions resulting in short TDS and tax dues. Not submitting Form 12BB causing employer to deduct higher TDS. Switching jobs without informing new employer about previous income leading to incorrect TDS. Not reconciling Form 26AS with actual TDS causing ITR mismatches. Always verify TDS in Form 26AS before filing ITR.
TDS Refund Process
When TDS deducted exceeds actual tax liability, refund can be claimed through ITR filing:
- Step 1: Download Form 26AS from Income Tax portal showing all TDS credited to your PAN
- Step 2: File Income Tax Return (ITR-1 for salary) before 31st July (for FY ending March)
- Step 3: Verify ITR within 30 days using Aadhaar OTP, EVC, or physical signature
- Step 4: Income Tax Department processes return and determines refund amount
- Step 5: Refund credited to pre-validated bank account (usually 1-3 months)
- Step 6: Check refund status on Income Tax portal using acknowledgment number
Common Refund Scenarios:
• Investment proofs submitted late, excess TDS deducted
• Job change mid-year, both employers deducted TDS without considering previous income
• Actual investments lower than declared, but adjusted at year-end
• Wrong tax regime assumed, actual liability lower
• Loss from house property not considered during TDS calculation