- Tax deducted in a month is due by the 7th of the next month, and March deductions by 30 April.
- Quarterly salary TDS statements go on Form 138, the old Form 24Q, due 31 July, 31 October, 31 January and 31 May.
- The annual certificate is Form 130, which replaced Form 16, issued by 15 June after the tax year ends.
- An employee without a valid PAN faces deduction at the higher of the normal rate or 20%.
On this page
How does salary TDS work under the 2025 Act?
Much as before, with new section numbers and one tax year. The old “previous year” and “assessment year” pair is gone. Tax year 2026-27 runs from 1 April 2026 to 31 March 2027.
Each month you estimate the employee’s taxable salary for the whole year, work out the tax and spread it over the months left. That is the average rate method set out on the Income Tax Department’s section 392 page.
Three inputs move the number. The regime the employee follows. Salary from a previous employer in the same year. And the proofs they file on Form 124, the successor to Form 12BB.
The new tax regime is the default. It applies unless the employee opts out. Section 392(2) also lets you bear the tax on non-monetary perquisites yourself.
FY 2025-26 salaries stay under the 1961 Act. Old law, old forms. Section 536, the savings clause of the 2025 Act, keeps the 1961 Act alive for any tax year that began before 1 April 2026, including proceedings started later that relate to those years.
What does a salary TDS calculation look like at ₹15 lakh?
About ₹8,125 a month under the new regime. Let’s say a Pune developer earns ₹15 lakh gross and has not opted out.
| Step | Amount |
|---|---|
| Gross salary | ₹15,00,000 |
| Less standard deduction | ₹75,000 |
| Taxable income | ₹14,25,000 |
| Tax at 5%, 10% and 15% slabs | ₹93,750 |
| Add 4% cess | ₹3,750 |
| Annual tax | ₹97,500 |
| Monthly TDS over 12 months | ₹8,125 |
No rebate applies here. The section 156 rebate (formerly 87A) clears tax only up to ₹12 lakh of taxable income. So a colleague on ₹12.5 lakh gross has no TDS at all.
Mid-year joiners cause the classic slip. A new hire declares salary from an earlier employer, and payroll ignores it. The shortfall then surfaces when the employee files a return.
Who deducts TDS on salary when you hire through an EOR?
The employer of record does. It is the legal employer in India, so its TAN goes on every challan, quarterly statement and annual certificate filed for your team.
You fund salary and tax through one monthly invoice. Our guide to payroll compliance in India shows where TDS sits in the monthly calendar.
How does Remunance run TDS on salary for your India team?
Remunance Services Pvt Ltd, our own Indian entity in Kothrud, Pune, deducts and deposits salary TDS under its TAN. We file every quarterly statement. We also issue the annual certificates and apply whichever regime each employee declares. Our explainer on EOR tax implications covers what stays with you. To see TDS modelled on your own salary bands, get a payroll tax walkthrough.
What else do people ask about TDS on salary?
Is TDS deducted if salary is below ₹12 lakh?
Usually not under the new regime. Taxable income up to ₹12 lakh carries a full rebate, so gross salary up to ₹12.75 lakh attracts no TDS.
Can an employee change tax regime after TDS has started?
Yes, at filing time. The binding choice is made with the return under section 263(1), so tax deducted under one regime can be squared up when the return is filed.
Do foreign nationals on Indian payroll pay TDS?
Yes. Salary for work done in India is taxable in India whatever the passport. Residency changes how their foreign income is treated, not the TDS on Indian pay.
Planning a hire in India?
Our founding team has run payroll and hiring in India for 22+ years, first as Remunance Systems, which was later acquired by ADP.