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TDS on Salary (Section 192)
Employer estimates your annual tax liability based on Form 12BB (declared deductions, HRA, LTA) and deducts TDS evenly across remaining months. Adjusted at year-end if liability differs.
Spread evenly across 12 remaining months — ₹8125/month if FY is partway done.
How employer TDS works
Section 192 makes the employer responsible for estimating your annual income tax liability and deducting it monthly. You submit Form 12BBin April declaring expected HRA, LTA, home loan interest, 80C / 80D / 80E investments and the regime you elect. The employer divides the projected annual tax across remaining months. Mid-year salary changes (appraisal, bonus, RSU vest) re-trigger the calculation — the back-loaded months can have a much larger TDS bite.
Worked example for FY 2025-26
A Hyderabad analyst with CTC ₹14 lakh elects the new tax regime. Standard deduction ₹75,000 + employer NPS 80CCD(2) ₹50,000 = taxable income ₹12.75 lakh. New regime slab tax ₹78,000 − 87A rebate (income just above ₹12L gets marginal relief of ~₹70k) = effective tax ~₹8,000 + cess ~₹320 = ₹8,320/year. Monthly TDS: ₹693. If she elected the old regime instead (with ₹1.5L 80C, ₹25k 80D, ₹2L home loan interest, ₹2L HRA exemption), the math could land at ~₹50,000 annual tax depending on the rent location.
When to revise your 12BB
- Bought a house mid-year — declare the home loan interest immediately
- Quarterly RSU vest — check that perquisite TDS is being deducted
- Bonus credited — verify the bonus-month TDS reflects revised projection
- Switched jobs — new employer needs Form 12B from old employer to avoid double standard deduction
Underreporting investments in 12BB means higher monthly TDS than necessary — the difference is refunded only after ITR filing in July. Cross-check your TDS with Form 26AS reader at the end of each quarter and use the CTC calculator to forecast in-hand correctly.
FAQ
Why does my company deduct more TDS later?
Recomputed if income increases (bonus, increment) or declared deductions don't materialise. Remaining months adjust.
Declare deductions to employer?
Submit Form 12BB at start of FY with proof. Without proof, employer assumes zero.
Switch regime mid-year?
Mid-year via Form 12BB if employer accepts. At ITR filing, switch to whichever is better.