Blog
TDS on Salary in India: How Section 192 Works and What Your Form 16 Shows
Your firm takes tax from your pay under Section 192 of the Income Tax Act 2025. The TDS rate depends on your total pay for the year. It is not a fixed percentage. Knowing how Section 192 works helps you see why your take-home pay is what it is. It also helps you cut what is taken out.
How Section 192 works
Your firm works out TDS in three steps.
Step 1 — Estimate your yearly pay
Your firm guesses your total pay for the full year. It looks at:
- Your monthly pay and allowances
- Any past job pay you share
- Any other income you tell your firm about (interest, rent, freelance work)
Step 2 — Use the slab rates
Your firm first takes a standard cut (₹75,000 under the new regime). Then it adds up any other cuts you qualify for (if you have submitted proof):
- Section 80C cuts: life insurance, PPF, ELSS, EPF, home loan principal, NSC, children’s fees
- Section 80D cuts: health insurance for you and your family
- Section 80CCD(1B): NPS extra cut
- Section 80DD, 80DDB, 80E, 80G, 80TTA, 80U cuts
- Section 87A rebate (full rebate for total pay up to ₹7 lakh under the new regime)
The rest is your taxable pay. Your firm then puts it through the new regime slab rates:
| Income slab | Tax rate |
|---|---|
| Up to ₹4 lakh | Nil |
| ₹4,00,001 — ₹8,00,000 | 5% |
| ₹8,00,001 — ₹12,00,000 | 10% |
| ₹12,00,001 — ₹16,00,000 | 15% |
| ₹16,00,001 — ₹20,00,000 | 20% |
| ₹20,00,001 — ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
An cess of 4% is added to the tax amount.
Step 3 — Split by 12 and take each month
Your firm takes the annual tax in 12 equal parts. It deducts one part each month.
Example:
You have a monthly salary of ₹85,000 including ₹15,000 as HRA and ₹5,000 as transport allowance.
- Annual salary: ₹85,000 × 12 = ₹10,20,000
- Less: Standard deduction (new regime): ₹75,000
- Less: Section 80C (life insurance + PPF + ELSS): ₹1,50,000
- Less: Section 80D (self and family health insurance): ₹25,000
- Taxable income: ₹10,20,000 − ₹75,000 − ₹1,50,000 − ₹25,000 = ₹7,70,000
Tax on ₹7,70,000 under new regime slabs:
- Nil on first ₹4,00,000 = ₹0
- 5% on ₹3,70,000 (₹4,00,001 to ₹7,70,000) = ₹18,500
- Cess at 4% = ₹740
- Total annual tax: ₹19,240
- Monthly TDS: ₹19,240 ÷ 12 = ₹1,603 per month
What counts as pay for TDS
Your firm works out TDS on your total pay. It includes:
- Basic pay
- Dearness allowance (DA)
- House Rent Allowance (HRA)
- Transport allowance
- Medical allowance
- Bonus and commissions
- Leave encashment
- Any other regular allowance your firm adds
What does not count as pay for Section 192:
- Money paid back for real costs (travel, phone, books)
- Uniform allowance (if used only for the uniform)
- PF and NPS contributions (these come out of pay, not added to it)
What your firm can deduct from taxable pay
Your firm applies cuts based on proof you give before the end of the financial year (usually by 28 February).
Common cuts your firm can apply:
| Section | Cut | Maximum |
|---|---|---|
| 80C | Life insurance, PPF, ELSS, EPF, home loan principal, NSC, children’s fees | ₹1,50,000 |
| 80CCD(1B) | NPS extra cut (on top of 80C) | ₹50,000 |
| 80D | Health insurance for you, spouse, children | ₹25,000 (₹50,000 for senior citizens) |
| 80DD | Care for a family member with a disability | ₹75,000–₹1,25,000 |
| 80DDB | Medical costs for specific illnesses | ₹40,000–₹1,00,000 |
| 80E | Interest on an education loan | No limit |
| 80G | Donations to approved charities | 50% or 100% of donated amount |
| 80TTA | Interest from savings accounts | Up to ₹10,000 |
| Standard cut | All salaried employees | ₹75,000 |
If you do not give proof, your firm takes TDS at the highest slab rate (30%). It cannot apply any cuts. This means it takes more than needed.
Section 192A — TDS on saved provident fund
If you take out your saved provident fund (EPF) after leaving a job, and you worked less than 5 years, TDS is taken at 10%. This applies if the amount you withdraw is over ₹50,000. This rule is separate from Section 192.
Form 16 — what it shows
Form 16 is the TDS slip your firm gives you at the end of the financial year (by 15 June of the next Assessment Year). It has two parts.
Part A — TDS details:
- Your firm’s name, address, and TAN
- Your name, PAN, and where you live
- What your firm paid you and what TDS it took each quarter
- Your PAN and your firm’s TAN
- Certificate number from the TRACES portal
Your firm downloads Part A from the TRACES portal (tdscpc.gov.in). It cannot be made by hand.
Part B — Tax math:
- Your total yearly pay
- Less: exemptions and cuts
- Less: standard cut
- Less: Section 80C, 80D, and other cuts
- = Taxable pay
- Tax at slab rates
- Less: rebate under Section 87A (if it applies)
- Add: cess
- = Total tax owed
- Less: TDS taken and paid
Part B must match what you show in your ITR.
What to do if too much TDS is taken
If your firm takes more than your real tax (because you gave incomplete proof or had other income it did not know about), you have options.
You can fix it in the same year. Give your firm extra proof before 31 March. It can then recalculate and cut future deductions.
You can also claim the excess back when you file your ITR. File before the due date (31 July for most people). The extra TDS comes back to you as a refund. The Income Tax Department sends it to your bank within 4–6 weeks of processing your ITR.
You can also use Form 13. If you expect your total pay to be below the taxable limit (because of investments, home loan interest, or other cuts), apply to the Assessing Officer for a lower TDS slip. Your firm will then take tax at the lower rate.
Working at more than one firm in a year
If you changed jobs during the year, each firm takes TDS on what it paid you. The second firm does not know what the first firm paid you.
To avoid under-TDS at the second firm:
- Tell your new firm about your first salary
- Give your new firm Form 12B (your salary details from your previous firm)
- Or tell your new firm your estimated total pay and ask it to take tax at a higher rate
If both firms take TDS without knowing the full picture, you may pay more tax than needed. Get the excess back when you file your ITR.
Sources
- Income Tax Act 2025, Section 192 — TDS on salaries (verified 2026-10-08)
- Income Tax Act 2025, Section 87A — Rebate (verified 2026-10-08)
- TRACES portal — Form 16 download (verified 2026-10-08)
- CBDT circular on Section 192 TDS computation (verified 2026-10-08)