What is TDS on salary?
Short answer
TDS on salary is income tax the employer deducts from pay each month, based on an estimate of the employee’s tax for the year, and deposits with the government.
How it works
- The employer projects the year’s taxable income, works out the tax under the employee’s chosen regime, and deducts it in monthly instalments.
- Health and education cess of 4% is added, and surcharge applies at high incomes.
- The employer files a quarterly return (Form 138 from 1 April 2026, earlier Form 24Q) and gives the employee a TDS certificate (Form 130, earlier Form 16).
- Employees declare investments, rent and loan interest to the employer on Form 124 (earlier Form 12BB).
In AdviHR
AdviHR projects tax each month for the employee’s regime, adds cess and surcharge with marginal relief, and produces the Form 138 file for quarters 1 to 3.
Frequently asked questions
Which regime does TDS follow?
The one the employee elects with the employer. The old regime allows deductions such as 80C and HRA; the new regime does not.
What replaced Form 24Q?
Form 138, from 1 April 2026 under the Income-tax Act 2025.
Related terms
How sure are we? These figures use the same rules AdviHR payroll applies. We publish what has been checked against an official source and what has not, on the statutory accuracy page.
General information, not legal or tax advice. Confirm against the official notification and your adviser.