Section 392 · was Section 192 in the 1961 Act
Your employer deducts TDS from salary every month. The employer estimates your total annual income, applies the regime and deductions you declared, computes annual tax, and divides by 12. Form No. 130 (earlier Form 16) is issued as the TDS certificate.
Who it applies to: All salaried employees whose annual income attracts tax — the employer deducts and deposits TDS on their behalf.
Kavya earns ₹10L annual salary. She declares ₹1L in 80C investments and pays ₹22K in health insurance premium (80D). She uses the optional regime. How much TDS does her employer deduct each month?
Gross salary: ₹10,00,000 Standard deduction: – ₹50,000 (optional regime) Section 123 (80C): – ₹1,00,000 (declared) Section 130 (80D): – ₹22,000 Total income: ₹8,28,000 Tax on ₹8,28,000 (old regime slabs): ₹0–2.5L: Nil ₹2.5L–5L: 5% × ₹2.5L = ₹12,500 ₹5L–8.28L: 20% × ₹3.28L = ₹65,600 Total: ₹78,100 Add 4% cess: ₹81,224 Monthly TDS: ₹81,224 ÷ 12 ≈ ₹6,769/month
Result: Kavya's employer deducts ₹6,769 per month. If Kavya forgets to declare her 80C investments, employer would deduct based on ₹9,50,000 income (no 80C deduction) — a higher TDS. She would get a refund after filing, but cash flow suffers.
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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.