TDS on salary calculation for FY 2026-27: monthly TDS with examples (new regime)

Your payslip shows a line called TDS or income tax. It is not a fixed slice of your salary. Every month the employer looks at what you are likely to earn in the whole tax year, works out the tax on that, and deducts a share of it. This post shows that working for tax year 2026-27 (FY 2026-27) under the new regime, at three salaries, and then shows what happens in a bonus month and when you change jobs mid-year.

The rule the employer follows

From 1 April 2026 the Income-tax Act, 2025 applies. Section 392(1) (earlier section 192 of the 1961 Act) says the employer must deduct tax when it pays salary, at the average rate of income tax on your estimated income under the head Salaries for the tax year. In plain words: estimate the year's salary, work out the year's tax, and take it in instalments.

Section 392(5)(c) lets the employer increase or reduce later deductions to make up for any excess or shortfall earlier in the year. That is the clause that lets TDS change mid-year when your income estimate changes.

Source: Income-tax Act, 2025, section 392(1) and 392(5)(c): TDS on salary at the average rate on estimated income; later deductions adjusted for any excess or shortfall (earlier section 192)

Step by step: the projected-income method

• Project the gross salary for the full tax year (April to March): monthly pay × 12, plus any bonus or arrears the employer already knows about.
• Subtract the ₹75,000 standard deduction (section 19, Table Sl. No. 2; earlier section 16(ia)). Under the new regime, that is the main deduction left for a salaried person.
• Add any other income you have declared to the employer, such as FD interest. More on that below.
• Work out the slab tax: nil up to ₹4 lakh, 5% from ₹4 to 8 lakh, 10% from ₹8 to 12 lakh, 15% from ₹12 to 16 lakh, 20% from ₹16 to 20 lakh, 25% from ₹20 to 24 lakh, 30% above.
• Apply the section 156 rebate (old section 87A): if taxable income is ₹12 lakh or less, the tax is nil. Just above ₹12 lakh, marginal relief caps the tax at the income above ₹12 lakh.
• Add 4% health and education cess.
• Divide by the months left in the year. In April that is 12. Once some TDS has already been deducted, take it off first: (projected tax − TDS so far) ÷ months left, this month included.

Source: Income-tax Act, 2025, section 202(1): new regime slab table, the default unless you opt out under section 202(4) (earlier section 115BAC(1A))

Source: Income-tax Act, 2025, section 156(2): rebate up to ₹60,000 when income is ₹12 lakh or less, and marginal relief above it (earlier section 87A)

Source: Income-tax Act, 2025, section 19 (Table, Sl. No. 2): ₹75,000 standard deduction under section 202(1)

Three salaries, worked through

All three are gross salaries (not CTC), paid in equal monthly amounts, new regime, no other income, for a resident below 60.

• ₹8 lakh a year (₹66,667 a month): taxable income ₹7,25,000. Slab tax ₹16,250 (5% of the ₹3,25,000 above ₹4 lakh). The rebate wipes it out, so the year's tax is nil and so is the monthly TDS.
• ₹12 lakh a year (₹1,00,000 a month): taxable income ₹11,25,000. Slab tax ₹52,500 (₹20,000 on the 5% slab and ₹32,500 on the 10% slab). Still under ₹12 lakh, so the rebate covers it all. No TDS.
• ₹18 lakh a year (₹1,50,000 a month): taxable income ₹17,25,000. Slab tax ₹20,000 + ₹40,000 + ₹60,000 + ₹25,000 (20% of the ₹1,25,000 above ₹16 lakh) = ₹1,45,000. No rebate at this level. Cess ₹5,800. Tax for the year ₹1,50,800.

Monthly TDS table

In a steady year, then, monthly TDS really is the year's tax ÷ 12. The rest of this post is about the years that are not steady, which is most of them.

Bonus month: why TDS jumps

Take the ₹18 lakh employee. In December the company pays a ₹2,00,000 bonus that was not in the April estimate. The projected salary for the year is now ₹20 lakh, taxable income ₹19,25,000, slab tax ₹1,85,000, and with cess ₹1,92,400. That is ₹41,600 more than before. From April to November the employer has deducted 8 × ₹12,567 = ₹1,00,536, so ₹91,864 is still to come.

Employers handle this in one of two ways. Both meet the law, because section 392(5)(c) lets them increase later deductions to cover a shortfall.

The same thing catches people near the rebate line. Someone on ₹12 lakh pays no TDS from April to November. If a ₹1,00,000 bonus arrives in December, the year's salary becomes ₹13 lakh and taxable income ₹12,25,000. Marginal relief limits the tax to the ₹25,000 above ₹12 lakh, plus ₹1,000 cess: ₹26,000. Spread over December to March, that is ₹6,500 a month of TDS, where there was none before.

Mid-year joiner: what the new employer counts

Say you join a new company on 1 October 2026 at ₹1,50,000 a month, an ₹18 lakh a year rate. The new employer pays you for six months of tax year 2026-27, not twelve. What it deducts depends on whether you tell it about the first half of the year.

• First job of the year (nothing earned from April to September): salary for the tax year is 6 × ₹1,50,000 = ₹9,00,000. Taxable income ₹8,25,000, under the ₹12 lakh rebate line, so the tax and the TDS are nil. Dividing an ₹18 lakh tax by 12 would have said ₹12,567 a month, which is wrong here.
• Job change, earlier salary declared: suppose the old job paid ₹1,00,000 a month from April to September (₹6,00,000). The old employer projected ₹12 lakh for the year and rightly deducted nothing. Together the year's salary is ₹15,00,000, taxable ₹14,25,000, slab tax ₹93,750, cess ₹3,750, total ₹97,500. If you give the new employer the details of the earlier salary, it deducts all of it from your six salaries: ₹97,500 ÷ 6 = ₹16,250 a month.
• Job change, earlier salary not declared: the new employer sees only ₹9,00,000 and deducts nothing. Neither employer did anything wrong, but your tax for the year is still ₹97,500. You pay it yourself before filing the return.

The declaration is optional, and the form for it is Form No. 122 (earlier Form 12B), under rule 204(1) of the Income-tax Rules, 2026 and section 392(4)(a). The same form is how you report other income, such as FD interest, if you want it taxed through payroll. Under section 392(4)(b), the particulars you give can lower salary TDS only for a loss under the head house property, or tax already deducted or collected elsewhere. Anything else you declare can only raise it.

Source: Income-tax Rules, 2026, rule 204: particulars of salary from other employers, other income and other TDS furnished in Form No. 122

The forms: Form 138 and Form 130

• Every quarter the employer files a TDS statement for salary in Form No. 138 (rule 219 of the Income-tax Rules, 2026; it was Form 24Q under the 1962 Rules). Due dates: 31 July, 31 October, 31 January, and 31 May after the year ends.
• After the year, the employer gives you Form No. 130 (earlier Form 16), the salary TDS certificate, by 15 June (rule 215). For tax year 2026-27 that means by 15 June 2027.
• If you worked for two employers in the year, each issues Parts A and B of Form 130 for its own period (rule 215(2)). Add both when you file.

Source: Income-tax Rules, 2026, rule 219: quarterly TDS statement for section 392 in Form No. 138, with due dates

Source: Income-tax Rules, 2026, rule 215: salary TDS certificate in Form No. 130 by 15 June; one per employer when you change jobs

Work out your own monthly TDS in Excel

The free sheet above gives the year's tax under both regimes. Type your projected gross salary for the year (monthly pay × 12, plus any bonus you expect) into the gross salary cell, then read the new-regime total. Divide it by 12 for a steady year. If TDS has already been deducted this year, take that off the total and divide by the months left, this month included. That is the same arithmetic your payroll team runs.

If your TDS looks wrong

• Check which regime payroll is using. The new regime is the default under section 202(1). If you want the old regime for TDS, tell your employer; the final choice is still made in your return.
• Check the projected salary on the payslip or the tax worksheet. Arrears, a bonus or a mid-year raise all change it.
• If you changed jobs, check whether the new employer has your earlier salary. If not, set money aside for the tax you will owe at filing.
• TDS is only an advance payment. The final tax is settled when you file, and any excess comes back as a refund.

General information on how TDS on salary works for tax year 2026-27, not tax advice. Your employer's payroll may round or time deductions differently; your Form 130 and your return are what count.