What TDS means
TDS stands for tax deducted at source. On a salary, it is the income tax your employer cuts from your pay each month and sends to the government in your name. It is not an extra tax. It is your own yearly income tax, collected in parts before the money reaches you.
TDS also applies to some other payments, such as interest on fixed deposits. This page is about TDS on salary.
How the monthly figure is worked out
Your employer estimates your income tax for the whole tax year. It then spreads that amount over your monthly salaries. If your pay changes mid-year, or you tell HR about other income, the later months adjust.
Kavya, 31, works in Noida. Her gross salary is ₹18,00,000 a year, or ₹1,50,000 a month. She is a resident and uses the new tax regime for Tax Year 2026–27. Kavya is a made-up example; PF and other deductions are left out here to keep the focus on tax.
| Step | ₹ per year |
|---|---|
| Gross salary | 18,00,000 |
| − Standard deduction | 75,000 |
| = Taxable income | 17,25,000 |
| Tax on ₹4–8 lakh at 5% | 20,000 |
| Tax on ₹8–12 lakh at 10% | 40,000 |
| Tax on ₹12–16 lakh at 15% | 60,000 |
| Tax on ₹16–17.25 lakh at 20% | 25,000 |
| Slab tax | 1,45,000 |
| + Cess at 4% | 5,800 |
| = Yearly tax | 1,50,800 |
Spread over 12 months, that is about ₹12,567 of TDS a month. The standard deduction is a fixed ₹75,000 that salaried people subtract first. The cess is a 4% charge added on top of the tax.
Now compare two lower salaries. At a gross of ₹12,75,000, taxable income is exactly ₹12 lakh, and the rebate (a discount that cancels the tax) brings tax to ₹0. At ₹12,85,000, the slab tax would be ₹61,500. Marginal relief limits it to the ₹10,000 by which income crosses ₹12 lakh, so the total is ₹10,400 with cess.
Where you see TDS
- Your payslip, as “income tax” or “TDS” in the deductions.
- Form 16, the yearly certificate your employer gives you. It shows your salary and the tax deducted.
- Form 26AS and the AIS (annual information statement) on the income tax e-filing portal, incometax.gov.in. These show what was deposited against your PAN.
If the amount on your payslip doesn’t appear on the portal, ask HR about it.
What TDS is not
TDS is not the final word on your tax. The real figure is settled when you file your return. If more was cut than you owe, you can claim a refund. If less was cut, you pay the balance.
Zero TDS on a payslip usually means your employer expects your yearly tax to be zero, as in our ₹12,75,000 case. It isn’t a special exemption.
Changing jobs mid-year is a common trap. Each employer may work out TDS as if it were your only salary. Then too little tax is cut overall, and you face a bill at the end. Tell your new employer about your earlier salary and the tax already deducted.
PF withdrawals can also carry TDS in some cases. Our guide on withdrawing your PF explains when.
What to check
- Compare the TDS on your last payslip with your own estimate.
- Make sure HR knows which tax regime you chose. The new regime is the default.
- Once a year, match Form 16 with Form 26AS or the AIS.
To estimate your own yearly tax, open the Income tax calculator. It runs in your browser and keeps your numbers on your device.