Take an annual gross salary of Rs 15,00,000 under the new regime. The employer first applies the Rs 75,000 standard deduction, leaving taxable income of Rs 14,25,000. Running this through the new-regime slabs gives Rs 0 on the first Rs 4 lakh, 5 percent on the next Rs 4 lakh which is Rs 20,000, 10 percent on the Rs 8 lakh to Rs 12 lakh band which is Rs 40,000, and 15 percent on the Rs 12 lakh to Rs 14.25 lakh portion which is Rs 33,750. That totals Rs 93,750. Because taxable income is above Rs 12 lakh, the Section 87A rebate does not apply. Adding the 4 percent health and education cess gives an annual tax of Rs 97,500. Spread over the year under Section 192, that is a monthly TDS of about Rs 8,125, leaving monthly net pay of about Rs 1,16,875 on a gross of Rs 1,25,000.
How it is calculated
The calculator estimates tax the way an employer does under Section 192. It subtracts the Rs 75,000 standard deduction from your gross salary, runs the remaining income through the new-regime slabs, applies the Section 87A rebate with marginal relief so income up to Rs 12 lakh pays no tax and amounts just above are smoothed, then adds 4 percent health and education cess. The annual tax is divided by 12 to give the monthly TDS. This is an estimate based only on salary under the new regime. Your actual deduction can differ if you choose the old regime and declare investments, claim HRA or other exemptions, have other income, or join partway through the year. Submitting your investment proofs and regime choice to payroll early prevents over-deduction in the closing months.
Frequently asked questions
How does my employer calculate TDS?
Under Section 192 the employer estimates your annual tax on projected salary, then deducts roughly one-twelfth each month. Declaring investments (old regime) or choosing the new regime changes the estimate, so submit proofs early to avoid over-deduction.
What is the standard deduction for salaried employees under the new regime?
For AY 2025-26 salaried employees and pensioners get a flat standard deduction of Rs 75,000 under the new regime. This amount is subtracted from gross salary before the slab tax is computed, reducing taxable income directly.
Up to what income is there no TDS under the new regime?
Under the new regime, Section 87A provides a full tax rebate of up to Rs 60,000 for individuals whose net taxable income does not exceed Rs 12,00,000. After applying the standard deduction of Rs 75,000, a gross salary up to approximately Rs 12,75,000 results in zero annual tax and therefore zero monthly TDS.
Can I switch between the old and new regime to reduce TDS?
Yes. You can inform your employer at the start of the financial year which regime you want to use for TDS purposes. If you choose the old regime and submit investment-declaration proofs (PPF, LIC, HRA, etc.), the employer will compute TDS on the lower taxable income that results. You can also switch at filing time, though that only affects the final settlement and does not change the monthly deductions already made.