Know how much TDS is deducted on a salary above ₹1 lakh, based on tax slabs, exemptions, and deductions. Learn how to calculate and claim refunds with accurate TDS insights.
For salaries exceeding ₹1 lakh per month, TDS is not calculated on a flat rate but depends on your total annual income and the applicable income tax slab—either under the old or the new tax regime. The employer must calculate the annual tax liability based on your total salary, deduct eligible exemptions and deductions, and divide it across the year to deduct TDS monthly under Section 192 of the Income Tax Act.
What is TDS?
Tax Deducted at Source (TDS) is a system under the Indian Income Tax Act, 1961, designed to collect tax at the source of income generation. It ensures early collection of tax, minimizes tax evasion, and provides a steady revenue flow to the government. TDS applies to income types like salaries, rent, interest, commission, and professional fees. The entity making the payment deducts the tax and remits it to the government on behalf of the recipient.
TDS on Salaries
Under Section 192, the employer is responsible for deducting TDS from an employee’s salary. Unlike other incomes with fixed TDS rates, salary TDS is calculated using income tax slabs, considering the taxpayer’s annual salary, investments, deductions, and rebates.
Salary income is unique in that the payer (employer) has a clear picture of the total annual income and can calculate TDS with accuracy. This differs from payments like rent or professional fees where a flat rate is applied due to variable and multiple income sources.
TDS depends on your annual salary, tax slab, and deductions—not just the ₹1 lakh figure. Consult Vakilsearch for exact TDS calculations.
How to Calculate TDS on Salary?
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Calculate Annual Income: Include basic salary, HRA, bonuses, and all other components.
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Apply Exemptions: Deduct HRA, conveyance, LTA, children’s education, medical allowance, etc.
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Apply Deductions: Subtract eligible deductions under Sections 80C, 80D, 80E, 80G, etc.
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Arrive at Taxable Income: Annual income minus exemptions and deductions.
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Apply Tax Slab: Use applicable slab rates under the old or new regime.
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Divide Tax Amount Monthly: This figure is your TDS deduction per month.
Use our Online TDS interest calculator to get accurate results quickly.
TDS Rates in the New Tax Regime
| Income Slab | Income Tax Rate |
|---|---|
| ₹0 – ₹3,00,000 | Nil |
| ₹3,00,000 – ₹6,00,000 | 5% |
| ₹6,00,000 – ₹9,00,000 | 10% |
| ₹9,00,000 – ₹12,00,000 | 15% |
| ₹12,00,000 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
TDS Exemptions and Deductions
Common Exemptions:
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HRA (Rent)
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Conveyance Allowance
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LTA (Leave Travel)
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Children’s Education Allowance
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Medical Allowance
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Interest on Savings and FD
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Agricultural & Pension Income
Common Deductions:
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Section 80C: PPF, LIC, home loan principal (up to ₹1.5L)
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Section 80D: Health insurance premiums
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Section 80E: Education loan interest
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Section 80EE: Home loan interest (up to ₹50,000)
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Section 80G: Charitable donations
TDS Refund Eligibility
To determine if you’re eligible for a refund:
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Compute total annual income.
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Apply exemptions and deductions.
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Calculate tax liability based on slab.
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Compare with TDS already deducted (check Form 16).
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If excess TDS is deducted, file ITR to claim a refund.
Example Calculation
If your annual taxable income is ₹10,00,000:
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Under the new regime, tax = ₹62,500 (as per slabs).
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Divide this by 12 = ₹5,208 TDS/month.
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If you’ve already paid more, the excess is refundable.
Conclusion
TDS on salaries is tailored to each individual’s annual income and applicable deductions. While the concept may appear complex, it ultimately ensures proper tax compliance and can offer refunds if excess tax is paid. Since tax laws and slabs may change, it’s best to seek expert advice or use a TDS calculator to get precise results. Visit Income Tax India or consult experts like Vakilsearch for accurate guidance.
FAQ’s:
How is TDS calculated on a monthly salary?
To calculate TDS divide the annual salary by 12 (number of months) and apply the TDS rate to your income level.
What is the TDS rate for a monthly salary, and how does it vary with different salary slabs?
TDS rates vary based on income slabs. For salaries of ₹50,000, ₹70,000, ₹90,000, and ₹75,000, the applicable TDS rates differ.
How much tax is deducted from a ₹50,000 monthly salary?
The tax deducted on a monthly salary of ₹50,000 can be found in the TDS slab rate provided above.
How much tax would I need to pay for a ₹70,000 monthly salary?
To calculate your TDS based on your annual income and applicable TDS rate, get in touch with the experts at Vakilsearch right away!
How does the in-hand salary get affected after TDS deductions?
TDS reduces your in-hand salary, as it's the amount you receive after tax deductions.
What factors influence TDS deductions from my salary?
TDS depends on income, exemptions, deductions and the TDS rate applicable to your income slab.
How can I check the amount of TDS deducted from my salary?
You can find the TDS deducted in your payslip or check Form 26AS online.
What is the in-hand salary of 7 lakh CTC?
Your in-hand salary depends on various factors, including deductions, exemptions, and the TDS rate for your income level.
Are there any exemptions or deductions I can claim to reduce my TDS?
Yes, you can claim exemptions and deductions, such as HRA or investments under Section 80C, to lower your taxable income and, in turn, reduce TDS.
How much TDS is deducted on 1 lakh salary?
The amount of Tax Deducted at Source (TDS) on a salary of 1 lakh varies based on the applicable tax slab and deductions. TDS is calculated based on the total income, including salary, and the tax deducted at the source as per the prevailing tax rates.
Is there any limit for TDS on salary?
Yes, there is a threshold limit for TDS on salary. Employers are required to deduct TDS on salary payments if the annual salary exceeds the minimum taxable income limit, which is determined by the applicable tax slabs
Can I avoid TDS on salary?
While you cannot entirely avoid TDS on salary, you can reduce the amount of TDS deducted by investing in tax-saving instruments such as Provident Fund, National Pension Scheme, Life Insurance, and others. Additionally, submitting investment proofs to your employer can help adjust the TDS deduction.
Is TDS refundable on salary?
Yes, TDS deducted on salary is refundable if the total tax liability for the financial year, after considering deductions and exemptions, is less than the total TDS deducted. In such cases, you can claim a refund while filing your income tax return
How to remove TDS from salary?
TDS on salary cannot be entirely removed, but it can be minimised by investing in tax-saving options and providing investment proofs to your employer. This helps in adjusting the TDS deduction based on the investments made by you, thereby reducing the overall tax liability.
