TDS on Salary Explained: How Employers Calculate Monthly Tax Deduction Step by Step (2026 Guide)
TDS on salary is the income tax deducted by employers from an employee’s monthly salary based on estimated yearly income. The employer calculates gross salary, subtracts deductions like standard deduction and exemptions, applies tax slab rates under the chosen regime, and divides the final tax into monthly installments. If excess TDS is deducted, it can be claimed as a refund during ITR filing. Proper planning of deductions and tax regime helps optimize TDS liability.