TDS on Salary (Section 192) in Excel — New vs Old Regime

Last updated: 27 June 2026 · Slabs for FY 2025-26 (AY 2026-27). Formulas tested in Excel 2010 and later.

TDS on salary under Section 192 is the income tax the employer deducts each month, calculated by estimating the employee's annual taxable salary, applying the chosen regime's slab rates, subtracting the Section 87A rebate, adding 4% cess, and dividing by the months remaining in the year. In Excel you build one annual tax figure with a nested IF (or a slab lookup), then deduct =ROUND(AnnualTax/12,0) every month.

Key takeaways

• TDS is deducted monthly but computed on the estimated full-year salary, then spread over the remaining months.
• New regime (default): no tax up to ₹12 lakh taxable income (Section 87A rebate up to ₹60,000); with the ₹75,000 standard deduction, a salaried person pays zero tax up to ₹12.75 lakh.
• Old regime keeps exemptions (HRA, 80C, etc.), a ₹50,000 standard deduction and an 87A rebate only up to ₹5 lakh.
• Cess of 4% is added on the tax after rebate, under both regimes.
• Keep slab tables on a Settings sheet so a Budget change updates every employee.
• The employee chooses a regime; if none is declared, the new regime applies by default.

Fact box. Under the new regime for FY 2025-26, the Section 87A rebate is up to ₹60,000, making income up to ₹12 lakh tax-free. With the ₹75,000 standard deduction for salaried employees, total salary up to ₹12.75 lakh attracts zero tax. (Source: Income Tax Department; ClearTax.)

What are the TDS slabs for FY 2025-26?

The slabs differ by regime. The new regime is the default; the old regime must be opted into.

New regime (FY 2025-26 / AY 2026-27):

Standard deduction ₹75,000; Section 87A rebate up to ₹60,000 (income up to ₹12 lakh).

Old regime:

Standard deduction ₹50,000; Section 87A rebate ₹12,500 (income up to ₹5 lakh). Exemptions like HRA and Chapter VI-A deductions (80C, 80D) apply.

How do I calculate annual tax in Excel (new regime)?

Compute tax on taxable income = annual salary − ₹75,000 standard deduction. A nested IF walks the slabs. Assume taxable income is in cell TI:

=IF(TI<=400000,0,
 IF(TI<=800000,(TI-400000)*5%,
 IF(TI<=1200000,20000+(TI-800000)*10%,
 IF(TI<=1600000,60000+(TI-1200000)*15%,
 IF(TI<=2000000,120000+(TI-1600000)*20%,
 IF(TI<=2400000,200000+(TI-2000000)*25%,
 300000+(TI-2400000)*30%))))))

Then apply the rebate and cess:

Tip: Hold the slab thresholds and rates in a Settings table and use SUMPRODUCT or a marginal-rate lookup if you prefer not to maintain a long nested IF. A lookup table is easier to update when a Budget revises the slabs.

Fact box. TDS on salary is governed by Section 192 and is deducted at the time of payment on the employer's estimate of the employee's annual income. Unlike most other TDS, it is not a flat percentage — it follows the income-tax slab applicable to the employee's chosen regime. (Source: Income Tax Department, Section 192.)

How is monthly TDS spread across the year?

TDS is the annual tax divided by the months remaining, so a mid-year joiner or a salary revision re-spreads the balance. The standard approach:

1. Estimate annual taxable salary (project the current monthly salary across the full year, add bonuses).
2. Compute annual tax (slabs → rebate → cess).
3. Subtract TDS already deducted earlier in the year.
4. Divide the balance by months remaining: =ROUND((AnnualTax-TDS_SoFar)/MonthsLeft,0).

Recompute whenever salary, declared investments (old regime) or regime choice changes, so the year ends with the correct total deducted.

How to build the TDS sheet step by step

1. On a Settings sheet, enter both slab tables, the standard deduction (₹75,000 / ₹50,000) and the rebate thresholds.
2. For each employee, capture regime choice and projected annual salary.
3. Compute taxable income = salary − standard deduction (− exemptions/80C in the old regime).
4. Compute annual tax with the slab formula, apply 87A rebate, add 4% cess.
5. Deduct monthly TDS = annual tax ÷ 12 (or ÷ months remaining for joiners).
6. Carry the monthly figure into the TDS column of your salary sheet.
7. Reconcile the year-to-date total before filing Form 24Q.

How Ankeshan helps: Ankeshan computes Section 192 TDS inside Excel for both regimes — slabs, standard deduction, 87A rebate and cess — re-spreading the balance when salary or declarations change, and totalling for your 24Q. (Launching soon — join the waitlist.)

Frequently asked questions

Is the new regime or old regime better for TDS? It depends on the employee's deductions. The new regime gives zero tax up to ₹12.75 lakh salary with no exemptions; the old regime can beat it only when HRA, 80C, 80D and home-loan interest are large. Compare both in Excel for each employee.

What is the standard deduction for FY 2025-26? ₹75,000 under the new regime and ₹50,000 under the old regime, for salaried employees and pensioners.

At what salary does TDS start under the new regime? A salaried employee with taxable salary up to ₹12.75 lakh (₹12 lakh after the ₹75,000 standard deduction) pays zero tax because of the Section 87A rebate, so no TDS is deducted below that point.

Which regime applies if the employee does not choose? The new regime is the default. The employee must positively opt for the old regime each year if they want it.

Is cess added to TDS? Yes — a 4% health and education cess is added on the tax after the 87A rebate, under both regimes.

Sources

• Income Tax Department — incometax.gov.in (Section 192, slabs, standard deduction, Section 87A rebate, cess).
• ClearTax — income tax slabs and TDS on salary references.

General information, not professional advice. Verify on the official portal for your case. Reviewed by a Chartered Accountant; last updated 27 June 2026.

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