# Section 192 — TDS on Salary

## Who deducts?

Payer: Employer (any person paying salary).
Payee: Employee.

## When?

At the time of payment of salary (not at credit).

## Threshold

TDS applies only if estimated salary for the year exceeds the Basic Exemption Limit applicable to the employee:

₹2,50,000 — individuals below 60 yrs
₹3,00,000 — senior citizens (60–80 yrs)
₹5,00,000 — super senior citizens (80+ yrs)

(Under the default New Tax Regime u/s 115BAC, the basic exemption is ₹3,00,000 for all individuals.)

## Rate

Average rate of income tax on estimated salary income for the financial year (i.e., total estimated tax ÷ total estimated salary).

## Key Point — Surcharge and HEC

Unlike most other sections, surcharge and Health & Education Cess ARE added to TDS on salary, because salary is taxed at slab rates and we are computing actual tax liability of the employee.

Worked example

### Example 1

Example: Mr. R's estimated salary for FY 2024-25 is ₹12,00,000 (old regime, no deductions claimed). Estimated tax: ₹1,72,500 + 4% HEC = ₹1,79,400. Average rate = 1,79,400 / 12,00,000 = 14.95%. Monthly TDS = (1,79,400 / 12) = ₹14,950.

### Example 2

Example: Employee whose estimated salary is ₹2,40,000 — no TDS as it is below the basic exemption limit.

⚠️ Common exam mistakes

Deducting TDS at flat 10% / 20% rather than average rate.
Forgetting to include surcharge and 4% HEC in computing TDS on salary.
Not re-estimating salary mid-year when bonus / increment changes the projection.

Reference: 192

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