Section 192: TDS on Salary under the Income-tax Act

Which law applies from 1 April 2026?

The Income-tax Act, 2025 came into force on 1 April 2026. Salary paid before that date is generally subject to section 192 of the 1961 Act, while salary paid on or after that date is governed by section 392 of the 2025 Act, subject to the applicable transition and savings provisions. This distinction depends on the date of payment, not merely the month to which salary relates. For example, March 2026 salary paid on 31 March 2026 follows the old Act; April 2026 salary paid on 30 April 2026 follows the new Act.

Consult the official Income-tax Act, 2025 (as amended), the official section 192 text, and the Income Tax Department transition FAQs.

Section 192(1): TDS on salary at the average tax rate

A person responsible for paying income taxable as salary must deduct tax at the time of payment, at the average rate calculated using the rates in force and the employee's estimated taxable salary for the financial year. The same central principle is retained in section 392(1) of the 2025 Act, referring to the relevant tax year.

Average rate means the estimated income tax payable on the estimated taxable salary divided by that salary, expressed as a percentage. Tax rates, surcharge, cess, rebates and permissible deductions must be considered as applicable; the rate is not necessarily a flat percentage of gross pay.

Explanation of the original section 192 provisions

Sub-sections (1A) and (1B): Non-monetary perquisites

An employer may elect to pay tax itself on the whole or part of a taxable non-monetary perquisite, rather than deducting that tax from the employee's cash salary. The tax is determined using the average-rate method and is treated as salary TDS. The corresponding mechanism appears in section 392(2) of the 2025 Act.

Sub-section (2): More than one employer

An employee with successive or concurrent employers may give the prescribed particulars of salary and TDS from another employer to a chosen employer so that the correct overall deduction can be calculated. Under the new Act, see section 392(4).

Sub-section (2A): Relief for arrears or advance salary

Eligible employees may submit prescribed particulars to claim relief under section 89(1) of the 1961 Act when computing salary TDS. The corresponding relief provision under the 2025 Act is section 157. Supporting information must be furnished in the prescribed manner.

Sub-section (2B): Other income and house-property loss

Employees may furnish prescribed particulars of other taxable income, tax already deducted, and eligible house-property loss. The employer takes these into account within statutory limits. In particular, disclosure of losses under other income heads does not generally permit reducing salary TDS; house-property losses are subject to the applicable restrictions.

Sub-sections (2C) and (2D): Perquisite reporting and evidence

The employer must provide prescribed particulars of taxable perquisites and profits in lieu of salary and obtain required proof of deductions, exemptions and loss claims. The corresponding obligations are consolidated in section 392(5) of the 2025 Act.

Sub-section (3): Adjusting excess or short deduction

The employer may increase or reduce TDS during the year to correct earlier excess or deficient deductions. Reconciliation should be based on current estimated income, tax regime and previous TDS.

Sub-sections (4) and (5): Provident fund and superannuation payments

Special withholding obligations apply to certain taxable accumulated balances paid by trustees of recognised provident funds and certain approved superannuation fund payments. Section 392(6) and (7) of the 2025 Act address related payments; the precise treatment depends on the fund, taxable status, thresholds and governing schedule.

Sub-section (6): Foreign-currency salary

Salary payable in foreign currency must be converted into Indian rupees using the prescribed exchange rate for salary TDS purposes. The corresponding provision is section 392(8) of the 2025 Act.

Important current compliance points

• Tax regime: Compute TDS under the regime applicable to the employee, including valid employee intimation where relevant. An employer's payroll intimation and an employee's final return election are not necessarily the same process.
• Eligible start-up ESOPs: Special timing rules may defer tax deduction or payment on specified perquisites. Check section 192(1C) of the 1961 Act for relevant old-law periods and section 392(3) of the 2025 Act for current periods.
• Payroll documentation: Maintain salary projections, investment proofs, declarations, perquisite valuation and records of tax deducted and deposited.
• Statements and certificates: Issue applicable TDS certificates and file prescribed statements within the relevant deadlines. Verify current forms and procedures on the official e-filing portal.
• Changes during the year: Review salary increments, bonuses, employment changes and declarations to avoid under-deduction.

1961 Act and 2025 Act: Salary TDS provisions

These are subject-matter correspondences, not a representation that every word, condition or procedure is identical.

Frequently asked questions

Is TDS calculated on gross monthly salary?

No. It is generally based on the employer's estimate of annual taxable salary and applicable tax, with deductions allocated across salary payments and adjusted as needed.

What if an employee joins another employer mid-year?

The employee should provide relevant previous-employer salary and TDS details in the prescribed manner to avoid inaccurate estimates.

Can an employer consider house-property loss?

Yes, subject to the prescribed declaration, evidence and statutory limits; not every loss from another income head can be set off in payroll TDS.

Does section 192 still apply to salaries paid in October 2026?

For salary payments made after 1 April 2026, the current salary TDS provision is section 392 of the Income-tax Act, 2025. Section 192 remains important for earlier periods and saved proceedings.

Official law and guidance

Refer to the Income-tax Act, 1961, section 192, the Income-tax Act, 2025, the official salary taxation guide, and the Income Tax e-Filing portal. Check amendments, rules and notifications applicable to the particular payment date and tax year.