When is TDS deducted on salary?
How an employer deducts tax on salary, why the trigger is the payment date, how the Income-tax Act, 2025 renumbers the duty to section 392(1) from April 2026, and what payroll has to reset for tax year 2026-27.
In this guide
An employer deducts tax on salary at the time of payment. Salary paid on or before 31 March 2026 follows section 192 of the 1961 Act. Salary paid on or after 1 April 2026 follows section 392(1) of the Income-tax Act, 2025. Rates did not change. Confirm the Act from the payment date, then file that period's TDS return on TRACES.
Which Act governs a salary TDS payment?
Salary TDS is not like contractor TDS. The official TDS-compliance FAQ is explicit: tax is deducted when the salary is paid, not when it is credited in the books.
| Payment | Governing provision |
|---|---|
| Salary paid on or before 31 March 2026 | Section 192 of the Income-tax Act, 1961 |
| Salary paid on or after 1 April 2026 | Section 392(1) of the Income-tax Act, 2025 |
A March salary paid on 7 April is a 2025-Act payment. A March salary paid on 31 March is not. Payroll that books the liability in March and pays in April has to follow the payment date, not the month the payslip is labelled.
Is salary in the section 393 table?
No. Salary sits in section 392(1), not in the consolidated deduction table in section 393. Quoting a 393 serial on Form 24Q is the wrong code.
What must an employer estimate for TDS?
The employer estimates the employee's annual tax and deducts it in instalments across the remaining pays of the year. That idea did not change. From 1 April 2026 the estimate is for tax year 2026-27, on the 2025 Act, using the regime the employee has chosen for that year.
The official FAQ tells employers to reset the computation on 1 April. Do not carry a leftover FY 2025-26 worksheet into April and keep deducting against last year's slabs. Last year is closed for this purpose once March is paid.
Does late deposit of March tax get a new-Act defence?
No. Deposit and return dates are the same operational calendar they were. See TDS payment due dates and the Form 24Q map. Late deposit of March 2026 tax still attracts 1.5 per cent a month from the date of deduction to the date of payment. Paying it in May because the new Act has started is not a defence.
Which Act do 2026-27 declarations cite?
The declaration the employee hands payroll in April has to cite the 2025 Act. The official example is the old section 80C basket, which now lives in Schedule XV read with section 123.
If the April form still says 80C, 80D, 80CCD, the payroll file and the TDS return will disagree with the Act the return is filed under. Update the declaration template before the first April run, not after the first 24Q fails.
Form 16 for FY 2025-26 is still the 1961-Act certificate for that year. Do not invent a new certificate number for tax year 2026-27 from this page. Read the TRACES / e-Filing utility for the year you are issuing.
Where does the employee see salary TDS?
Credit follows the year the income is assessable, not the day the employer deposited the challan.
- Tax deducted on March 2026 salary sits in AIS for AY 2026-27, even if the employer deposited it after 1 April.
- Tax deducted on April 2026 salary sits in Form 168, the annual information statement for tax year 2026-27.
The official FAQ says those two statements are generated separately and both are on the e-Filing portal. An employee who looks only at last year's AIS in August will think April TDS is missing. It is on the other statement.
If the numbers still do not match, the same FAQ's instruction is to tell the employer and have them file a correction. The usual cutover error is the old section number on a new-year line, or the wrong AY / tax year on the challan.
How do I confirm salary TDS rules?
- Read the salary answers on the official TDS Compliance FAQ. Questions 19 to 26 are the cutover.
- Open section 392 for payments from April 2026. Do not look for salary in section 393.
- File the statement and issue the certificate only through TRACES / e-Filing. A spreadsheet is not a return.
Match the employee's side against 26AS and AIS for AY 2026-27, and against Form 168 for tax year 2026-27.
Where do salary TDS codes get updated?
The payment-date rule for section 192 / section 392(1) is in the department's own FAQ. What still moves is the Form 24Q utility, a Form 16 notification, or a correction to the salary computation. CBDT updates on Complied AI keep those next to section 392 so payroll is not quoting 192 on an October 2026 payslip, and is not looking for salary in the section 393 table.
Practical checks
Common questions
When is TDS deducted on salary, at credit or at payment?
At payment. The official TDS-compliance FAQ says salary TDS is triggered when the salary is paid, not when it is credited in the books. March 2026 salary paid on 31 March 2026 is still section 192. April 2026 salary paid on 30 April 2026 is section 392(1). A March payslip paid on 7 April is already a 2025-Act payment.
Did salary TDS rates change under the Income-tax Act, 2025?
No. The official FAQ says TDS rates and monetary thresholds were retained. Section 392(1) is a restatement of the employer duty, not a rate change. Payroll still has to quote section 392(1) on returns for payments from 1 April 2026, or the Form 24Q statement can fail processing. Salary is not in the section 393 table.
Should the FY 2026-27 investment declaration cite section 80C?
No. The official FAQ says declarations for tax year 2026-27 should cite the 2025 Act. The old section 80C deductions sit in Schedule XV read with section 123. Leaving 80C on the April form is how a payroll file and a TDS return fall out of line. Update the declaration template before the first April run.
Where does March 2026 salary TDS show for the employee?
In AIS for AY 2026-27, under the 1961 Act. April 2026 salary TDS shows in Form 168, the annual information statement for tax year 2026-27. The official FAQ says the portal keeps those two statements separate. An employee who looks only at last year's AIS in August will think April TDS is missing.
March salary was paid on 7 April. Is that still section 192?
No. A March salary paid on 7 April is a 2025-Act payment under section 392(1). Payroll that books the liability in March and pays in April has to follow the payment date, not the month the payslip is labelled. Quote 392(1) on that line, and file it on the April 24Q, not the March one.
Late deposit of March 2026 salary TDS. Does the new Act help?
No. Late deposit of March 2026 tax still attracts 1.5 per cent a month from the date of deduction to the date of payment. Paying it in May because the Income-tax Act, 2025 has started is not a defence. Deposit and return dates stay on the same operational calendar, including Form 24Q.
Do I issue a new Form 16 number for tax year 2026-27?
Form 16 for FY 2025-26 is still the 1961-Act certificate for that year. Do not invent a new certificate number for tax year 2026-27 from this page. Read the TRACES / e-Filing utility for the year you are issuing, and quote section 392(1) on every salary TDS line from April 2026.
Publication method
How this guide was prepared
This guide is published by the Complied AI research desk. Its source list and stated position were checked against the official records shown below on 15 August 2026.
Automation, including AI, may assist research, drafting and structure. It does not replace the official record or amount to an independent professional review. Read our editorial standards and corrections policy.
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