How TDS on Salary Works

Under the new regime, a ₹12,00,000 salary with the ₹75,000 standard deduction leaves ₹11,25,000 taxable. That spans the 5%, 10%, and 15% slabs, yielding ₹78,750 in tax plus ₹3,150 cess — about ₹6,825 per month. The employer withholds this from your monthly salary and deposits it with the government.

New vs. Old Regime

The new regime's lower slab rates help most salaried taxpayers who claim few deductions; the 87A rebate makes income up to ₹7,00,000 entirely tax-free. The old regime rewards taxpayers with heavy 80C, 80D, HRA, and LTA usage — above roughly ₹15 lakh of taxable income, the old regime with full deductions usually wins again. Run both here and compare the monthly TDS.

Rebate Rules

Section 87A wipes out the tax entirely when taxable income stays at or below the threshold — ₹7,00,000 (new regime) or ₹2,50,000 (old regime). Cross the line by even one rupee and the full slab tax applies, so it pays to stay just under the limit if you can shift income or deductions.