Salary TDS Filing by Employers for AY 2026-27

For the Filing of Salary TDS by an Employer in AY 2026-27, employers must calculate tax under Section 192, deduct it from employees’ salaries during FY 2025-26, deposit the amount with the Central Government and file quarterly Form 24Q statements. Employers must also issue Form 16 to eligible employees by 31 May 2026.

The correct tax regime, salary exemptions, deductions, employee declarations, PAN details and quarterly reporting all affect the employer’s compliance. This guide explains the Salary TDS Filing by Employer for AY 2026-27, including due dates, calculation rules, Form 12BB, Form 24Q, TRACES and corrections.

Salary TDS Filing by Employer for AY 2026-27: Key Dates

The financial year relevant to AY 2026-27 is FY 2025-26, from 1 April 2025 to 31 March 2026.

Employers should track three separate compliance dates:

1. TDS deduction date: When salary is paid or credited, whichever occurs earlier.
2. TDS payment date: When the deducted tax is deposited with the Government.
3. TDS return date: When the quarterly Form 24Q statement is filed.

Employer TDS Return Filing Due Dates AY 2026-27

Salary period	Quarter	Form 24Q filing due date
April to June 2025	Q1	31 July 2025
July to September 2025	Q2	31 October 2025
October to December 2025	Q3	31 January 2026
January to March 2026	Q4	31 May 2026

The fourth-quarter Form 24Q is particularly important because it contains the employee’s annual salary details and information required for Form 16.

Employers should verify the latest compliance requirements on the Income Tax Department’s TDS information page.

TDS Payment Due Dates for Salary Paid in FY 2025-26

An employer must generally deposit salary TDS by the 7th day of the following month.

Month in which salary is paid or TDS is deducted	TDS payment due date
April 2025 to February 2026	7th of the following month
March 2026	30 April 2026

For example:

• TDS deducted from salary paid in September 2025 must generally be deposited by 7 October 2025.
• TDS deducted from salary paid in March 2026 must generally be deposited by 30 April 2026.

Employers deposit TDS electronically using Challan ITNS 281. The payment should be made under the correct TAN, assessment year and relevant major and minor head.

Section 192 Salary TDS Rules AY 2026-27

Section 192 applies to tax deduction from salary. The employer, known as the deductor, must estimate the employee’s taxable salary for the full financial year and deduct income tax at the average rate applicable to that estimated income.

The basic process is:

1. Estimate the employee’s annual salary.
2. Add taxable allowances, perquisites and profits in lieu of salary.
3. Consider eligible exemptions and deductions.
4. Apply the employee’s selected tax regime.
5. Reduce TDS already deducted during the year.
6. Deduct the remaining tax over the balance salary payments.

The law does not require the same TDS amount every month. An employer may deduct different amounts when salary, bonus, arrears, perquisites or declarations change.

What is included in salary for TDS?

Salary for Section 192 purposes may include:

• Basic salary
• Dearness allowance
• Bonus and incentives
• Commission
• Taxable House Rent Allowance
• Taxable leave travel allowance
• Employer-provided perquisites
• Gratuity, pension or retirement benefits, where taxable
• Taxable reimbursements
• Arrears and advance salary
• Salary from previous employment reported by the employee

The employer must also consider income from other employers if the employee provides the relevant details and supporting information.

TDS on Salary Under New Tax Regime AY 2026-27

The new tax regime applies as the default regime for individual taxpayers, subject to the employee’s valid declaration to the employer. An employee who wants TDS under the old tax regime should communicate this choice to the employer within the employer’s specified timeline.

For FY 2025-26, the revised new-regime slabs are generally as follows:

Total income under the new regime	Tax rate
Up to ₹4,00,000	Nil
₹4,00,001 to ₹8,00,000	5%
₹8,00,001 to ₹12,00,000	10%
₹12,00,001 to ₹16,00,000	15%
₹16,00,001 to ₹20,00,000	20%
₹20,00,001 to ₹24,00,000	25%
Above ₹24,00,000	30%

A ₹75,000 standard deduction is available against salary income under the new regime. Therefore, a salaried individual may have no tax liability where the gross salary is up to ₹12,75,000, assuming there is no special-rate income and the individual qualifies for the applicable rebate.

The new regime also provides a rebate under Section 87A for eligible resident individuals with taxable income within the prescribed limit. The rebate does not generally apply to income taxable at special rates, such as certain capital gains.

Employers should refer to the Union Budget 2025 documents and the applicable CBDT instructions while finalising salary TDS calculations for FY 2025-26.

Deductions generally restricted under the new regime

The following commonly claimed items are generally not available under the new regime, subject to specific statutory exceptions:

• Deduction under Section 80C
• Medical insurance deduction under Section 80D
• Interest deduction on a self-occupied home loan under Section 24(b)
• HRA exemption under Section 10(13A)
• Leave travel allowance exemption
• Most other Chapter VI-A deductions

Employer contributions to certain retirement schemes, including eligible employer contributions under Section 80CCD(2), may continue to receive tax treatment subject to the applicable limits and conditions.

Old Tax Regime and Salary TDS Calculation

An employee may choose the old tax regime for employer-level TDS calculation. Under this regime, the employee may claim eligible exemptions and deductions after submitting the required details and evidence to the employer.

Common claims include:

• Standard deduction of ₹50,000
• HRA exemption under Section 10(13A)
• Leave travel allowance exemption
• Professional tax, where applicable
• Home loan interest deduction
• Section 80C investments and payments
• Section 80D medical insurance premium
• Section 80E education loan interest
• Section 80G eligible donations
• Section 80TTA or Section 80TTB interest deduction, where applicable

The employer must not allow a deduction merely because the employee mentions it verbally. The employer should collect the required declaration and supporting documents according to its payroll process.

An employee can ultimately choose the applicable regime while filing the income tax return. However, the regime selected for payroll TDS and the regime selected in the income tax return may differ.

TDS Deduction on Salary Calculation AY 2026-27: Example

Assume an employee has the following income for FY 2025-26:

• Gross salary: ₹12,75,000
• Standard deduction under new regime: ₹75,000
• Taxable income: ₹12,00,000

Assuming the employee has no special-rate income and qualifies for the applicable rebate, the final tax liability may be reduced to nil. In this situation, the employer may not deduct TDS after properly considering the employee’s declaration and salary details.

Now assume another employee earns gross salary of ₹15,00,000:

• Gross salary: ₹15,00,000
• Less: Standard deduction: ₹75,000
• Taxable income: ₹14,25,000

Illustrative slab tax:

• ₹4,00,000 to ₹8,00,000 at 5%: ₹20,000
• ₹8,00,000 to ₹12,00,000 at 10%: ₹40,000
• ₹12,00,000 to ₹14,25,000 at 15%: ₹33,750

Tax before cess: ₹93,750

Health and education cess at 4%: ₹3,750

Estimated annual tax: ₹97,500

If the employee has already suffered TDS of ₹20,000, the employer would generally deduct the balance of ₹77,500 over the remaining salary payments, subject to changes in salary and declarations.

This is an illustrative calculation. Actual TDS may change because of bonus, perquisites, professional tax, previous employer salary, eligible deductions and special-rate income.

Form 12BB and Salary TDS Deduction AY 2026-27

Form 12BB is a statement submitted by an employee to the employer to provide details of claims for tax exemptions and deductions. It helps the employer calculate salary TDS correctly.

The employee may provide details relating to:

• House Rent Allowance exemption
• Leave travel concession or allowance
• Home loan interest
• Section 80C investments and payments
• Section 80D medical insurance
• Section 80E education loan interest
• Section 80G donations
• Other eligible deductions accepted by the employer

The employee should submit Form 12BB and supporting documents within the employer’s internal deadline, usually before the final payroll processing for the year.

Documents employers commonly request

Depending on the claim, payroll teams may request:

• Rent receipts and landlord PAN, where applicable
• Home loan interest certificate
• Tuition fee receipts
• Life insurance premium receipts
• Public Provident Fund statements
• National Pension System contribution proof
• Health insurance premium receipts
• Donation receipts containing required details
• Investment statements
• Previous employer Form 16 or salary and TDS details

The employer uses these documents for TDS estimation. Submission of a document to the employer does not automatically guarantee deduction in the income tax return if the claim does not meet the legal conditions.

Form 24Q Filing for Salary TDS AY 2026-27

Form 24Q is the quarterly TDS statement used by employers to report tax deducted from salary under Section 192.

The statement generally contains:

• Employer TAN and PAN
• Employee PAN
• Employee name and address
• Salary amount
• Taxable salary
• TDS deducted
• TDS deposited
• Challan details
• Section under which tax was deducted
• Tax regime-related information where required
• Details of deductions and exemptions in the annual statement

Annexures in Form 24Q

Form 24Q includes different information during the year:

• Annexure I: Filed for each quarter and reports deductor, challan and deductee-level TDS details.
• Annexure II: Filed with the fourth-quarter statement and includes detailed annual salary and tax calculation information.

The employer should reconcile Form 24Q with:

• Payroll records
• Salary registers
• Challan payment records
• Employee PAN database
• TDS ledger
• Form 16 data

Incorrect PAN, wrong challan details or mismatched TDS amounts can prevent the employee’s credit from appearing correctly in Form 26AS or the Annual Information Statement.

TRACES Salary TDS Return Filing for Employers

Employers use the TRACES portal, the TDS Reconciliation Analysis and Correction Enabling System, for several salary TDS activities.

TRACES allows employers to:

• Download TDS certificates
• Download Form 16
• View statement status
• Check defaults and notices
• Download justification reports
• Submit certain correction statements
• Track challan and deductee-level mismatches
• Obtain conso files for correction

Employers must use a valid TAN login and ensure that authorised personnel maintain secure access. The official TRACES portal provides services for deductors, employees and tax professionals.

Common TRACES defaults

A Form 24Q statement may show a default because of:

• Short deduction of TDS
• Short payment of TDS
• Late deduction
• Late deposit
• Late filing
• Invalid or missing employee PAN
• Incorrect challan details
• Excess claimed salary exemption
• Interest or levy not paid
• Incorrect reporting of employee details

The employer should download the justification report, identify the reason and take corrective action promptly.

Form 16 Issuance Due Date for Employers AY 2026-27

The Form 16 issuance due date for employers AY 2026-27 is 31 May 2026.

Form 16 is the annual TDS certificate issued to an employee whose salary TDS was deducted. It helps the employee file the income tax return and verify salary income and tax credit.

Parts of Form 16

Part A

Part A is generated through TRACES and includes:

• Employer and employee PAN
• Employer TAN
• Salary TDS deducted
• TDS deposited
• Quarter-wise payment details
• Form 24Q statement references

Part B

Part B is prepared by the employer and provides the salary computation, including:

• Gross salary
• Exempt allowances
• Standard deduction
• Professional tax
• Deductions under Chapter VI-A
• Taxable income
• Tax calculation
• Rebate and cess
• Net TDS payable

The employer should issue Form 16 after successfully filing the fourth-quarter Form 24Q and downloading the certificate from TRACES.

Form 24Q TDS Return Correction AY 2026-27

If the original Form 24Q contains an error, the employer should file a correction statement rather than manually changing Form 16.

Common corrections include:

• Wrong employee PAN
• Incorrect salary amount
• Incorrect TDS amount
• Wrong challan identification number
• Incorrect quarter
• Missing employee record
• Incorrect date of deduction
• Incorrect regime or deduction details in the annual salary statement

Practical correction process

1. Identify the mismatch in payroll records, Form 26AS or TRACES.
2. Download the relevant justification report and conso file.
3. Correct the payroll and challan information.
4. Prepare the correction statement using approved TDS return preparation software.
5. Validate the file through the prescribed validation utility.
6. Submit it through an authorised TDS return filing channel.
7. Track the revised statement on TRACES.
8. Download the corrected Form 16 after processing.

A correction statement may require additional payment if the original filing resulted in short deduction or short payment.

Penalties for Late or Incorrect Salary TDS Compliance

Employers should avoid delays because different defaults can attract separate consequences.

• Late filing fee under Section 234E: ₹200 for every day of delay, subject to the amount of TDS deductible for the relevant statement.
• Interest for late deduction: Generally applicable where TDS is deducted late.
• Interest for late deposit: Generally applicable where deducted TDS is deposited late.
• Penalty under Section 271H: May apply for late or incorrect TDS statements in specified circumstances.
• Penalty under Section 272A: May apply for failure to issue TDS certificates or comply with certain reporting requirements.

The employer should reconcile TDS every month instead of waiting until the quarterly return deadline.

Employer Compliance Checklist for AY 2026-27

Before finalising salary TDS filing, employers should complete the following checklist:

• Obtain valid employee PAN and personal details.
• Confirm the employee’s selected tax regime.
• Collect Form 12BB and supporting documents.
• Obtain previous employer salary and TDS details, where applicable.
• Calculate taxable salary and perquisites.
• Deduct TDS when salary is paid or credited.
• Deposit TDS by the applicable due date.
• Reconcile payroll data with challan payments.
• File Form 24Q by the quarterly deadline.
• Verify the processed statement on TRACES.
• Download and issue Form 16 by 31 May 2026.
• Correct PAN, challan or salary errors without delay.
• Preserve payroll, declaration and payment records.

Frequently Asked Questions

Is Form 24Q mandatory if no TDS was deducted?

Employers should check the applicable filing requirements for the period and deductor category. Where salary TDS reporting applies, the employer may need to file the prescribed statement even if the resulting tax deduction is nil.

Can an employee change the tax regime after the employer deducts TDS?

Yes. The employee may select the legally applicable regime while filing the income tax return. If the final tax liability differs from the TDS deducted, the employee may receive a refund or may need to pay additional tax.

Is Form 12BB filed with the Income Tax Department?

No. The employee generally submits Form 12BB to the employer. The employer uses it to calculate salary TDS and retains the supporting records for compliance purposes.

What happens if the employee’s PAN is incorrect?

The TDS credit may not reflect correctly in Form 26AS or the Annual Information Statement. The employer should correct the PAN and file a revised Form 24Q.

When should an employer issue Form 16 for FY 2025-26?

The employer should issue Form 16 to eligible employees by 31 May 2026, after filing and processing the fourth-quarter salary TDS statement.

Conclusion

For Salary TDS Filing by Employer for AY 2026-27, the essential steps are correct Section 192 calculation, proper treatment of the new or old tax regime, timely TDS payment, quarterly Form 24Q filing and Form 16 issuance by 31 May 2026. Employers should maintain accurate Form 12BB records, reconcile payroll with TRACES and complete any Form 24Q TDS Return Correction AY 2026-27 promptly to protect both the employer and employee from tax credit mismatches.