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Omnivoo deducts Tax Deducted at Source (TDS) from your monthly salary as required under Section 392 of the Income-tax Act 2025 (Section 192 of the 1961 Act before April 2026). This guide explains how TDS works, the difference between the two tax regimes, and how to reduce your monthly deduction.

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What Is TDS?

TDS is income tax deducted by the employer from your salary before paying you. Instead of paying your entire tax liability at year-end, it is spread across the months of the financial year. Omnivoo deposits TDS with the government on your behalf.

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Tax Regimes: Old vs New

India offers two tax regimes. The New Tax Regime is the default. You choose your regime on your investment declaration, and it is used for your TDS computation.

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New Tax Regime (default)

These are the slabs for FY 2025-26 and FY 2026-27, updated per Union Budget 2025:
  • Standard deduction of ₹75,000.
  • Section 87A rebate: if your taxable income is ₹12,00,000 or less, the rebate (up to ₹60,000) cancels out your tax, so your tax works out to nil.
  • No other deductions under 80C, 80D, HRA exemption, etc. (a few specific reliefs such as the 80CCD(2) employer NPS contribution still apply).
  • Simpler, lower rates. Usually best if you do not have significant investments or rent.

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Old Tax Regime

  • Standard deduction of ₹50,000. (The ₹75,000 deduction is new-regime only.)
  • Professional Tax you pay comes off your taxable income.
  • Senior citizens: if you are 60 or older by 31 March, nil tax runs to ₹3,00,000. At 80 or older it runs to ₹5,00,000.
  • Section 87A rebate: full rebate (up to ₹12,500) if your taxable income is ₹5,00,000 or less. The old regime’s rebate carries no marginal relief.
  • All deductions available: 80C (₹1,50,000), 80D (health insurance), HRA exemption, home loan interest (Section 24), NPS (80CCD(1B)), and more.
  • Best if you have significant tax-saving investments and pay rent.
You set your tax regime as a toggle inside your Investment Declaration form. New Regime is selected by default. You can change it whenever you update your declaration, and Omnivoo recalculates your TDS accordingly.

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How Omnivoo Calculates Monthly TDS

Every month, Omnivoo works out your tax for the whole financial year and deducts what is still due:
  1. Work out the year’s income: the salary you were actually paid in earlier months this year, plus this month’s salary, plus your current salary for each month left to March. Bonuses already paid this year and any income you declared (including a previous employer’s salary) are added.
  2. Apply standard deduction: ₹75,000 on the new regime, ₹50,000 on the old one.
  3. Apply HRA exemption: (Old regime only) based on your rent and salary, if you declare rent.
  4. Subtract Professional Tax and declared deductions: (Old regime only) PT, 80C, 80D, 80E, and the other Chapter VI-A sections from your investment declarations.
  5. Round the income to the nearest ₹10 and calculate tax on the slabs.
  6. Apply the Section 87A rebate: Reduces tax to nil if you are within the rebate threshold (₹12,00,000 new regime, ₹5,00,000 old regime).
  7. Apply marginal relief on the rebate: (New regime only) see below.
  8. Add surcharge: on incomes above ₹50,00,000, see below.
  9. Add cess: 4% Health and Education Cess, then round the tax to the nearest ₹10.
  10. Deduct what is still due: (year’s tax − TDS already deducted this year − TDS a previous employer deducted) ÷ the months left, including this one.
Because every month starts from what was actually paid and deducted, your TDS corrects itself:
  • A bonus or arrears: the whole extra tax on it is deducted in the month it is paid. The months after are not affected.
  • A raise or a pay cut: the months left are re-spread at the new salary.
  • Unpaid days: only that month’s salary is lower. The rest of the year is still projected at your full salary.
  • Joining mid-year: only the months you work here are projected. Declare your previous employer’s salary and TDS on your investment declaration so they are counted.
  • Leaving: once your last working day is set, the months after it are no longer projected.
  • Reimbursements (for example an internet bill) are not income and are not taxed.
  • Employer PF over ₹7,50,000 a year: if your employer’s PF contributions for the year come to more than ₹7,50,000, which only happens with PF on your full basic, the part over it is taxable salary and is added to the year’s income. The interest on it is also taxable and isn’t counted here, so include it on your return.
If more has been deducted than the year’s tax, for example after a pay cut late in the year, no more TDS is deducted and you claim the rest back as a refund on your income tax return. TDS never takes more than the net pay left after your other deductions. Anything it could not deduct is picked up the next month.

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Surcharge on higher incomes

Above ₹50,00,000 of taxable income, a surcharge is added on top of the tax: On the new regime the surcharge is capped at 25%, so the 37% band does not apply. Marginal relief applies to the surcharge as well, so crossing a band can never cost you more tax than the extra income that took you over it.

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Marginal relief on the rebate

On the new regime the ₹60,000 rebate is all-or-nothing at ₹12,00,000, so a single rupee over the line would otherwise cost about ₹61,500 in tax. Marginal relief caps your tax at the amount by which your income exceeds ₹12,00,000, and stops mattering at around ₹12,75,000 where the ordinary slab tax is lower anyway.

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No PAN on file

Without a PAN, the law requires TDS at 20% of your taxable income, or your normal tax if that is higher. Nothing is deducted if your income is within the rebate. Once your PAN is on file, the next payroll corrects the rest of the year.

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Form 16

After the financial year ends (after March 31), your employer generates Form 16 for you:
  • Part A: TDS certificate that confirms tax deposited with the government.
  • Part B: Detailed computation of income, deductions, and tax.
Form 16 is generated by your employer through Omnivoo. Until it is generated, Form 16 shows as Coming Soon on your Tax Documents page. Once available, you can download it there. You need it to file your personal income tax return. See Tax Documents.

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Quarterly TDS Returns (24Q)

Employers report salary TDS to the Income Tax Department every quarter on Form 24Q: Omnivoo prepares the 24Q data and supporting records so this filing is managed for you. Employees do not need to take any action for 24Q.

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Reducing Your TDS

If you are on the Old Tax Regime, you can reduce your monthly TDS by submitting investment declarations. The more eligible deductions you declare, the lower your monthly TDS. Common deductions: Section 80C (PPF, ELSS, EPF), Section 80D (health insurance), HRA exemption (rent payments), Section 80E (education loan interest), NPS contributions. On the New Tax Regime, most deductions do not apply, so declaring investments will not change your TDS (the standard deduction and 87A rebate are applied automatically).