Section 392 TDS on Salary Under Income Tax Act 2025

Your April 2026 Salary Slip Looks Different. Here Is Why.

If you are a salaried professional in India, you may have noticed a change in your TDS deduction this April. Your employer has reset TDS calculations from scratch, and the section governing this deduction has changed from Section 192 to Section 392 under the new Income Tax Act 2025.

This is not an error in your salary slip. It is a direct result of the new Income Tax Act 2025 coming into force from April 1, 2026. The law governing how your employer deducts tax from your salary has been restructured, renumbered, and in some cases, simplified.

This article explains exactly what Section 392 is, how it differs from the old Section 192, what changed for your TDS calculation from April 2026, and what you need to do as a salaried employee.

Quick Context: Section 192 of the Income Tax Act 1961 governed TDS on salary from 1961 to March 31, 2026. From April 1, 2026, Section 392 of the Income Tax Act 2025 takes over. The core concept remains the same. The structure, section number, form names, and compliance requirements have changed.

Section 192 vs Section 392: What Changed and What Did Not

The most important thing to understand before getting into the details is that Section 392 is not a policy change. The government has not introduced new tax rates, changed how salary income is calculated, or altered the deduction limits. What has changed is the structure and numbering of the law.

For a complete understanding of how TDS on salary worked under the old Act, read the TDS on salary Section 192 guide. For details on Form 130 replacing Form 16, read the Form 16 replaced by Form 130 guide.

What Exactly Is Section 392 of the Income Tax Act 2025?

Section 392 is the provision in the new Income Tax Act 2025 that governs Tax Deducted at Source on salary payments. It replaces Section 192 of the old Act and consolidates salary TDS into a single clean section.

Under Section 392, every employer who pays salary to an employee is required to:

• Estimate the employee’s total income for the Tax Year at the beginning of the year
• Calculate the tax liability on that estimated income after deductions and the standard deduction
• Spread this tax liability equally across the remaining months of the Tax Year
• Deduct the calculated amount from the employee’s monthly salary at the time of payment
• Deposit the deducted TDS with the government by the 7th of the following month

The key phrase here is “at the time of payment.” TDS under Section 392 is triggered when salary is paid, not when it is earned or accrued. This is the same principle as the old Section 192 and has not changed.

The Critical Transition: March 2026 vs April 2026 Salary

The transition from the old Act to the new Act created a specific situation for salaries paid around March and April 2026. The rule is straightforward: the date of payment determines which Act applies, not the month for which the salary is being paid.

Most companies pay March salaries in the last week of March or the first week of April. If your March salary was paid on March 31 or earlier, it falls under the old Act. If it was paid on or after April 1, it falls under the new Act. This created a natural cut-off that most large employers have already handled through payroll system updates.

Why Your Employer Reset TDS from April 2026

From April 1, 2026, your employer was required to reset TDS calculations for Tax Year 2026-27 from scratch. This is standard practice at the start of every financial year, but this time it also involved switching to the new Act.

Your employer’s HR or payroll team would have done the following:

• Collected a fresh investment declaration from you for Tax Year 2026-27. Under the new Act, this is now done on Form 124 instead of the old Form 12BB. The declaration covers your HRA, home loan interest, Section 80C investments, and other deductions you plan to claim.
• Re-estimated your annual income for Tax Year 2026-27 based on your current salary, any expected increments, and other income sources you declared.
• Applied the applicable tax regime. The new regime remains the default under Section 392 just as it was under Section 192. If you want to opt for the old regime, you must declare this to your employer explicitly.
• Calculated monthly TDS by dividing total estimated tax liability across the remaining months of the Tax Year.

This reset is why your April 2026 TDS may look slightly different from your March 2026 TDS. It is a fresh calculation for a fresh Tax Year, not an error.

Form Changes Under Section 392: What You Need to Know

Several forms related to salary TDS have been renamed and restructured under the Income Tax Act 2025. Here is what changed and what it means for you as an employee:

Form 16 Is Now Form 130

The annual TDS certificate that your employer issues after the end of the Tax Year is now Form 130 instead of Form 16. Form 130 has three parts instead of the earlier two, and includes an additional annexure for senior citizens. The information it contains is essentially the same: your total salary, the components, and the TDS deducted throughout the year.

For Tax Year 2026-27, your employer will issue Form 130 in June 2027. For FY 2025-26, you will still receive Form 16 (the old format) in June 2026, since that year falls under the old Act. For a detailed breakdown of Form 130, read the guide on how to read Form 130.

Form 12BB Is Now Form 124

The investment declaration form that you submit to your employer to claim HRA, home loan interest, LTC, and Section 80C investments is now Form 124 under the new Act. If your employer has already asked you to fill a new declaration form for Tax Year 2026-27, that is Form 124. The information required is largely the same, but HRA claims now require landlord relationship disclosure in some cases.

Form 24Q Is Now Form 143

This is the quarterly TDS return that your employer files with the Income Tax Department. As an employee, you do not interact with this form directly. But it matters because errors in Form 143 filed by your employer affect the TDS credit that appears against your PAN on the portal. If your employer has not updated their payroll software to file Form 143 correctly, your TDS credits may not reflect accurately.

How TDS Under Section 392 Is Calculated: A Step-by-Step Example

The calculation method under Section 392 is identical to what happened under Section 192. Here is how it works for Tax Year 2026-27:

Example: Priya is a software engineer in Bengaluru with a monthly CTC of Rs. 1 lakh (Rs. 12 lakh per year). She has opted for the new tax regime for Tax Year 2026-27.

Step 1: Estimate annual taxable salary
Gross salary: Rs. 12,00,000
Less standard deduction (new regime): Rs. 75,000
Taxable salary: Rs. 11,25,000

Step 2: Calculate tax on Rs. 11,25,000 under new regime slabs
Up to Rs. 4,00,000: Nil
Rs. 4,00,001 to Rs. 8,00,000 (5%): Rs. 20,000
Rs. 8,00,001 to Rs. 11,25,000 (10%): Rs. 32,500
Total tax: Rs. 52,500
Add cess at 4%: Rs. 2,100
Total tax with cess: Rs. 54,600

Step 3: Section 87A rebate check
Taxable income of Rs. 11,25,000 exceeds Rs. 12 lakh? No, but wait. Rs. 11,25,000 is below Rs. 12 lakh, so Section 87A rebate applies and tax becomes Nil. Priya pays zero TDS.

If Priya’s salary were Rs. 14 lakh: Taxable after standard deduction = Rs. 13,25,000. This exceeds Rs. 12 lakh so Section 87A does not apply. Tax is calculated on Rs. 13,25,000 under the slab rates, and monthly TDS = Annual tax divided by 12 months.

For a detailed comparison of both regimes with worked examples at different salary levels, read the old vs new tax regime comparison.

What Happens If You Want to Switch Tax Regime

Under both Section 192 (old) and Section 392 (new), your employer must deduct TDS based on the regime you declare. The new regime is the default.

• If you want the new regime, do nothing. Your employer applies it automatically.
• If you want the old regime, you must inform your employer at the start of Tax Year 2026-27 through your investment declaration on Form 124.
• Your employer can only apply one regime throughout the year. If you change your mind, you cannot ask your employer to switch mid-year.
• You can always choose a different regime when filing your ITR. So if your employer deducted TDS under the new regime but you want to claim deductions under the old regime at the time of filing, you can do that. Any excess TDS will come back as a refund.

Penalties for Employers Under Section 392

Non-compliance under Section 392 carries the same consequences as under the old Section 192. Employers who fail to deduct or deposit TDS correctly face:

• Interest for late deduction: 1% per month from the date tax was deductible to the date it was actually deducted
• Interest for late deposit: 1.5% per month from the date of deduction to the date of actual deposit
• Penalty for late filing of Form 143: Rs. 200 per day of default, subject to a maximum of the TDS amount
• Expense disallowance: Under Section 35(b) of the new Act, 30% of any salary payment on which TDS was not deducted or deposited by the return filing due date is disallowed as a business expense for the employer
• Prosecution: In cases where TDS was deducted but not deposited, criminal proceedings can be initiated

For employees, the practical risk is different. If your employer deducts TDS but does not deposit it or file Form 143 correctly, the TDS credit will not appear against your PAN. This can lead to a tax demand on you even though the money was already deducted from your salary. Always verify your TDS credits on the income tax portal before filing your ITR.

Key Dates and Deadlines Under Section 392

For all ITR filing deadlines for FY 2025-26 (the return you file in 2026), read the ITR filing last date 2026 guide.

Frequently Asked Questions on Section 392

What is Section 392 of the Income Tax Act 2025?

Section 392 is the provision governing TDS on salary under the new Income Tax Act 2025. It replaces Section 192 of the Income Tax Act 1961 and applies to all salary payments made on or after April 1, 2026. The core concept is unchanged: employers deduct tax from salary at the time of payment and deposit it with the government on the employee’s behalf.

Does Section 392 change how much TDS is deducted from my salary?

Not necessarily. The tax slabs, rates, standard deduction, and Section 87A rebate limits remain unchanged for Tax Year 2026-27. The change is in the section number and the forms used. Your actual TDS amount depends on your salary level, tax regime, and the deductions you declare, all of which remain governed by the same rules as before.

Why did my employer ask me to fill a new declaration form?

From Tax Year 2026-27, the old Form 12BB (investment declaration) has been replaced by Form 124 under the new Income Tax Rules 2026. Your employer is required to collect your tax regime choice, HRA details, home loan interest, and investment declarations on this new form. The information required is largely the same as the old form.

What is Form 130 and when will I get it?

Form 130 is the new name for what was previously called Form 16. It is your annual TDS certificate issued by your employer after the end of the Tax Year. For Tax Year 2026-27, you will receive Form 130 from your employer by June 15, 2027. For FY 2025-26 (the current filing year), you will still receive the old Form 16 by June 15, 2026.

My March 2026 salary TDS looks different from February. Is there an error?

Possibly not. If your March salary was paid in April 2026 (which many companies do), it falls under Section 392 and the new Act. Your employer would have reset TDS calculations for Tax Year 2026-27, which means the TDS for that month was computed fresh based on your projected annual income for the new Tax Year. This is correct and expected.

What if my TDS credit is not showing on the portal?

TDS credits appear on the portal only after your employer files Form 143 (the quarterly TDS return). If your employer has not filed the Q1 return yet or has made errors in filing, your credit may not reflect. Check your Form 168 (the new name for Form 26AS) on the income tax portal. If there is a discrepancy, follow up with your employer’s HR or payroll team before your ITR filing deadline.

Can I opt for the old tax regime even if my employer deducts TDS under the new regime?

Yes. Your employer applies the regime you declare. If you did not declare a preference, your employer defaults to the new regime. However, when you file your ITR, you can choose the old regime and claim all applicable deductions. Any excess TDS deducted under the new regime will be refunded after processing your ITR.

Does Section 392 apply to freelancers and self-employed individuals?

No. Section 392 covers only salary income. Freelancers and self-employed individuals are not covered under Section 392. TDS on payments to them (professional fees, contractual payments) falls under Section 393 of the new Act, which replaces the old Section 194J and other 194-series sections.

Section 392 TDS on Salary: Quick Reference Summary

The shift from Section 192 to Section 392 is part of a broader restructuring of Indian tax law under the Income Tax Act 2025. To understand the full scope of changes under the new Act, read the complete comparison of Income Tax Act 2025 vs Income Tax Act 1961.

Questions about your specific TDS situation or how Section 392 affects your take-home pay? Drop them in the comments below.

Written & Reviewed by

Diksha Chawla

Financial Educator & Content Creator | FinLecture.in

Diksha covers Indian income tax, mutual funds, ITR filing, and personal finance. FinLecture content is cross-checked against official government portals and SEBI/AMFI guidelines.

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