TDS & Income Tax
Omnivoo deducts Tax Deducted at Source (TDS) from your monthly salary as required under Section 192 of the Income Tax Act 1961. This guide explains how TDS works, how to choose your tax regime, and how to reduce your monthly deduction.
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 12 monthly deductions. Omnivoo deposits TDS with the government on your behalf.
Tax Regimes: Old vs New
India offers two tax regimes. You must choose one at the start of each financial year.
New Tax Regime (Default from FY 2023-24)
| Taxable Income | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 - ₹7,00,000 | 5% |
| ₹7,00,001 - ₹10,00,000 | 10% |
| ₹10,00,001 - ₹12,00,000 | 15% |
| ₹12,00,001 - ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
- Standard deduction of ₹75,000.
- No deductions under 80C, 80D, HRA exemption, etc.
- Simpler, lower rates -- best if you do not have significant investments or rent.
Old Tax Regime
| Taxable Income | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 - ₹5,00,000 | 5% |
| ₹5,00,001 - ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
- Standard deduction of ₹50,000.
- All deductions available: 80C (₹1,50,000), 80D (health insurance), HRA exemption, home loan interest (Section 24), NPS (80CCD), and more.
- Best if you have significant tax-saving investments and pay rent.
Use Omnivoo's tax regime comparison tool on the employee dashboard to see which regime saves you more tax based on your actual income and deductions. You can switch regimes once per financial year.
How Omnivoo Calculates Monthly TDS
- Project annual income: Monthly gross salary x 12 (plus any known arrears or bonuses).
- Apply standard deduction: ₹75,000 (new regime) or ₹50,000 (old regime).
- Subtract declared deductions: (Old regime only) 80C, 80D, HRA, etc. from your investment declarations.
- Calculate annual tax: Apply slab rates to taxable income.
- Add surcharge and cess: 4% Health and Education Cess on tax.
- Divide by 12: Monthly TDS = Annual tax / 12.
As the year progresses, Omnivoo recalculates to account for actual salary paid and any changes in declarations.
How to Choose Your Tax Regime
- Log in to your employee dashboard.
- Go to Tax > Tax Regime.
- Select Old Tax Regime or New Tax Regime.
- Review the projected tax comparison.
- Confirm your choice.
You must select your tax regime at the start of the financial year (April). If you do not select, the New Tax Regime is applied by default. You can change your selection once during the year, but it is best to decide early.
Form 16
At the end of the financial year (after March 31), Omnivoo generates Form 16 for each employee:
- Part A: TDS certificate -- confirms tax deposited with the government.
- Part B: Detailed computation of income, deductions, and tax.
Form 16 is available for download by June 15 each year. You need it to file your personal income tax return. See Tax Documents.
24Q Filing
Omnivoo files Form 24Q (quarterly TDS return for salaries) with the Income Tax Department:
- Q1: April - June (due July 31)
- Q2: July - September (due October 31)
- Q3: October - December (due January 31)
- Q4: January - March (due May 31)
This is handled entirely by Omnivoo. Employers and employees do not need to take any action for 24Q filing.
Reducing Your TDS
If you are on the Old Tax Regime, you can reduce monthly TDS by submitting investment declarations. The more 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.