27 July 2025
Great question! Let’s clarify both parts:
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### 🔹 **1. Is TDS on salary applicable if the employee is outside the taxable bracket?**
✅ **Answer:** **No**, TDS on salary **is not required** if the **employee’s total estimated income is below the basic exemption limit** for that financial year **and** the employee **declares all their income details and investments properly**.
* As per **Section 192**, TDS on salary is deducted **only if estimated income exceeds the basic exemption limit** after considering:
* Salary * Other income (if declared) * Eligible deductions (under 80C, etc.) * Applicable exemptions (e.g., HRA, LTA)
📌 **BUT**: The **employee must submit proper declaration/proof** (like investment declarations, Form 12BB, etc.) to the employer for this to apply.
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### 🔹 **2. Is the employer liable to deduct TDS on salary if the employer is not under tax audit?**
✅ **Yes**, TDS obligation under **Section 192** is **independent** of whether the employer is subject to tax audit under **Section 44AB**.
* Even a small business or individual employer who **pays salary** is required to **deduct TDS** if the **employee’s income exceeds taxable limits**. * There is **no threshold** like "only if under tax audit."
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### 🔸 Summary:
| Situation | TDS Deduction? | | ------------------------------------------------------------------------ | -------------------------------------------- | | Employee total income **below** basic exemption limit | ❌ No TDS | | Employee income **above** exemption limit (post-declarations/deductions) | ✅ Yes TDS | | Employer **not under tax audit** | ✅ Still required to deduct TDS if applicable |
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Let me know if you want the exemption limits for a particular year or need a sample declaration format.
CAclubindia
