I have a question regarding Income Tax. I am an engineer and changed my job last week. With regard to Income Tax, I fall in the 30% slab and till now the tax was deducted according to that slab.
The new company where I joined for work has told that, they will be paying the salary under the head "Professional Fee" and they will deduct flat 10% as Income Tax. And they will give me Form 16A every quarter. The finance head of the company mentioned that, I have to pay only 10% tax and not 30%, since what I am getting is a professional fee and not a salary. So, I want to know if this is correct? And, when I submit my returns for this year, will it be ok to merge form 16 (from previous employer) and form 16A (from new employer)? Will it not create any problems?
18 January 2013
You are confusing with the actual Income tax rates & TDS rates, as a Individual you need to calculate the taxable income and calculate the tax as per the 10,20,30 percentage slabs only. if your taxable income exceeding Rs.10 lakh you are coming under 30% tax bracket only.
In your new company, they might have hired you on contract basis, not in the role of employment so since you are engineer they are considering your contract as professional contract and deducting the TDS at the rate of 10% on your payments, but that does not mean you are coming under 10% income tax slab, you need to pay the different of 20% tax to the department when you are computing the total income & filing the returns.
Of course you need to merge your form 16 from previous employer and form 16A from current employer to calculate your income & tax
CAclubindia
