Tds on salary

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Pawan Kumar (Querist)
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09 March 2013 Dear Experts

AS an employer, while deducting TDS on salary ,can i consider TDS certificate produced by employee of his business income and deduct the TDS already deducted under any other section from tds paybale by me on salary.

Santosh Mishra

Santosh Mishra (Expert)
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09 March 2013 I could not get your point "TDS certificate produced by employee of his business income"

If you mean whether you can consider his income from the head " Income from Business & Profession". Yes you can, but it should not be loss.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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09 March 2013 Pawan,

I believe you are referring to Form 16A produced by the employee.

In such a case, you may include the said income in your computation of tax liability of the said employee. After arriving at the tax liability, do provide credit for the taxes deducted as evidenced by the impugned Form 16As.

As Santosh as already advised you, kindly ignore the income mentioned in Form 16A if the employee wishes to claim losses. However, you may still consider the TDS credit.

Pawan Kumar

Pawan Kumar (Querist)
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11 March 2013 thanks to both of you!!

can we consider TDS on business income if employee actually incurred business loss?
and
whether employer need to take any declaration from employee for such purpose??

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Great question! Here's a clear explanation about considering TDS on business income when deducting TDS on salary, especially if the employee has business losses:

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### Can employer consider TDS on business income if employee incurred business loss?

* **No, the employer should not consider business losses while computing tax liability for salary TDS.**
* However, the employer **can consider the TDS credit already deducted on business income** when calculating the tax payable on salary.
* This means, while computing TDS on salary, you calculate the tax on salary income only, but you **give credit for TDS already deducted** under other heads like business income, regardless of whether the business income resulted in profit or loss.

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### Does employer need to take any declaration from employee?

* **Yes, it’s good practice for the employer to obtain a declaration from the employee** about their other income and TDS deducted elsewhere, including whether they have business losses or not.
* This helps the employer to correctly compute the tax liability and avoid issues later.
* Usually, a declaration or Form 12B (if applicable) or any other declaration mentioning other income and TDS details is taken.

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### Summary:

| Scenario | Employer's action |
| ------------------------------------------------------- | ------------------------------------------------------------------------------- |
| Employee has business income (profit) with TDS deducted | Consider TDS credit; compute TDS on salary accordingly |
| Employee has business loss but TDS deducted | Consider TDS credit, but don’t reduce salary income by loss while computing TDS |
| Declaration | Obtain employee declaration regarding other income and TDS details |

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If you want, I can help draft a sample declaration form or letter to collect this info from employees. Would you like that?

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