11 July 2012
As a matter of good practice we should deduct tax monthly of every employee whose income is above taxable limit, but most of the companies are not deducting it monthly instead they deduct at last month and deposited and they even don't pay interest, I know interest should be payable @1% and 1.5% in case of late deposited, so my question is till now is their is any case on this you have came across in which AO have any objection ?
11 July 2012
Dear Aadish it is true that there is interest provision. But on which amount it is to see. if in full year co don't deduct full TDS then interest will be charged. if co deduct TDS on last month but full amount. Then on which amount interest will be calculated. on zero so result will be zero thats why many co deduct TDS on last months. 192 give this exemption to deduct TDS on variable basis means we can deduct TDS in any month.
Interest will be calculated @1% for short deduction cz we have to deduct monthly and we are not complying that instead we r deducting in the last month, and 1.5% shall not be applicable because when we deduct immediately we deposit it and therfore there is not late payment of TDS.
12 July 2012
Dear Aadish you are wrong. on salary case TDS can be diff month to month. it can be like this first six month NIl then next 6 month TDS. because salary can be increased after. thats why this provision is like this. So lets assume in March company deduct full TDS then on which amount interest will be applicable. on Zero. So no interest. think I am right on this and see your Q. you also ask why most of companies do this. this is the reason they are doing this
13 July 2012
let us cosider an eg. if emloyee salary is 25000 pm an its going to be 3 lacs per year after considering 50000 deduction 80C, taxable income comes out to be 2.5 lacs now tax comes out to be 5000 now this 5000 to be deducted monthly by dividing 12,S0 i can understand tax can fluctuate month by month, there will be no interest if we deducted full amount of taxon th income of employee.
16 July 2012
Right, most of the companies doing this, instead od deducting every month, they deduct at last month, but if we see from other angle and by law, it is loss to the government exchequer, govt. is losing interest. but as per the case law, it can be done the condition is full tax should be deducted. Thanks Prashant for answering. resolved
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