Section 192 of the Income Tax Act, 1961 deals with the provisions of Tax Deduction at Source (TDS) on salary payments. As per this section, an employer is required to deduct TDS on salary paid to employees and remit the same to the government within the specified time.
The TDS rate applicable under Section 192 depends on the employee's income and the tax slab rate applicable to him or her. The employer is required to compute the employee's total income for the financial year, taking into account all salary payments, allowances, perquisites, and other benefits. Based on this, the employer must calculate the tax liability of the employee and deduct TDS at the applicable rate.
The employer is also required to issue a TDS certificate in Form 16 to the employee, which contains details of the salary paid, TDS deducted, and other relevant information. The employee can use this certificate to file his or her income tax return and claim credit for the TDS deducted.
Under Section 192 of the Income Tax Act, 1961, the following entities are liable to deduct TDS on salary payments:
- Companies (Private or Public): Any company, whether it is a private or public limited company, is liable to deduct TDS on the salary payments made to its employees.
- Individuals: An individual who is responsible for paying salary to an employee is also required to deduct TDS under Section 192, provided that the individual is liable to get his accounts audited under section 44AB of the Income Tax Act, 1961 for the previous financial year.
- HUF: A Hindu Undivided Family (HUF) that is liable to get its accounts audited under section 44AB of the Income Tax Act, 1961 for the previous financial year is also required to deduct TDS on salary payments made to its employees.
- Trusts: Any trust, whether registered or not, which is liable to get its accounts audited under section 44AB of the Income Tax Act, 1961 for the previous financial year, is also required to deduct TDS on salary payments made to its employees.
- Partnership firms: A partnership firm, whether registered or not, is required to deduct TDS on salary payments made to its employees.
- Co-operative societies: Any co-operative society, including housing co-operative societies, which is liable to get its accounts audited under section 44AB of the Income Tax Act, 1961 for the previous financial year, is also required to deduct TDS on salary payments made to its employees.
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