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Tax calculation of employee

seema (Associate Accounts Consultant) (122 Points)

12 January 2009

How should be tax calculated of the employees who joined in mid of financial year? if saving should be consider if employee hasn't deposited any previous income detail? What should doif they intentionaly not depositing their pevious salary documents,

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8 Replies

Mugdha (Service) (96 Points)
Replied 12 January 2009

Case 1: Where employee has furnished his previous salary details, you have to consider the same and deduct the TDS on salary.

Case2: Where employee has not furnished his previous salary details, consider that there was no previous salary and compute the TDS.

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CA CS CIMA Prakash Somani (Landmark Group) (23502 Points)
Replied 12 January 2009

Basically this is the format of calculating Taxable Salary and TDS thereon

Basic

Conveyance

HRS/HRA

Medical All/ Sundries

Variable All

Personal All

LTA

Misc

Special All

Food Coupons

Less : Deduction

Labor Welfare/ BFRF/Sundry

Prof Tax

Take Home

Tax Calculation

Salary

Less : Allowances Exempt

HRA

Conveyance

LTA

Food Coupans

Medical Re-imbursement

Less :

Profession Tax

Less : Deductions u/s 80C

LIC

Others

u/s 80D

Medical Insurance

Higher Insurance Premium

Taxable Salary

Income Tax

Cess

Total Tax

Tax Deducted till Date

Balance Tax to be Deducted

Monthly Tax

Atul Kumar (CA) (504 Points)
Replied 12 January 2009

Where employee has not furnished his previous salary details, consider that there was no previous salary and compute the TDS accordingly.

seema (Associate Accounts Consultant) (122 Points)
Replied 14 January 2009

But what about savings that he claimed in last firm?????

Shudhanshu Agrawal (Business) (2570 Points)
Replied 14 January 2009

In such a case u can consider the savings according to his declaration upto the month of February...and ask the employee to furnish the related documents upto march.....if employee furnish the documents everything is fine.....but if he doesn't do so then u can consider his savings NIL at the end of year and at the time of finalization of TDS in the month of march deducte TDS considering savings upto the amount of documents furnished by the employee

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Shashi (ACCOUNTANT) (237 Points)
Replied 24 March 2009

Thanx a lot Sir

Narendra kumar (Account Executive) (82 Points)
Replied 26 March 2009

Originally posted by :seema
"	How should be tax calculated of the employees who joined in mid of financial year? if saving should be consider if employee hasn't deposited any previous income detail? What should doif they intentionaly not depositing their pevious salary documents,	"

Narendra kumar (Account Executive) (82 Points)
Replied 26 March 2009

The tax laws cast on an employer the responsibility for calculating the tax payable by each employee on his income which needs to be deducted at source while paying salary every month. In the computation of taxable amount, several deductions and rebates have to be incorporated while determining the tax which has to be withheld from the salary of each employee.

In large organisations employing thousands of persons, a full-fledged department has to be set-up which virtually has to do the work of the Income Tax Department. Since employees are eligible to claim deduction and rebates permitted under various sections of the law, the question which generally arises is whether the employer can base the tax calculation for each employee on a claim or declaration made by an employee in respect of the rebates which he is entitled to claim under the law.

It is well-nigh impossible for an employer to scrutinise the documents, receipts and other pieces of evidence. Most companies and employers take a written statementor declaration signed by each employee who claims that he has made certain investments, for example, in the Public Provident Fund, National Savings Certificate, or has paid premium to Life Insurance Corporation or any other expenditure which qualifies for the rebate under Section 88 of the Income Tax Act, 1961.