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TDS on salaries

Laxmi (Student) (74 Points)

05 May 2011

How tds on salaries is deducted? And what is the %?

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11 Replies

Gaurav Tripathi (Working with DIAGEO-Leading Drinks Manufacturing Company) (210 Points)
Replied 05 May 2011

20% flat if the employee don't have PAN.

Normal rate of deduction is 10% but for calculating this you need to go for his annual salary along with the incentives(other then salary those included in salary like TA,DA,HRA etc is normally included in salary but the * performance bonous* is not).

If still not clear give me reply i will explain u with example.

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Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 05 May 2011

There is no specific % for calculating TDS on salary. Please refer Section 192 on Income Tax Act.

I'll briefly tell about it.

We need to calculate the taxable salary following all the provisions applicable to salary and considering all the benefits that are taxable and also consider exemption. The details of other income of the employee and also his investments details that are eligible for deduction should be taken. Tax should be calculated at the rates prevailing in the relevant assessment year. Once you come to the tax amount, the same should be divided in 12 equal instalments and deducted every month. All this exercise is done at the beginning of the financial year. However, as all the information about the other income, investments, etc is not available, this exercise should be reviewed each month and the TDS should be adjusted accordingly.

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pavankumarcma (B.Com ICWAI (CA FINAL) SAP Consultant) (147 Points)
Replied 05 May 2011

TDS on Salary will be deducted by the company/Employer according to the % ( slab Method) specified in the budget .

Then the Employer has to pay the TDS amount to the GOvt.

For the AY 2011-12 the apllicable Rates are as follows.

Individuals and HUFs

In case of individual (other than II, III and IV below) and HUF:-

	Income Level / Slabs	Income Tax Rate
i.	Where the total income does not exceed Rs.1,80,000/-.	NIL
ii.	Where the total income exceeds Rs.1,80,000/- but does not exceed Rs.5,00,000/-.	10% of amount by which the total income exceeds Rs. 1,80,000/-
iii.	Where the total income exceeds Rs.5,00,000/- but does not exceed Rs.8,00,000/-.	Rs. 32,000/- + 20% of the amount by which the total income exceeds Rs.5,00,000/-.
iv.	Where the total income exceeds Rs.8,00,000/-.	Rs. 92,000/- + 30% of the amount by which the total income exceeds Rs.8,00,000/-.

Education Cess: 3% of the Income-tax.

II. In case of individual being a woman resident in India and below the age of 60 years at any time during the previous year:-

	Income Level / Slabs	Income Tax Rate
i.	Where the total income does not exceed Rs.1,90,000/-.	NIL
ii.	Where total income exceeds Rs.1,90,000/- but does not exceed Rs.5,00,000/-.	10% of the amount by which the total income exceeds Rs.1,90,000/-.
iii.	Where the total income exceeds Rs.5,00,000/- but does not exceed Rs.8,00,000/-.	Rs. 31,000- + 20% of the amount by which the total income exceeds Rs.5,00,000/-.
iv.	Where the total income exceeds Rs.8,00,000/-	Rs.91,000/- + 30% of the amount by which the total income exceeds Rs.8,00,000/-.

Education Cess: 3% of the Income-tax.

III. In case of an individual resident who is of the age of 60 years or more at any time during the previous year:-

	Income Level / Slabs	Income Tax Rate
i.	Where the total income does not exceed Rs.2,50,000/-.	NIL
ii.	Where the total income exceeds Rs.2,50,000/- but does not exceed Rs.5,00,000/-	10% of the amount by which the total income exceeds Rs.2,50,000/-.
iii.	Where the total income exceeds Rs.5,00,000/- but does not exceed Rs.8,00,000/-	Rs.25,000/- + 20% of the amount by which the total income exceeds Rs.5,00,000/-.
iv.	Where the total income exceeds Rs.8,00,000/-	Rs.85,000/- + 30% of the amount by which the total income exceeds Rs.8,00,000/-.

Education Cess: 3% of the Income-tax.

IV. In case of an individual resident who is of the age of 80 years or more at any time during the previous year:-

	Income Level / Slabs	Income Tax Rate
i.	Where the total income does not exceed Rs.5,00,000/-.	NIL
ii.	Where the total income exceeds Rs.5,00,000/- but does not exceed Rs.8,00,000/-	20% of the amount by which the total income exceeds Rs.5,00,000/-.
iv.	Where the total income exceeds Rs.8,00,000/-	Rs.60,000/- + 30% of the amount by which the total income exceeds Rs.8,00,000/-.

Education Cess: 3% of the Income-tax.

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Sathya Sankeerth K N (Chartered Accountant) (429 Points)
Replied 05 May 2011

tds on salaries is deducted only when the Net taxable income of the asessee is more than tax slab i.e, 160000 in case of individual male or HUF and so on......

tds is calculated on the info provided by the employee regarding his income fot the year i.e, salary, bank interest, commission etc.,

Income tax on the same is calculated normally and tax to be paid is divided by 12 i.e, 12 months and whatever the amount cums is to be deducted as TDS from every monthly salary.

Please note that TDS on Salary is not compulsory.

1 Like

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 05 May 2011

Originally posted by : R.J. Gaurav Tripathi
	20% flat if the employee don't have PAN. Normal rate of deduction is 10% but for calculating this you need to go for his annual salary along with the incentives(other then salary those included in salary like TA,DA,HRA etc is normally included in salary but the * performance bonous* is not). If still not clear give me reply i will explain u with example.

Please refer to section 192 and review your reply. This doesnot exist anywhere in the Act.

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Gaurav Tripathi (Working with DIAGEO-Leading Drinks Manufacturing Company) (210 Points)
Replied 05 May 2011

Amol Sir, I know the Sec very well and I know its not in Act but I replied on the basis of my practicle experience.. Which works for me!

Sir, let me clear u my answer that for calculating TDS on Salary we have to go for emoloyees declaration regarding to his payments for insurance,int.payments etc. along with if there is any othere income which he/she had declared, and also we have to read his/her payslip for calculating that what co. had paid to employee till yat (within the f.y.). Then we have to follow thae tax slab and give exemption or deduction under Sch. VI. Here I want to clear one more thing that If we will not go for his pay slip then its possible that in future emplyee face demand from i. tax dep.

For exp. if annual salary is 6,00,000/- but co. add commission of Rs. 1.35,000/- (divided in 4 months as:-- +25,000+40,000+50,000+20,000), employee had deduction of Rs. 1,10,000 in schedule six deducated till Feb Rs. 46,800/-

Then in march (Salary+Commission) - Deduction (Schedule VI) then on taxable income we will calculate tax, and then from normal tax we subtract TDS (till feb) on rest will be taken as payable if positive and refund due if negative.

Even Mrs. Laxmi can read the Sec. but I think that she wants creem from milk. SO, Its a creem. Even i respect your words as its 100% in the block hole!!!

Sorry if I am wrong. Please correct me like your child

Amol Gopal Kabra (CA,CS,DISA) (Practicing CA) (8539 Points)
Replied 05 May 2011

Gaurav that is what we do for our ease. But if laxmi is asking about the section, we need to reply her in the manner that has to be done in a standard way, not the one which is easy for us. This thing may not work when the salary of the employee is say Rs. 12,00,000 p.a. So it was my duty to explain her the right way. Its better to give her the solution that will help her in any situation. Even what i said you and shy i said is only with the intention to correct you. My intention is not to demoralise you.

P.S.: What is this? Please correct me like your child. Just for your information, I am just 25 plus. So dont call me by that way.

Gaurav Tripathi (Working with DIAGEO-Leading Drinks Manufacturing Company) (210 Points)
Replied 05 May 2011

Anmol SIr, I will make sure that In future i reply with sec. and detail every time.

Now, As far as my line "Please correct me like your child." it just means that "i had less exp. as professional. So correct me as a senior professional"

vij_mori@yahoo.com (vij_mori@yahoo.com) (22 Points)
Replied 07 May 2011

PLEASE HELP ME, Exices ruls like (sez, CTC, under Bond)

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 07 May 2011

Originally posted by : vij_mori @ yahoo.com
	PLEASE HELP ME, Exices ruls like (sez, CTC, under Bond)

post in proper forum pls and with certain details

CTC is not part of excise.

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(Guest)

Originally posted by : Amol Gopal Kabra (CA,CS,DISA)
	Originally posted by : R.J. Gaurav Tripathi 20% flat if the employee don't have PAN. Normal rate of deduction is 10% but for calculating this you need to go for his annual salary along with the incentives(other then salary those included in salary like TA,DA,HRA etc is normally included in salary but the * performance bonous* is not). If still not clear give me reply i will explain u with example. Please refer to section 192 and review your reply. This doesnot exist anywhere in the Act.