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tds on salary

13 December 2010

a man salary 20000 per month and we dont deduct their tds on salary from april 2010 now we want to deduct tax on their salary .

20000*12=240000, 240000-160000=80000, 80000*10% =8000 + 3%(cess) = total tds of whole year =8240

question is this can we deduct 8240/12= 687*8 ( 8 for april to nov. month tds) = 5496 from the salary of november 2010.

we should no deduct earlier month salary tds and we deduct 687 rs for the month of nov. 2010 and so on continue

whichever is right ?

plz reply

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5 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 13 December 2010

Dear Deepak,

Your calculation of TDS is absolutely right.

For the collection and payment of TDS you have 3 options.

1. As you mentioned above, you can Deduct the tax pertaining to earlier months from the salary of November 2010 itself.

2. As calculated above, you can deduct the tax installment from November to February and the residue [8240-(687*4)] can be deducted in march.

3. But both the above options will be a bit burdensome on the employee, because the salary in hand for the month of November/March will be extensively less.

So I would like to suggest you to go for 3rd oprion i.e. the total deduction should be divided equally into 5 installments for the months from Novembar to March. (8240/5=1648). So you will have to deduct Rs. 1648/- from November onwards.

Regards,

Devendra & Nitin.

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Divya K S (CA) (289 Points)
Replied 13 December 2010

It is better to remit TDS of Rs. 1648 for 5 months.

RUPESH CHOUDHURY (Student) (484 Points)
Replied 14 December 2010

Dear Deepak,

Conclusions by Mr. Devendra is correct.And you must communicate to the employee before deducting TDS ,regarding any Deductions or Exemptions he is allowed to .