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TDS on salary applicability, calculation and when to pay


Rahul Rai

2013-11-20

TDS payment and filing is a nightmare nowdays. A small mistake and notice by Income Tax department in your hands.

TDS on salary applicability, calculation and when to pay

We will discuss the TDS on Salary in detail here.

How to calculate TDS on salary?

TDS on salary is given a different treatment by Income Tax laws. Salary is not treated in line with TDS on professionals, contract etc.

In case of TDS no minimum amount is specified, crossing which TDS should be deducted.

However TDS should be deducted, if Salary payable to employee is more than taxable income subject to if employee prove that his income is not taxable.

The best method to calculate TDS is by ascertaining the Taxable salary of Employee, and than find calculate the Tax Payable. Once Tax is calculated, Divide the Tax amount by number of months.

Example of Tax calculation and TDS calculation

Tax Calculation
Particulars Amount Amount
Basic Salary             1,50,000
variable Pay                 24,500
Others             2,15,000
Medical Allowance               7,500  
Conveyance               4,800  
HRA             61,250  
Less: Allowances Exempted           (12,300)  
Less: HRA Exempted                      -                 61,250
Gross Salary Income             4,50,750
Less: PT                   1,200
Net Salary Income             4,49,550
Tax on Salary Income                 70,007
Tds For each month                   5,834

 

When to Pay TDS (Tax Deducted at Source) on Salary to Government?

Unlike other TDS, on salary remittance to government is not on basis on credit in books or Date of payment. In case of salary the remittance should be done when Amount is credit to the account of Employee.

If employee Prove that his overall income is not taxable, should Tax should be deducted?

No, if Employee proves than no need to deduct.