TDS on salary applicability, calculation and when to pay
TDS payment and filing is a nightmare nowdays. A small mistake and notice by Income Tax department in your hands.
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
|Less: Allowances Exempted||(12,300)|
|Less: HRA Exempted||-||61,250|
|Gross Salary Income||4,50,750|
|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.