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TDS Rate on Salary Income and TDS Calculation on Salary under section 192

How to Calculate the TDS Amount on Salary Income i.e Tax Deduction on Salary or What will be the TDS Rate on Salary Income.There is no fixed Tax Deduction Rate (TDS Rate) for Salary Income, TDS has be calculated based on the Income Tax rate applicable to that person. For each year Income Tax Slab Rates are different .i.e Income Tax for Year 2012-13 & 2013-14 (A.Y. 2013-2014 & A.Y. 2014-15) Salary Income upto Rs. 2 Lakh is not taxable and For Year 2011-12 (A.Y. 2012-13) Income upto Rs. 180000 was not taxable.

NATURE OF PAYMENT

Any payment chargeable under the head “salary”. Thus, where a firm pays salary to its partner, section 192 is not applicable because such payment is taxable in the hands of partner under the head “Income from BPV”.

Steps to calculate TDS on Salary Income:

Steps

Computation

Remark

Step 1

Estimate income taxable under the head “Salary” as per provisions for salary

Simultaneous employment:

Where, the employee is employed simultaneously by more than one employee as responsible for TDS and provide the details of salary Income from other employees, TDS out of such salary and other necessary particulars to such selected employer in form No. 12B

Previous employment:

Where the employee was in employment under same previous employer in the same year, he may furnish details of salary Income, TDS out of such income and other necessary particulars to his present employee in Form No. 12 B

Step 2

Consider other incomes, if reported by the employee

If the employee submits details of other incomes and TDS out of such income and TDS out of such income in Form No. 12C and employer shall consider such other income and TDS while calculating TDS u/s 192.

However, following points should be kept in mind –

  • The employer cannot consider negative incomes (i.e. Losses)except under the head “House Property”
  • The employer cannot consider other income and TDS , if the effect of such consideration is to reduce the tax otherwise deductable u/s 192.

Step 3

Allow deduction under chapter VI-A

The deduction under 80G can be allowed only in respect of certain donations.

Step 4

Calculate Tax at the rates applicable to an individual. Include education cess and SH education cess as applicable

Step 5

Allow relief u/s 89

If the employer is Govt. company, cooperative society, university, local authority, institution, association or body, it can consider relief u/s 89 provided the employee submits necessary details in Form No. 10E

Step 6

The net tax liability shall be deducted

The TDS shall be deducted at the average rate of Tax.

DEDUCTION AT WHAT TIME?

Tax shall be deducted at the time of making payment of salary.

IMPORTANT NOTES

  1. Adjustment of excess / deficiency:

    The employer can increase or reduce the amount of TDS so as to adjust previous excess / short-deduction during the same year.

  2. Tax payment on non-monetary perquisites:

    The employer can make, at his option, payment of tax on non-monetary perquisites of employees. In such a case, no TDS shall be required to that extent. It is further provided that the tax payable by the employer in relation to non-monetary perquisites shall be calculated as follows –



 

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10 thoughts on “TDS Rate on Salary Income and TDS Calculation on Salary under section 192
  • J. C. Mistry says:

    If there is loss more than Rs. 1,50,000/- from Let out Commercial Property, and if employee furnishes details/declaration; then while arriving at tax deductible from Salary, whether Employer can take cognisance of this and deduct less TDS than otherwise. Since the line of argument is to arrive at Average Rate

    • admin says:

      If Employee can give the proof that his interest payment for the housing property is Rs 150000/-Since there is clause no 7 in form 16 which says any other income shown by employee (Income can be negative also). Its the duty of employer to deduct TDS at right amount.So employer must consider the Interest and Loan amount while calculating TDS amount
      Check NEW FORM 16

  • B.Thiyagarajan says:

    Good

  • prashant gupta says:

    what is tds and how to calculate it?
    what is service tax and how calculate it?

  • Thangaraj says:

    I Need Clear notes for TDS with Example……

  • Ajay says:

    Pls reply.
    In case of TDS deducted and deposited without Cess on salary TDS but after 2 days deposited the cess amount from another challan.
    please reply that 24q aceepted by incometax department.
    please advise

  • Harilal says:

    please describe the amount to be posted in item 18 of Form 16(192(1) and 192(1A)n perquisites u/s 17(2)

  • Arun Pai says:

    sir my query is calculation TDS under 194IA ( Sale of immovable properties ) Threshold limit or cut of limit is Rs5000000/-, If my property value is Rs 6900000/- what will be the TDS amount Please explain.

    Thanks & regards

    • admin says:

      TDS of Rs 69000/- .ie 1% of Rs 69lakhs to be done at the time of payment
      for more information pls read TDS Category of Taxfaq