HomeSection

Section 192 TDS on Salary rate and computation

Like Tweet Pin it Share Share Email

When a person/Employer is paying Income Under head ‘salary‘,he is responsible for deducting TDS on an average rate of income tax (check the bottom of the post for average rate computation example)based on the prevailing rate during the Financial Year by considering  the estimated Income of assessee. All Employers making such payments like Individual,HUF,Partnership Firms,Companies,Co-operative societies, trust, artificial judicial persons are liable to deduct TDS .

Section 192  TDS on salary Income tax Act.

Conditions to be fulfilled for TDS deduction Under Section 192

  • Payment made to resident employees.
  • Payment made to non resident employees.
  • The TDS deduction under section 192  under head salary is makes it mandatory that, there exist an employer – employee relationship between deductor and deductee.
  • Payment is made by the employer to the employee.
  • The payment is in the nature of salary
  • The income under the head salaries is above the maximum amount not chargeable to tax.

When and at what amount of TDS to be deducted under section 192

The deduction should be made at the time of making payment not on when it becomes due or obligation arises, and TDS shall be deducted as per Section 192, the employer is required to deduct tax at source on the amount payable at the average rate of income tax. Average rate of Income tax is calculated on the basis of rates in force for the financial Year in which payment is made.

Standard Deduction

The 2018 budget has been decided to be withdrawn the existing benefits of deduction of transport allowance of 1600/ month and medical expense up to 15000 re reimbursed by the employer. in place a standard deduction of 40000/- or amount of salary  whichever is less is allowed from 1 st April 2018 . Therefor medical expense 15000+ transport allowance (1600 x 12) 19200 =  34200, The net benefit of this scheme is 5800.00

2019 budget update: The benefit of standard deduction has been increased to 50000.

Explanation standard deduction

This is a deduction of fixed amount of 40000 in place of transport allowance and medical expense and no proof documents are required.

For example : A person with a taxable salary of  450000 can deduct  40000 and his taxable salary becomes 410000.

Note: This is applicable in the AY -2019-2020 only.For AY 2018-19 You can deduct existing 450000- 15000 ( medical allowance ) and transport allowance 19200= Hence taxable salary would be = 415800.

Surcharge and cess for AY -2018-19

10% Surcharge is applicable for tax payers under category Individuals, Hindu undivided family HUF), for Income slabs between 50 lacs to 1 crore and 15 % is applicable for Income above 1 crore. Education cess & Higher Education Cess is applicable @ 3% on Income tax for Resident and non resident assessee. Hence TDS on salalry is calculated after considering these tax elements.

Budget 2018 Update of Cess & Surcharge for AY 2019-20

The budget 2018 proposed a replacement of existing Education cess of 3 % with new Health and Education cess of 4 % income tax of personal income tax and corporation tax.

Wherein  surcharge on income tax of Individuals shall be paid the surcharge as follows.

Income Does not exceeds 50 Lakhs : Nil

Between 50 lakhs & 1 crore :  10 % on income tax.

More than 1 crore : 15 % on income tax.

There is no change for cess and surcharge  ( Budget 2019)  for AY 2020-2021.

Calculation of TDS under average rate of income tax.

For Example: A resident Employee X is is paid 50000/month Under the head salary during Financial year 2016-17, Who is under the age of 60.

His Total Income would be estimated as                                                                               600000
And an estimated deduction under various section would be                                              50000

Income chargeable to tax is estimated                                                                                     550000
Tax is calculated as per current slab rate of Individual resident for Calculation of TDS on salary under section 192                                                                                                                   35000
Education and higher Education Cess of 3% on the income tax                                              1050
Net Tax Payable                                                                                                                      36050
Averare rate of Tax on salary is calculated by applying Formula = Estimated tax 36050 x 100  Devided by
Total Income Estimated                                                                                                     600000
=                                     6.008 %
Hence Mr X TDS is to be deducted/Month                                               = 50000 x 6.008% =  3004

Calculation of TDS under average rate of income tax

The rate varies for persons under various slab rate ,may vary in different financial year & depends on Total Income earnings & available deductions per year.
Note :You can Consider any other income reported by employee,incomes exempt, deductions and relief while calculating average rate of income tax.

Issue of Form 16 &  Form 12 BA

The TDS deducted to be Deposited to Government and a FORM 16 should be issued to employees. He can claim the TDS amount while submitting tax return against the total tax payable.The cut off date for issuing Form 16 is  31 May of the Next Financial year in which tax is deducted.

Apart from issue of form 16 Form 12 BA is also issued in case the employer is giving perquisites & Profit lieu of salary under section 17 (3).

Time Limit for the Payment of TDS to the Government.

  • On 7th of the Next month in which TDS is deducted.
  • Salary Paid in the month of March should be deposited on or before 30th of April
  • In the case of a Government office ,same day of deduction without a challan.
  • The deposition of TDS is to be made vide challan No.ITNS 281.

Quarterly Return in Form 24 Q

The person/Employer who is deducting TDS or the payer of such Income should Furnish a Quarterly return to the Income tax department in Form Prescribed Which is Form 24 Q.The due date for the same is

I   Quarter April to june                     – On or before 15th July,

II  Quarter July to September          – On or before 15th October

III Quarter October to December    – On or before  15th January

IV Quarter January to March           – On or before  15th May.

Similarly For Government deductors due date is as follows

I   Quarter April to june                     – On or before 31st July,

II  Quarter July to September          – On or before 31st October

III Quarter October to December    – On or before  31st January

IV Quarter January to March           – On or before  15st May.

TDS on Salary on Change of Employment or Multiple Employer.

Employee Working Under more than One Employee :-In the case of an employee who is working for more than one employer, he may furnish his salary TDS details to the employer of his choice.

Employee Changed his employer during the Financial Year:- In case of employee who has changed his employer also submit his previous TDS ,salary details to subsequent employer.

These details are to be furnished  Form 12 B according to Rule 26A. Up on receipt of such Form ,Employer consider the aggregate salary and TDS paid so far and deduct if necessary for the remaining Income earned by the employee.

Is TDS deductible for the Non Monitory perquisite  given to the employee?

It is not necessary to deduct TDS on non monitory perquisites.But employer can opt to make deduction on such benefits under Sections 192 (1A) & 192 (1B) .The condition is that such payment will have to be made  when such tax was otherwise deductible. The tax so paid shall be deemed to be the TDS made from the salary of the employee. However, as per provison to section 198, this tax paid will not be deemed to be income of the employee.

Other Important Points Regarding TDS on Salaries

  • Tax payer can make application for lower deduction or non-deduction of TDS in prescribed form No 13 Under Rule 28AA
  • The Total TDS paid in excess of Total tax due is eligible for a refund.
  • Adjustment can be made in the subsequent deduction in case of Lower deduction or excess payment  of TDS made due to Increment in salary,Advance salary,Bonus, Commission etc.

Income tax compuation

Income Tax Computation
Basic Salary Including DA xxx
House Rent Allowance xxx
Transport Allowance ( Tax free limit is 19200 in FY 2018) xxx
Medical Reimbursement ( Tax free limit of Rs 1500 in FY 18,Separate fro Medical deduction u/s 80D xxx
Taxable Portion of LTA xxx
Bonus xxx
Allowances xxx
Taxable Income from Housing ( Total Income received from housing  after deduction for property tax and statutory deduction of 30 % for repair and maintenance  but without considering any deduction towards principal and /or interest paid on housing loan.) xxx
Other Income ( Representing income from other sources ,being interest pension,and devident from foreign companies. xxx
Total Income  ( A ) xxx
DEDUCTIONS
Deduction U/S  80 C Up to 1.5 lakhs ( Deduction for Investments u/s 80 C ( Instruments like EPF ,PPF , ELSS,NSC ,Insurance premium,Home Loan Principal etc xxx
DEDUCTIONS U/S 80CCD (UPTO RS 2 LACS) – NEW PENSION SCHEME
80CCD (1) ( Amount of Deduction Cannot Exceed  10 % of your basic salary Including DA  ) XXX
8CCD(1B)Maximum amount of deduction allowed is  50000,Available to Tier 1 accounts only. XXX
DEDUCTIONS U/S 80D (UP TO RS 1,00,000)
Medical insurance premium expenditure for self /family ( For Senior citizen the limit is 30000 for FY & FY 19 it is 50000. Otherwise 25000. Senior citizen can claim deduction for the amount spent as medical expenditure if he/she does not have a medical insurance in his /her name. xxx
Preventive medical check up for self & family limit upto 5000 xxx
Medical insurance premium expenditure for Parents ( For Senior citizen the limit is 30000 for FY & FY 19 it is 50000. Otherwise 25000. Senior citizen can claim deduction for the amount spent as medical expenditure if he/she does not have a medical insurance in his /her name. xxx
Preventive medical check up for parents limit upto 5000 xxx
Standard Deduction ( Standard Deduction has increased to 50000 from 40000 ( This deduction is available from salary in lieu of transport allowance and medical reimbursement ( no proofs required ) xxx
Other Deduction ( Any other deduction under section 80TTA,80TTB,80DD,80DDB,80E,80G,80GG,80QQB,80U. xxx
Interest Paid on Housing Loan ( Limit of Rs 2 Lac for self occupied house .Additional Deduction of Interst of Rs 50000 Per annum In case of individual buying property for the first time provided value of the house, does not exceed Rs 50 Lakhs,and loan does not exceed Rs 35 lakhs. xxx
Interest Paid on Housing Loan not occupied by the owner. No limit on interest paid on housing loan for house not self occupied. xxx
House Rent paid xxx
Total deduction ( B) xxx
Taxable Income (A)-(B) xxx

 

Comments (18)

  • Hi Sir,
    My salary is 15k without any deduction so i’m eligible for TDS dedution?
    suppose if not ,my employer deducted rs.300 as TDS dedution. is that right?
    Please help me same sir with section & subsection.
    Thanks
    Anil Varma

    Reply
    • Your salary attract TDS only when total Income exceeds 250000 in a year. This is based on the current Income tax rate applicable for FY 2016-17. Are you getting any other benefits apart from salary ? Such as bonus ,Incentives etc. If so ,The sum total of all Income might be exceeding 250000. In such case employer can deduct TDS.

      Your salary is only 15000/month . Total for a Year is 12 x 15 = 180000 . Your salary does not comes under the chargeable slab of Income Tax. In that case your employer deducted TDS by mistake.

      Reply
    • Hello Sir,
      Is There Any Other Allowances Other Than Salary
      If There Are No Such Allowances Then No TDS is Required To Be Deducted.
      Since Your Employer Has Already Deducted The TDS You Can Claim The Refund While Filing The Income Tax Return.
      For Any Queries You Can Contact Me at 8142881203

      Reply
  • hi Sir,
    I did internship in an MNC at Bangalore. I was supposed to get 30500 for the 2-month internship but TDS got deducted upon payment of the same amount @ 10%. My annual income was that 30500 only since I am a student.

    So, shall I file tax refund, or it is compulsary to pay 10% TDS on professional income > 30000 ?

    Reply
  • Sir,
    My salary is Rs. 22,000/- per month. TDS is applicable for me?

    Reply
  • Kindly give detailed explanation about TDS sir.
    What forms are to be collected from employer if TDS applicable for me.
    what is 16 & 16A
    and 24Q and 26Q.
    What is payment due dates & online returns due dates

    Reply
    • Dear Naresh ,

      Kindly clarify whether you are employer or employee so that we can answer you accordingly

      Reply
  • Hai Saju Sir,

    Your suggestions are valuable. Will you please teach how TDS will be calculated.

    Reply
  • Respected Sir,
    I don’t Know TDS Act, Section 192, So please reply me details of section 192

    Reply
  • Hi Sir ,

    One of my teammate deeksha prasad joined in Nov 2016.
    At the time of joining , she was not having pan card and haven’t quoted the same in Salary account.
    Post account creation she got the PAN card created and quoted the same .
    Now the TDS is showing in her form 16 is 3179 but total tax deducted under form 12BA “Tax deducted from salary of the employee u/s 192(1) 8,412.00”

    Please let us know if she is liable to get return of 3179 or 8412.

    Regards
    Tapan

    Reply
  • RESPECTED SIR,
    I AM PRINCIPLE OF A PRIVATE SCHOOL THERE ARE SO MANY TEACHERS WHO ARE RECEIVING SALARY MORE THAN 3 LAKH IN A FINANCIAL YEAR. I DID NOT DEDUCT ANY TAX FROM THEIR SALARY,
    SO I AM ASKING YOU THAT CAN I DEDUCT CONSOLIDATE TAX AT THE END OF THE YEAR

    Reply
    • Yeah sure you can deduct in the year end depends upon declaration given by the employee and deduct the eligible deductions and calculate the tax and deduct the tax amount along with the cess and remit to government.

      Reply
  • Hi Sir im getting salary as 14000as take home salary but company is deducting TDS as 10% in my take home salary and they agreed to give me 14000 only as take even if we calculate my salary for 12 months it is only 1.68L and there is no gross salary

    So please help me with this?

    Reply
  • Sir, Last year my income tax was 24012. This year (2018-19), my income tax is expected to be around 26000. My monthly salary is approx. 60000. I want to settle the entire tax in the month of February. Is TDS per month is compulsory since my salary is much higher than the income tax to be paid and I am able to pay in one month rather than paying on monthly basis as IT Department does not pay interest on advance TDS and I used to earn interest on RD 2000 per month which is solely opened for paying income tax in February?

    Reply
  • Sir I am getting 22000 per month salary which has been increased from jan 2018.

    And i also received bonus 22000 in diwali.

    Total will be 22000 ×13=286000 will be.

    i do not received any other rupee from employer.

    No Basic no DA no HRA no PF nothing only flat 22000 pm.

    Now my employer is saying why he will take headache to deduct TDS only because of of me.

    And he told me you tell me how to do and process. The amount of Tds and time to deduct Tds. Etc

    He he told if you can’t do take the balance salary above 250000 in cash.

    Please help me!

    Reply
  • Sir,
    I am a Central Govt DDO. One of my employees has submitted Rent receipt for claiming HRA rebate at source. On scrutiny of the same, I am not satisfied that it is genuine. Under which Section of the Income Tax Act, am I authorised to deny rebate to the employee? Would request you to provide me the reference of the relevant section of IT Act. Thanks in advance. Regards

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *