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TDS on Salary : Section 192

TDS on Salary

Introduction

Tax Deduction at Source [TDS] on salary is a crucial aspect of income tax regulations in India. Let’s delve into the details:

    • Employers are required to deduct tax from employees’ salaries before disbursing the payment. This process is known as TDS (Tax Deduction at Source).
    • The deduction amount is then deposited with the government on behalf of the employee.
    • here exists an employer-employee relationship.
    • The payment made by the employer to the employee is in the nature of salary.
    • The income chargeable under the head “Salary” exceeds the maximum amount not chargeable to tax.

 

Who Can Deduct TDS under Section 192?

    • Various entities can deduct TDS on salary, including:
      • Companies (both private and public)
      • Individuals
      • HUF (Hindu Undivided Families)
      • Trusts
      • Partnership firms
      • Co-operative societies
    • The employer-employee relationship is crucial for TDS deduction, regardless of the employer’s status (e.g., HUF, firm, or company).

 

When is TDS Deducted under Section 192?

    • TDS is deducted at the time of actual salary payment (not during accrual).
    • It applies whether the salary is paid in advance, on time, or even in arrears (late payment).
    • If your estimated annual salary does not exceed the basic exemption limit, no TDS will be deducted.
    • The basic exemption limits for different age groups are as follows:
      • Below 60 years: ₹2.5 lakh
      • Senior citizens (60 to 80 years): ₹3 lakh
      • Super senior citizens (above 80 years): ₹5 lakh

 

Rate of TDS on Salary

The TDS (Tax Deduction at Source) rate on salary in India varies based on the income slab. Here’s a summary of the applicable rates for the financial year 2023-24:

  1. Payment of Salary (Section 192):
    • TDS on salary is deducted based on the normal slab rates applicable to individual taxpayers.
    • The basic exemption limit for employees determines whether TDS is applicable.
    • If your estimated annual salary exceeds the basic exemption limit, TDS will be deducted according to the regular income tax slabs.

 

Salary from than one employer

If you find yourself employed by multiple employers simultaneously, you can navigate the intricacies of TDS (Tax Deduction at Source) on your salary. Here’s how it works:

  1. Form 12B: If you’re juggling more than one job during a financial year, choose one of your employers to be responsible for deducting TDS. Provide details about your salary income received or receivable from other employers in Form 12B. Once your chosen employer receives all the necessary information from you, they will compute your gross salary and deduct TDS accordingly.

 

Due dates of TDS payment

Under Section 192 of the Income Tax Act, which deals with TDS on salary, here are the relevant due dates for both TDS payment and return filing:

  1. TDS Payment Due Date:
    • For the month of March, the TDS on salary must be deposited on or before the 30th day of April.
    • For all other months, the TDS should be deposited within seven days from the end of the month in which the deduction is made.

 

Due dates of return filing

  1. TDS Return Filing Due Date:
    • For the April to June quarter, the due date is July 31.
    • For the July to September quarter, the due date is October 31.
    • For the October to December quarter, the due date is January 31.
    • For the January to March quarter, the due date is May 31

 

TDS Forms

TDS (Tax Deducted at Source) is an essential aspect of income tax compliance in India. Employers and other entities that make specified payments are required to deduct TDS from the income before making payments to the recipients. Let’s delve into the details:

  1. TDS Return Forms:
    • TDS returns are quarterly statements that contain information about TDS deducted and deposited. Different forms are prescribed for filing TDS returns based on the nature of the TDS deduction:
      • Form 24Q: This form is used for tax deducted at source from salaries. Employers (deductors) file this quarterly statement, providing details such as PAN of the deductor and deductee, salary information, TDS details, and other relevant data.
    • TDS Certificates:
      • Form 16: This certificate is issued by employers to employees. It provides details of TDS deducted from salary income during the financial year. The due date for issuing Form 16 is on or before June 15 of the financial year immediately following the year in which tax is deducted.

 

What are the consequences of non-compliance under section 192?

  1. Levy of Interest: If the employer does not deduct the TDS on salary or deduct the TDS but does not deposit it to the government, then interest is required to be paid on such amount.
  2. Disallowance of expenses: Also, the employer is only eligible to claim the deduction of salary expense from PGBP income if TDS is deducted on time.
    The amount of disallowed salary expenses shall be

    1. 30% of the salary payment goes to the resident.
    2. 100% of Salary payment to Non-Resident.

 

Income under other heads

Let’s explore Section 192(2B) and Rule 26B related to TDS (Tax Deducted at Source) on salary:

  1. Section 192(2B): Specifically allows an employee to furnish particulars of income under any head other than “Salaries” for the same financial year and of any tax deducted at source thereon.
    • In simpler terms, an employee can provide details of other income (such as income from house property, capital gains, etc.) to the employer for the purpose of TDS calculation.
  2. Rule 26B:
    • Rule 26B complements Section 192(2B).
    • It requires the employer to consider these additional particulars of income (other than salary) while calculating TDS.
    • Essentially, it ensures that TDS is accurately deducted, taking into account the employee’s overall income

 

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