TDS on salary under Section 192 applies to salaries paid by employers. It ensures tax is deducted at the source based on the employee's taxable income and applicable slab rates. Employers must calculate TDS after considering exemptions, deductions, and rebates. Understanding TDS computation helps ensure compliance and optimize tax liability for both employers and employees
Tax Deducted at Source (TDS) is a form of indirect tax implemented to collect tax from the source of income. TDS on salary under section 192 applies to an individual’s monthly salary and ensures tax deduction at the source before the salary is credited. This provision helps the government collect income tax efficiently from salaried individuals.
The salary you receive from your employer falls under ‘income from salary,’ and the employer is responsible for deducting TDS at the applicable Income Tax Rate based on your estimated annual income for the relevant financial year. The tax deducted under section 192 is reflected in Form 16, which the employer issues to the employee.
The TDS on salary under section 192 depends on your income and the applicable tax slab rates, which range from 10% to 30%. Employers calculate and deduct TDS accordingly to ensure compliance with the Income Tax Act.
Who Is Responsible for Deducting Tax at Source?
Any employer who pays money to their employees is required to deduct tax at source every month under section 192. The employee can be an
- Individual
- HUF
- Trusts
- BOI
- Local authority
- Partnership firms
- Artificial judicial person
All these employees must deduct Tax Deducted at Source monthly and deposit it to the government within a specific period. According to Section 192 of the Income Tax Act, there should be an employer-employee relationship for tax deduction at the source. The employer’s status is not relevant for the deduction of taxes under this section. Moreover, the number of employees hired by the employer does not matter while computing and paying tax deductions.
How to Calculate TDS on Salary Under Section 192
To calculate Tax deducted at source on Salary under section 192, employers follow a systematic process considering various components of an employee’s income and applicable exemptions. Here’s a step-by-step guide:
Step 1: Estimate Employee’s Salary
Begin by estimating the employee’s annual salary, encompassing basic pay, dearness allowance, perquisites, allowances (e.g., HRA, LTA), EPF contributions, bonuses, commissions, and salary from previous employment.
Step 2: Calculate Exemptions under Section 10
Determine exemptions under Section 10 of the Income Tax Act, covering HRA, travel expenses, uniform expenses, children’s education allowances, and deduct professional tax, entertainment allowance, and standard deduction (₹ 50,000). Subtract these exemptions from the gross monthly income to arrive at the taxable salary income.
Step 3: Include Other Incomes and Deductions
Consider additional incomes provided by the employee, like rental income or bank deposits, and factor in any deductions. For instance, subtract interest paid on housing loans from house property income.
Step 4: Calculate Gross Total Income
After adjusting for exemptions, deductions, and other incomes, determine the employee’s gross total income.
Step 5: Account for Chapter VI-A Deductions
Reduce Chapter VI-A deductions based on the employee’s declaration, including investments such as PPF, employee provident fund, ELSS mutual funds, NSC, Sukanya Samridhi account, and expenditures like home loan repayment, life insurance premiums, etc. Allow deductions under various sections like 80D, 80G, etc.
Note: Consider Tax Regime and Employee’s Choice
From FY 2023-24, the new tax regime is the default. Employees can choose the old tax regime and must inform their employer during the investment declaration. The chosen regime affects exemptions and deductions. The employer deducts income tax accordingly based on the selected tax regime.
Understanding these steps aids employers in accurately calculating TDS on Salary under section 192, aligning with tax regulations and employee preferences regarding tax regimes.
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How is TDS Deducted in Case of Multiple Employers?
TDS (Tax Deducted at Source) in cases involving multiple employers depends on the circumstances, primarily categorised into two scenarios: a change of job during the year and being engaged with two or more employers simultaneously.
Change of Job During the Year
When an individual changes jobs within a financial year, and there are two or more employers involved, it’s vital to provide details of the previous employment to the new employer using Form 12B. The new employer considers the previous salary and TDS deducted to accurately calculate the TDS for the remaining months in the financial year. This ensures proper tax deduction in alignment with the employee’s total annual income.
Engaged with Two or More Employers Simultaneously
In situations where an employee is concurrently employed by two or more employers, TDS on salary under Section 192 mandates that the employee furnish details of salary and TDS via Form 12B to any one of the employers. Subsequently, that employer is responsible for deducting TDS on the aggregate salary, including income from all employments. This practice streamlines the tax deduction process, prevents underreporting of income, and ensures compliance with tax regulations.
In both cases, providing accurate and complete information regarding salary, TDS, and previous employment details is crucial under TDS on salary under Section 192. This ensures that employers calculate TDS appropriately, avoiding discrepancies and maintaining adherence to tax laws. Transparency and communication between the employee and employers play a vital role in the smooth operation of TDS deductions, especially in scenarios involving multiple employments within a financial year.
Rate of Tax Deducted at Source Under Section 192
Under TDS on salary under section 192, there is no specific Source Tax Deduction rate. The amount to be deducted depends on tax slabs and rates applicable to the financial year for which the salary is paid. The employer should work out the requirement for deducting tax at source under section 192 after considering all the exemptions, allowance rebates, and deductions available to the employee.
The total tax deducted from the estimated income of the employer for the relevant financial year is divided by the number of months of their employment. If the employee does not have a PAN number, tax should be deducted 20% without including health and education. If the employee has made any payment as advance tax, then the employer can adjust the same for TDS Payment and calculation, but the employee has to intimate the same to the employer.
When Is Tax Deducted at Source Deducted From One’s Salary?
Under section 192, the source tax deduction is deducted at the time of salary payment and not during the accrual of wages. It means the tax will be deducted only when the employer pays the salary in advance or at the time of the payment in arrears. If the estimated wage is not more than the essential exemption list, the tax amount will be zero, so the tax deduction at salary will not be deducted. This rule applies to those who do not have PAN. The table below shows the basic exemption limit as the age does not require source tax deduction.
| Age | Minimum income |
| Residents in India below 60 years | ₹2.5 lacs |
| Senior citizens between 60 to 80 years | ₹3 lacs |
| Senior citizens above 80 years | ₹5 lacs |
The Due Date to Deposit Source Tax Deduction
The organizations’ responsibility is to deduct the source tax, and they are known as deductors. They are responsible for duly paying the applicable tax deducted at the source to the government before the due date. Generally, the due date to pay the tax deducted at the source is always the 7th of the following month, but there are a few exceptions.
For instance, if the organization wants to pay Tax Deducted at Source for June, then the due date for the same will be the 7th of July. one notable exception is the month of March, the source tax deduction payments for which can be made up to the 30th of April. For government assessments paying tax without challan, the Tax Deducted at Source payment has been made on the same day, and the original transaction has been completed.
How To Check Tax Deducted at Source
Keeping track of the source tax deducted from one’s salary can be done using the PAN card. It can be done with the help of the following steps.
- Visit this site
- Key in the verification code
- Click on Proceed
- Enter the pan and tan number
- Select the financial year and the water and type of payment
- Click on proceed/ go
- The screen will display the details
Ways To Compute Tax Deducted at Source On Salary Under Section 192
For computing TDS on salary under section 192, consider the following:
- Income other than salary, such as rent, should be considered by the employer for computing Source Tax deduction on salary if the employee submits such details.
- Interest on a home loan up to ₹2 lacs will be set off from salary income to arrive at estimated income for Tax Deduction at Source computation if the evidence is given in form 12BB by the employee.
- Many employees make investments to enjoy tax benefits to reduce their tax liability, but you do not know about such investments as an employer. Source Tax deduction amount increases when the actual tax liability. In these cases, you can declare information about all your tax-saving investments to the employer using Form 12BB. When an employee does this, they will consider these investments and compute Source Tax deduction accordingly.
How Can Vakilsearch Help You?
Going over the crucial rules, regulations, and computing applicable tax deductions can be time-consuming and exhausting. But with professional assistance, it becomes effortless. If the above computation seems overwhelming, explore Vakilsearch for simplified solutions. Our representatives assist you from TDS on salary under section 192 computation to the reimbursement process. We ensure complete compliance with government regulations, offering seamless tax-related services. Visit our website or contact us for expert assistance.
FAQs
What is Section 192B on salary?
Section 192B on salary pertains to TDS (Tax Deducted at Source) for income earned through salary, outlining the tax deduction process for the taxpayer.
What is Section 192B in TDS?
Section 192B in TDS specifically addresses TDS deductions on salary income, stipulating how taxes are to be withheld from the salary paid to an individual.
What is the difference between 192A and 192B?
The difference between 192A and 192B lies in their focus—192A deals with TDS on premature withdrawals from Provident Funds, while 192B addresses TDS on salary.
How much TDS will be deducted on salary?
TDS deducted on salary varies based on your income slab and applicable tax rates, calculated as per the provisions of Section 192B.
How do I claim Section 192B?
To claim benefits under Section 192B, ensure accurate filing of your income details, exemptions, and deductions while filing your income tax return.
How is 192B TDS calculated?
TDS under Section 192B is calculated using the prescribed rates based on the individual's income and other relevant factors mentioned in the Income Tax Act.
What is the difference between 192A and 192B?
Section 192A pertains to TDS on salary payments, encompassing a broader understanding, while 192B specifically focuses on TDS calculations for salary income.
What is 192A section of TDS?
Section 192A in TDS addresses tax deductions on salaries, outlining the process and rates for withholding taxes based on the individual's income and tax liability.
