TDS Return on Salary Payment (Form 24Q)
Every person or entity who has deducted TDS while disbursing salary to its employees must file your quarterly TDS returns. A delay in filing the returns attracts interest and penalty levied by the Tax Department. TAXAJ provides you with a prompt mechanism to comply with all the TDS compliance on salary payment.
It usually takes 3 to 5 working days.
- Registration on TRACES
- Form 24Q Up to 100 employees (1 no.)
- Fulfillment using ClearTDS Returns Software
- Bulk PAN Verification
- Challan Verification
- Online FVU Generation and Submission
- Generation of Form 16
- Any individual who is required to make a payment of salary and has to deduct TDS
- Any organisation such as corporate, partnership firm etc required to make salary payment after deduction of TDS
- Any branch of principal business office
- Purchase of plan
- FIll in the details in the template provided
- Upload documents on vault
- Return form prepared by Tax Expert
- Generation of Form 16
- Details of deductor
- Details of responsible person
- Details of deductee
- Challan details
- Deduction details
Everything you need to know about TDS on Salary Payments!
TDS on Salary under Section 192
Section 192 of the Income Tax Act, 1961 deals with tax deducted at source (TDS) on salary. Your employer will deduct TDS from the salary payable to you. The salary you receive from your employer is categorised in ‘Income’ under the head ‘Salary’ and the employer will be responsible for deducting TDS at normal income tax rates applicable to you on your estimated income for the relevant financial year. The TDS deducted u/s 192 is reflected in Form 16, which is issued by the employer to the employee.
Who can Deduct TDS under Section 192
The employer’s can be-
- Companies (Private or Public)
- Partnership firms
- Co-operative societies
All these employers are required to deduct TDS monthly and deposit it to the government within the specific time period. According to section 192 of the Income Tax Act, there must be an employer-employee relationship for the deduction of tax at source. The employer’s status such as HUF, firms or company is irrelevant for the deduction of tax at source under this section. Moreover, the number of employees employed by the employer does not matter while calculating and deducting TDS.
When is TDS Deducted under Section 192
Under Section 192, TDS is deducted at the time of actual payment of salary and not during the accrual of salary. It means tax will be deducted if your employer pays salary in advance or at the time of salary payment in arrears.
In case your estimated salary is not more than the basic exemption limit, tax amount will be zero and hence, TDS will not be deducted.
This rule is applicable even to those who do not have a PAN. To know the income tax rates applicable to you, click here.
The table below shows the basic exemption limit as per the age that does not require TDS to be deducted:
|Resident in India below 60 years||Rs 2.5 lakh|
|Senior Citizens between 60 years and below 80 years||Rs 3 lakh|
|Super Senior Citizens above 80 years||Rs 5 lakh|
How is TDS Deducted on Salary
Calculation of Taxable Income of the Employee
At first, the employer estimates employee’s salary for the relevant financial year. This should include basic pay, dearness allowance, perquisites granted by the employer, other allowances granted by the employer like HRA, LTA, meal coupons, etc., EPF contributions, bonus, commissions, gratuity, salary from the previous employer, if any, etc.
In the next step, the employer calculates exemptions under Section 10 of the Income Tax Act. The exemptions can be applicable on allowances like HRA, travel expenses, uniform expenses, children’s education allowances, etc. Also, reduce the amount of professional tax paid, entertainment allowance and standard deduction of Rs 50,000.
The employer reduces such exemption from the gross monthly income and the net amount will be treated as the taxable salary income.
If the employee has provided the information about other incomes such as rental income from house property or bank deposits, etc. In that case, such amounts should be added to the net taxable salary. Further, the interest paid on housing loans are deducted from the house property income, but if there is no income from house property, there will be a negative figure under the head ‘income from house property’. After adding or reducing the said amounts, the calculated figure will be the employee’s gross total income.
Now, the employer reduces the investments for the year, which fall under Chapter VI-A of the Income Tax Act declared by the employees as per the investment declaration submitted. The declaration may include the amounts of investments such as PPF, employee’s provident fund, ELSS mutual funds, NSC, Sukanya Samridhi account. It may also income expenditures such as home loan repayment, life insurance premiums, NSC, Sukanya Samridhi account, etc. Similarly, the employer allows deduction under various other sections such as Section 80D, 80G, etc.
Note: If the employee wishes to opt for a new tax regime, he/she may intimate the same to the employer about exercising the option each year. And the employer may deduct his/her income tax according to the new tax regime.
Also, if the employee has declared to calculate income tax as per the new tax regime, then the Income Tax act does not allow 70 specified exemptions and deductions allowed in the old tax regime. Hence, the employer will calculate the net taxable income as per the income tax regime chosen by the employee.
Rate of TDS Deduction
Section 192 does not specify a TDS rate. TDS will be deducted as per the income tax slab and the rates thereof applicable to the taxpayer for the relevant financial year for which the salary is paid.
The tax calculation is usually done by the employer at the beginning of the financial year. The TDS to be deducted by dividing the estimated tax liability of the employee for the financial year by the number of months of his employment under the particular employer.
However, if there is no PAN of employee, TDS shall be deducted at the rate of 20% plus 4% cess.
The employer adjusts any excess or deficit arising out of any earlier deduction by increasing or decreasing the number of subsequent deductions during the same financial year.
If the employee has made any payment as an advance tax, then the same can be adjusted for calculation of TDS. The employee needs to intimate the same to the employer.
A resident employee Nikhil (aged 40), who works for ClearTax, is fixed as Rs 1,00,000 per month as salary during the FY 2022-23. Nikhil has investmented Rs 50,000 in ELSS funds, Rs 60,000 in PPF, Rs 40,000 in NSC. What will be the monthly TDS deducted u/s 192?
- His total income would be estimated as Rs 12,00,000.
- Standard deduction of Rs 50,000 is allowed on salary income.
- Deduction (as declared by employee) under Chapter VI A would be Rs 1,50,000.
Calculation of TDS from monthly salary
|Less: Standard deduction||50,000|
|Gross Taxable income||11,50,000|
|Chapter VI-A deductions||1,50,000|
|Tax as per applicable slab rates|
0 to Rs 2.5 lakh – Nil
Rs 2.5 lakh to Rs 5 lakh – 5%
Rs 5 lakh to Rs 10 lakh – 20%
|Cess @ 4%||4,500|
If there are 12 months remaining for TDS deduction in the financial year the employer will deduct TDS u/s 192 = Rs 1,17,000 / 12 = Rs 9,750.
In above case, if the employee makes a declaration to the employer for opting new tax regime, the employer shall deduct tax at source as below:
In the new tax regime, standard deduction of Rs 50,000 and deduction for investment in ELSS, PPF, NSC will not be allowed as a deduction. And tax will be calculated as per the new slab rate of individual resident for calculation of TDS on salary u/s 192 , i.e. Rs 1,05,000.
Education and higher education cess of 4% on the income tax = Rs 4,200.
Therefore, the net tax payable = Rs 1,09,200.
Accordingly, TDS u/s 192 to be deducted per month = Rs 1,09,200 / 12 = Rs 9100.
Mr Soni receives a pension of Rs 30,000 per month and income from interest on pension account (savings account) is Rs 12,000 during the FY 2021-22. What will be the monthly TDS amount deducted from the pension?
As per Section 192, TDS is required to be deducted on all the monetary amounts paid by the employer under the head ‘Salary’. Since, ‘Salary’ also includes pension, TDS on the same needs to be deducted as per Section 192.
Computation of TDS
|Income from salary|
|Less: standard deduction||50,000|
|Net income from salary||3,10,000|
|Income from other sources|
|Interest on savings account||12,000|
|Gross total income||3,22,000|
|Income tax thereon|
0 – Rs 3,00,000 – Nil
Rs 3,00,000 – Rs 3,22,000 – 5%
|Less: Rebate under Section 87A (up to Rs 12,500)||1,100|
|Income tax payable||Nil|
Hence, since the income tax payable is zero, no TDS will be deducted by the employer from the monthly pension.
Salary from More Than One Employer
If you are engaged with two or more employers simultaneously, you can provide details about your salary and TDS in Form 12B to any one of the employers. Once the employer receives all kinds of information from you, he/she will be responsible for computing your gross salary to deduct TDS.
Subsequently, if you resign and join a different employer, you can provide details of your previous employment in Form 12B to your new employer. This employer will consider your previous salary and TDS will be deducted for the remaining months of the financial year.
If you choose not to provide details of income of other employment, each employer will deduct TDS only from the salary paid by him respectively.
Q. What is TDS in salary?
TDS or Tax Deducted at Source is a tax levied by the Indian government wherein taxes are collected based on 'pay as you get'. The taxes are deducted at payments source, such as salary & commission.
The employer deducts the Tax before making the payment to the employee and is deposited with the govt. The employer later issues form 16 to its employees, which serves as proof of tax payment in the employee's hands.
Q. When is online return mandatory?
For certain people, it is compulsory to be submit the quarterly return online. If the deductor is :
👉 A Government office
👉 A company’s principal officer
👉 Assessee who is required to have its accounts audited for the previous year under 44AB of the Income Tax Act, 1961.
👉 If there are 20 or more records of deductees in a statement for any quarter of a particular financial year. Annexure I and Annexure II are also forms that require submission along with this form. Annexure I has to be filled in for all four quarters of the year. Annexure II needs to be filed only for the final quarter of the year. TAXAJ Experts will guide you on the same.
Q. Is there any minimum amount upto which tax is not deducted on salary payment?
If the expenditure incurred/payment made during the year is below the threshold limit, then there is no requirement to deduct tax at source. If net taxable income is less than maximum amount which is not chargeable to tax
👉 Rs. 2,50,000 for an individual
👉 Rs. 3,00,000 for Senior Citizens
👉 Rs. 5,00,000 for Super Senior Citizens
Q. Is their any interest and penalty for non or late filing of Form 24Q?
In case you have not deposited TDS by the due date, the following penalties are applicable:
👉 Late filing fee (if you do not file by the deadline)
👉 Interest (if you do not deposit the TDS amount in time)
👉 Penalty (if TDS is not filed within one year of the due date)
Q. I need to file my TDS returns for more than 100 employees. Can you advise?
Our plan caters to filing TDS returns for up to 100 employees. If your firm has more than 100 employees, our representatives will advise you on the fees. Please submit your enquiry here or write to us at firstname.lastname@example.org