TDS Deduction on Employee Salary

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This discussion clarifies the rules around Tax Deducted at Source (TDS) on employee salaries. Generally, TDS is not required if an employee's annual salary is below £5,00,000. However, employers should still obtain a declaration from employees regarding any other income they may have, such as interest from Fixed Deposits. If an employee's total income, including other sources, exceeds £5 Lakhs, TDS may become applicable. Employees use Form 12BB to declare investments and expenses for tax deductions.

Rahul Singh

Rahul Singh (Querist)
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21 November 2020 Hello everyone,

I pay salary to some employees under my proprietorship (IT services only business) and get the audit done. But is it required for me to deduct TDS on salary of employees for whom salary is below INR 5,00,000 per financial year?

Looking for your help. Thanks

Harshit Bangar

Harshit Bangar (Expert)
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21 November 2020 No you are not required to deduct TDS on salary below Rs. 5,00,000/- but take declaration from employee regarding other incomes.

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Rahul Singh

Rahul Singh (Querist)
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22 November 2020 Dear Harshit Ji,

Thanks for answering. So if their other income is above 5 Lacs including FD interest, etc. then am I liable? In what format I should get this declaration?

Thanks!

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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02 December 2021 The Form 12BB is a statement of claims by an employee for deduction of tax. ... Using Form 12BB, an employee has to declare the investments that they have made during the year. Documentary evidence of these investments and expenses have to be provided at the end of the financial year as well.

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