This discussion addresses whether a proprietor needs to deduct Tax Deducted at Source (TDS) on employee salaries when the annual income for those employees falls below INR 5,00,000. The general guidance provided is that TDS deduction is only required if the employee's income exceeds the basic exemption limit and consequently, a tax liability arises.
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?
26 September 2021
You have to first arrive at the tax-ability of employee having income more than basic exemption limit. If any tax liability arise, then you have to deduct TDS.