09 April 2011
One of our employee is drawing a salary of Rs.2.5L P.A. after all deductions like HRA,PF,PT Etc. his taxable salary is Rs.1.7L after exempting threshold limit of Rs.1.6L i have made tds payment of Rs.2030/- on Rs.10000/- (20.3%)
as per our TDS software service provider confirmed that we are supposed to deduct the tds on entire Rs.1.7L. i.e (1.7L x 20.3% = 34510).
Can you please someone help me to clarify above doubt
weather TDS will be deducted on total amount or on amount after exempting amount of Rs. 160000/-.
09 April 2011
There is no need to stretch imagination. Allow all permissible Exemptions and Deductions.
Check http://www.simpletaxindia.org/2011/01/tds-on-salary-without-pan-us-206aa.html to note the following:
"...if PAN is not furnished by the employee, the deductor will calculate the average rate of income-tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to deducted at the average rate."
No where it is provided that Deductor should deny allowable Exemptions and Deductions
The difference or variation is only in rate of tax and not in computation procedure
09 April 2011
Dear Sir, They have explained as per the circular No.8/2010[F.No.275/192/2009-IT(B)],issued from the IT Dept on 13.12.2010. Page.27.
according to this circular it says that " TDS under sec 206AA in case where PAN is not furnished by the employee" as per the example shown indicated that on 450000/- of taxable income90000/-tds is calculated.
can you please explain the correct view of this circular, i am totally confused. and the guy getting the salary of 18000/- in hand after all deductions has to bare almost two month salary. which is very huge. please help me in this regards.
09 April 2011
Dear Sir, They have explained as per the circular No.8/2010[F.No.275/192/2009-IT(B)],issued from the IT Dept on 13.12.2010. Page.27.
according to this circular it says that " TDS under sec 206AA in case where PAN is not furnished by the employee" as per the example shown indicated that on 450000/- of taxable income90000/-tds is calculated.
can you please explain the correct view of this circular, i am totally confused. and the guy getting the salary of 18000/- in hand after all deductions has to bare almost two month salary. which is very huge. please help me in this regards.
12 April 2011
After going thro your Reply, I have visited the incometaxindia.gov.in and studied Example-1 in Annexure-I to the Circular No: 8/10
Unfortunately, Deductions u/s 80C only are allowed.
Tax is calculated at 20 % of Total Income BEFORE allowing Exemption Limit of160000. This being statutory has to be followed, whether it is justified or not and irrespective of hardship it causes
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