TDS - salaries

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Venkateswar Rao p (Querist)

20 March 2008 Hi friends,

can you explain the average rate of tax calculation in case of salaries along with a illustration showing month wise deduction.Usually companies will deduct tax by dividing total tax with no. of months.i want to know where we will get difference.
Definitely later will result in some lower deduction if any incentive is paid during the year(particular month)
Pls explain me.

RICKY

RICKY (Expert)

20 March 2008 Hi......
I will explain you by an example then you can understand better..
Now company is paying to an employee(individual) salary of Rs.16000 p.m. (for A.Y. 2008-09)

So company needs to deduct tax, annual salary is Rs.(16000*12)=192000. so taxable income is 82000. so tax on total income will be 12400.

so monthly employer is liable to deduct 1034 rupees from his salary as TDS. suppose employee got incentive in the month of december Rs.10000. so now taxable income of the employee for the A.Y is 202000. tax is 14400.

But employer already deducted TDS for Rs.9297. so he is liable to deduct still Rs.5103.
this amount employer has to deduct in the remaining months. so each month from december TDS is 1276 upto march.

Now i hope you understand better. is not just call me. (09884325649)

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