What is meant by "average rate" in tds on salary
This query is : Resolved
08 June 2012
I was just going through the TDS Rate Chart & found out that TDS is to be deducted on Salary at the "Average Rate" . What does this Average Rate mean . Can you please explain in detail ?
Is TDS also deductible on Salary that has not actually been paid but is Payable (Accrued) ?
Is TDS also deductible on Salary that has not actually been paid but is Payable (Accrued) ?
08 June 2012
Compute the estimated total income of the employee for the whole year.
Compute the tax liability on such estimated total income.
Tax liabilty/estimated total income is the average rate.
TDS is to be calculated on a monthly basis using this average rate.
Compute the tax liability on such estimated total income.
Tax liabilty/estimated total income is the average rate.
TDS is to be calculated on a monthly basis using this average rate.
08 June 2012
yes.agree with above expert.
08 June 2012
What are the provisions for penalty in case this TDS has not been deducted monthly ? Will the Person responsible to deduct be penalized or the deductee ? To what extent ? And ultimately when such TDS is deducted (albeit at a later date) , will any interest be charged on it & at what rate ?
08 June 2012
Interest for non-deduction of TDS is 1% per month.
Interest for non-payment of TDS is 1.5% per month.
Penalty may be levied u/s 221.
Interest for non-payment of TDS is 1.5% per month.
Penalty may be levied u/s 221.
08 June 2012
I just read section 221(1) & it says the assessee will have to pay the amount of tax arrears as Penalty .
So , can we conclude that the total liability will be the amount of TDS not deducted plus interest on it till it is paid .
However , I have a Question . Suppose the Tax payable by the assessee for a particular year was Rs. 15,000 . If his employer had deducted his TDS (say Rs. 10,000) , then he would have had to pay only Rs. 5000 tax for that year .
However , his employer didn't deduct the TDS amount and as a result the employee paid the full Rs. 15,000 as Tax since he didn't have any Form 16A to furnish .
Now ,as we can see the I-T Dept. has got it's full tax from this assesse for that year . Will the TDS STILL need to be deducted & interest paid on it ?? What is the Logic ?
So , can we conclude that the total liability will be the amount of TDS not deducted plus interest on it till it is paid .
However , I have a Question . Suppose the Tax payable by the assessee for a particular year was Rs. 15,000 . If his employer had deducted his TDS (say Rs. 10,000) , then he would have had to pay only Rs. 5000 tax for that year .
However , his employer didn't deduct the TDS amount and as a result the employee paid the full Rs. 15,000 as Tax since he didn't have any Form 16A to furnish .
Now ,as we can see the I-T Dept. has got it's full tax from this assesse for that year . Will the TDS STILL need to be deducted & interest paid on it ?? What is the Logic ?
08 June 2012
Who is liable for deduction of TDS...EVERY PAYER.
IF PAYER(DEDUCTOR) NOT DEDUCTED TDS OR SHORT DEDUCTED OR IF DEDUCTED NOT DEPOSITED TIMELY IN GOVT A/C..IS THIS CASE DEDUCTOR WILL LIABLE FOR INTEREST & PENALTY.NOT DEDUCTEE.
RATE WILL BE AS WRITTEN ABOVE...
INTEREST 1.5% PER MONTH.
PENALTY AS PER SEC 221 OF IT ACT.
IF PAYER(DEDUCTOR) NOT DEDUCTED TDS OR SHORT DEDUCTED OR IF DEDUCTED NOT DEPOSITED TIMELY IN GOVT A/C..IS THIS CASE DEDUCTOR WILL LIABLE FOR INTEREST & PENALTY.NOT DEDUCTEE.
RATE WILL BE AS WRITTEN ABOVE...
INTEREST 1.5% PER MONTH.
PENALTY AS PER SEC 221 OF IT ACT.
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