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At which amount tds will be deducted on salary

Sanjeev Pati (Accountant) (250 Points)

11 December 2018

Dear all,

I am employer and i have to deduct TDS on salary of an employee... I am confused at which amount TDS will be deducted.

I give an employee to Salary Rs. 20000/- P.M (i.e 2,40,000/- in year) + Incentive Rs. 50,000/- & Bonus - 28,000/- …Total amt paid to employee is 318000/-

I want to know at which amount TDS will be deducted… (TDS will be deducted or not becoz salary is below 250000/-)

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11 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 11 December 2018

TDS will not be deductible because of standard deduction and rebate u/s. 87a effect....

1 Like

Sanjeev Pati (Accountant) (250 Points)
Replied 11 December 2018

Sir that means if i will pay Salary more than Rs. 2,50,000/- then i have to deduct TDS... (in Incentive & Bonus no TDS will be deducted)

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 11 December 2018

Wrongly interpreted, dear......

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 11 December 2018

While talking about Tax calculations, the first thing comes up in this context is the tax deductions and exceptions that are available in the Indian Tax return contexts. Both deduction and exemption of taxes are the ways to lower the tax burden and give some benefits to the people.

There will be certain standard tax exemptions allowed by the Government of India. While computing TDS for the salary, these exemptions are deducted first from the total annual salary as per specification of Income Tax Department of India. Then tax is calculated on the non-exempt part of annual income. There are several provisions by Income Tax Department of India regarding availing tax exemptions. The employees need to submit those proofs of exemption along with the declaration to their employers so that TDS could be computed properly. Employer is responsible for computation of TDS based on the proofs and declaration, deducting the taxes from salary and depositing those with the authority.

Sanjeev Pati (Accountant) (250 Points)
Replied 11 December 2018

Originally posted by : Sanjeev Pati
	Dear all, I am employer and i have to deduct TDS on salary of an employee... I am confused at which amount TDS will be deducted. I give an employee to Salary Rs. 20000/- P.M (i.e 2,40,000/- in year) + Incentive Rs. 50,000/- & Bonus - 28,000/- …Total amt paid to employee is 318000/- I want to know at which amount TDS will be deducted… (TDS will be deducted or not becoz salary is below 250000/-)

Sir, i would like to know in this case what will be the amount of TDS which i have to deduct of an employee.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 11 December 2018

Sir, i would like to know in this case what will be the amount of TDS which i have to deduct of an employee.

Rs. 3,18,000 --- SD Rs.40000/-........ = Rs. 2,78,000/-

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 11 December 2018

Net tax liability after rebate u/s. 87a of Rs.1400/- will be Nil...

Sanjeev Pati (Accountant) (250 Points)
Replied 11 December 2018

Sir Thank you.... but i want to know how do you calculate the SD (Standard Deduction) amount of Rs. 40000/- from 318000/- total amount.

S ELAVARASI (ACCOUNTANT) (2975 Points)
Replied 11 December 2018

Originally posted by : Dhirajlal Rambhia
	Sir, i would like to know in this case what will be the amount of TDS which i have to deduct of an employee. Rs. 3,18,000 --- SD Rs.40000/-........ = Rs. 2,78,000/-

Dear Sir.,

At the time of Calculation / filing ITR Where will be show the SD amount...?

1 Like

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 11 December 2018

U/s. 16(ia) of IT act (Note: New ITR forms for AY 2019-20 will be amended accordingly.)

For your reference the section is reproduced hereunder::

Deductions from salaries.

16. The income chargeable under the head "Salaries" shall be computed after making the following deductions, namely :—

(i) [***]

Following clause (ia) shall be inserted after clause (i) of section 16 by the Finance Act, 2018, w.e.f. 1-4-2019 :

(ia) a deduction of forty thousand rupees or the amount of the salary, whichever is less;

(ii) a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less;

(iii) a deduction of any sum paid by the assessee on account of a tax on employment within the meaning of clause (2) of article 276 of the Constitution, leviable by or under any law.

2 Like

CA Manisha (CA) (1397 Points)
Replied 02 August 2020

While the basic salary is fully taxable according to respective tax bracket, some exemptions are available for payments made as allowances and perks.

You can calculate TDS on your income by following the below steps.

Calculate gross monthly income as a sum of basic income, allowances and perquisites. Calculate available exemptions under Section 10 of the Income Tax Act (ITA).

Exemptions are applicable to allowances such as medical, HRA, travel.

Reduce exemptions according to step (2) for the gross monthly income calculated in step (1).

As TDS is calculated on yearly income, multiply the corresponding figure from above calculation by 12.

This is your yearly taxable income from salary. If you have any other income source such as income from house rent or have incurred losses from paying housing loan interests, add/subtract this amount from the figure in step (4).

Next, calculate your investments for the year which fall under Chapter VI-A of ITA, and deduct this amount from the gross income calculated in step (5).

An example of this would be exemption of up to Rs.1.5 lakh under Section 80C, which includes investment avenues such as PPF, life insurance premiums, mutual funds, home loan repayment, ELSS, NSC, Sukanya Samriddhi account and so on.

Now, reduce the maximum allowable income tax exemptions on a salary. Currently, income up to Rs.2.5 lakhs is fully exempt from paying taxes, while income from Rs.2.5 lakhs to Rs.5 lakhs is taxed at 10%, and Rs.5 lakhs to Rs.10 lakhs income bracket is taxed at 20%. All income above this amount is taxed at 30%.

Do note that senior citizen have different tax slabs and receive higher exemptions than those discussed above Income Tax Slabs TDS Deductions Tax Payable Up to Rs.2.5 lakhs Nil Nil Rs.2.5 lakhs to Rs.5 lakhs 10% of(Rs.5,00,00-Rs.2,50,00 Rs.25,000 Rs.5 lakhs to Rs.6.33 lakhs 20% of(Rs.6,33,00-Rs.5,00,00) Rs.26,600.

Here you will find a tool called salary calculator. One can see the details growth of his salary and also they can add future companies to see the expected salary growth as per their profile.