Deduction of TDS from salary

As per Section 192 of the Income Tax Act, 1961, TDS is deductible on salary income. Depending on your net taxable salary, the TDS is deducted by the employer on your behalf and deposited to the income tax department. The TDS deducted by the employer is reflected on Form 16 issued annually. You can, then, calculate your tax liability at the end of the financial year and then adjust the TDS to pay either the differential liability or to claim a tax refund. 

TDS is deducted from the salary when the amount is actually paid. It is not deducted when your salary accrues, i.e. when you are earning the salary but it is not being paid by the employer. Moreover, if you receive an advance on your salary or if your employer pays the outstanding salary in one lump sum, TDS would be deducted on such payments. 

If, however, your taxable salary is below the threshold limit of tax, TDS would not be deducted from the salary income. The threshold limit for the current financial year, i.e. FY 2021-22 is as follows –

• Individual taxpayers and HUFs below 60 years of age – INR 2.5 lakhs
• Senior citizens aged between 60 and 79 years – INR 3 lakhs
• Super senior citizens aged 80 years and above – INR 5 lakhs