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Tds on service fee/salary

Jins (nil) (24 Points)

01 November 2012

Hello,

I have opted a service from one professional for a fixed monthly payment of Rs 25000. I have given him a cotract letter too. Now I have two options either I can give him a cheque as a professional fee or as a salary. He wants less amount to be deducted from his salary.

Further, he is asking, the taxable amount is above 200000 per annum. So, only 1 lakh will be the actual amount, and 10% of the said amount to be deducted. Then Why I am deducting 10% of the total salary. In that way, I will be deducting 30000 per annum and I need to pay only 10000. I am not sure what answer I should give him.

Please can someone help me out and suggest me a best possible way to give his payment with least deduction.

Thanks in advance

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3 Replies

@VaibhavJ (Believe!! Live your dreams!) (33511 Points)
Replied 02 November 2012

Hi,

Tell him to submit lower tds deduction certificate from IT dept for deducting lower TDS else on whole amount to be paid deduct TDS @ 10%.

Rgds//Vaibhav

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Ajay Chahal (ca final) (42 Points)
Replied 02 November 2012

Hello Sir,

you are paying salary to him so you required to deduct TDS according to section 192 on average rate. Because it is the duty of Employer to calculate estimated salary of employees and according to you your employee yearly salary is 3,00,000. For e.g- his salary 25000 per month.then employer calculate his total income is 300000 and 200000 is exempt under Income Tax Act, 1961.then he will deduct TDS @ 10% on the remainning Income that is 1,00,000*10%=10,000.monthly deduction of TDS is 10000*1/12 i.e Rs.833.