How to calcuate tds

Dear sir

Calculate the approximate yearly salary income after allowing 80c and 24b deductions, find out the yearly tax including cess divid the tax by remaining months and deduct the tax accordingly. As it is a salary income, the deductor is liable to deduct the Tax

Dear Divi

Balasubramanian Sir has already explained the method of computation. (I think deduction in respect of interest on borrowed loan under Sec.24(b) needs to be considered only if the employee has specifically made a written declaration to the employer in respect of his other income including the income from house propoerty and not otherwise.)

For exact computation more info is required:

1. Basic salary - fully taxable.

2. HRA - exemption maybe available if the employee actually pays rent for his residence and not if he is using his own house. Further, info as to where his place of work and residence is located (metro or non-metro), actual rent paid amount etc. With the above info we can compute exempt HRA amount as per Sec. 10 (13A) read with Rule 2A).

Note: Ensure that the employee produces the rent receipt (if HRA drawn is more than Rs.3000 p.m.) issued by the land lord in respect of rent paid by him. Also, collect info like name of the landlord, address, rent paid and PAN (if rent paid is more than Rs.2 Lakhs p.a.). 

3. Conveyance Allowance - to the extent it is actually used for the purpose of conveyance in performance of duties of the office, it is exempt.

4. Special Allowance - further info as to the exact nature of such allowance is required to decide if it is fully taxable or any part is exempt.

After the above info is collected, we can proceed according to the method described by Balasubramanian Sir to arrive at monthly TDS to be deducted.

Regards

Ajay