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Plz tell me my tax deduction is correct or not ?

rama (manager) (33 Points)

27 April 2012

Hi

I'm working in software company as a consultant (Contract base) they are paying 1050000(Ten laks Fifty Thousand ) Rupees per Annum for this they are showing below format (2012-2013) can any plz tell me whether my IT cuttings are correct are not ? are they cutting excess?

Salary - 1050000

Professional Tax- 2400

IT Excemption (80C,80D...) - 100000

--------------------

Total Income 9,47,600

___Tax on Income -_________1,23,312_____________________________

if we calculate my monthly wise salary

Net Salary - 87500

Professional Tax - 200

IT Pay /Monthly TDS - 10276 (Per Annum my TDS is 1,23,312)

------------------------

Net Pay = 77024

Plz tell me my Tax deduction is correct or not ?

Thanks

rama

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6 Replies

Dintakurthi Tirumala (CA FINAL) (15994 Points)
Replied 27 April 2012

You are saying they paying you consultant fee on contract basis i.e you are liable to deduct TDS under section 194C i.e @ 10% on gross payment to you(20% if pan not provided by you). i.e your total deduction of TDS per annum is Rs.1,05,000(i.e Rs.8,750 pm) but they are deducting Rs.1,23,312 p.a(i.e.Rs10,276) thus they are deducting excess TDS of Rs.18,312 p.a(i.e Rs.1,526 p.m) as per the contract basis of payment. I think they are deduction TDS under section 192 i.e on the basis of salary payment and not on the basis of contract. First you confirm is you are contracter to such company or employee to such company if you comes under first case then you arguee with the company and can reduce your TDS deduction by Rs.1,526 pm according to the section 194C. otherwise you comes under second case then the company is correct and however additional deduction to be made by the company depending on your actual savings at the end of the year in the case of salary.

OM SAI SRI SAI JAI JAI SAI

Kishore Dichwalkar (PRACTICING CHARTERED ACCOUNTANT) (45 Points)
Replied 27 April 2012

Any income if it is to be taxed under the head Salaries, there should be employer-employee relationship is essential. If a person is working under contractual basis as a consultant then that payment can not be called as Salary. But in your case the Profession Tax is deducted by the company. Company can deduct Profession Tax only when you are in their employment. Therefore your income will be taxed under the head Salaries.

Swarup Dutta (Assistant Auditor) (42 Points)
Replied 28 April 2012

Total Tax For the A.Y. 2013-14 :

Total Tax Rs. 123106/-

So they are deducting little extra.

rama (manager) (33 Points)
Replied 07 May 2012

Hi All,

I'm working as Software Developer in my company as Contract basis so am I will come 194 C or 194 J (Professional or Techinical services).

for my Tax calculation some one is saying 10 % and some saying diffrent tax rate .if even though I will come under 10% tax rate am I can show my tax exemption for 80c payments.

Thanks

rama

rama (manager) (33 Points)
Replied 08 May 2012

Hi ,

Anyone plz give me reply I'm working as Software employee of one company as contract base whether I will come 194C or 194 J .Is there any differnces in Tax deduction or Flat 10% of Tax for 194c or 194j

Thanks

rama

Prasad (Sr. Manager) (617 Points)
Replied 08 May 2012

HI

Prima facie the company you are working (based on details provided by you) is deducting tax under Salary.

If you are contract basis the deduction should have been 194J which is 10% on Gross Amount (i.e., 87,500 * 10% = 8750, it would be wrong to deduct u/s 194C in your case.

Secondly as an individual you will still pay tax at same rate as of Salaries from the income you can claim deduction U/s 80C, HRA exemptions.....

or Alternatively to find out ask your company whether they will provide FORM 16 (Salary) or FORM 16A (professional Fees) for tax deducted. eitherway your tax liablity appears to have been deducted.

Based on the information provided, I think you need not worry about the TDS deduction.

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