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taxation

M.S.Nathan (service) (75 Points)

22 August 2009

If a person earns Rs.50000/- per month (taxable income) and left the service after three months. Hence, the total taxable income (without claiming any deduction) is Rs.150000/-.

Whether he has to pay income tax proportionately. We feel that since his total income is less than Rs.160000/- ., there is no need for tax deduction. But employer says that we will recover the tax proportionately in the final settlment.

Whether we have to deduct tax in his final settlement.

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9 Replies

N.Naveena Maheswara Rao (Assistant manager for accounts) (1096 Points)
Replied 22 August 2009

Yes, TDS has to be deducted because his annual income will defenitly exceed Rs.160000/-

Giridharan K (Student) (123 Points)
Replied 22 August 2009

There is no need to pay tax since the total income is below Rs.1,60,000/-. HIs income may change in the rest of 9 months and hence the employer can deduct tax at source. If the employer deducts tax it can be claimed as refund at the time of filing his return of income, if his taxable income does not exceeds Rs.1,60,000/-.

N.Naveena Maheswara Rao (Assistant manager for accounts) (1096 Points)
Replied 22 August 2009

The person was earning Rs.50000/- per month. In the rest of 9 months he will defenitly earn money. So it is better to deduct TDS and if he had no earnings in the rest of 9 months then he can claim refund. Paying 50000/- to employee without deducting TDS may not be appropriate.

ashish gupta ( student) (1922 Points)
Replied 22 August 2009

Employer is right in deducting the tax .

llllVICTORllll (Internal Auditor) (511 Points)
Replied 22 August 2009

Yes, TDS is to be deduced, but the assesse can claim for refund if his income doesnt cross the limit,i.e he didnt have anyother income after leaving the job

C A GROUP COACHING (COACHING ) (2487 Points)
Replied 22 August 2009

CASE I

Since the Income from the employer is less then the Floor limit of Taxable Income Employer need not deduct Tax, How ever if the Employee has reported his Other Income by virtue of which the income exceeds the Floor Limit the Employer has to deduct Tax.

Case II

If this is the only income in the year in consideration till such time, & Later in the same year if the person gets employed with some other employer & reports this previous employers Income of Rs 150000/- The New employer will calculate Tax on Total Income adding Prev Inc 1.50 & Deduct Tax.

Case III

Suppose the employee does not report his previous employers Income earned to the subsequent, then the second employer will Just do the deductions as applicable to the Income earned by the Employee from his company,

How ever in case III situation the employee will file his return declaring his total Income for the full year earned from all employers & all sources & Pay diferrential Taxes as calculated after taking credit for TDS deducted by his Employers inchain

CA SHABIR (CA) (336 Points)
Replied 22 August 2009

Yes thses payments are subject to TDS provisions. Because law suggests to deduct tax as Under:

E.g. Mr. A Joins a company today 01-04-2009 @ Rs. 50000.00 P.m. His yearly income, taking this income as base, is Rs. 600000 P.a. And presume TDS rate is 10%.

Therefore Tax to be deducted for the year = 60000.00

Therefore tax to be deducted monthly =60000/12 = Rs. 5000.00

Hope same will sufice your requirements

Thanks

Originally posted by :M.Shanmuganathan

If a person earns Rs.50000/- per month (taxable income) and left the service after three months. Hence, the total taxable income (without claiming any deduction) is Rs.150000/-.
Whether he has to pay income tax proportionately. We feel that since his total income is less than Rs.160000/- ., there is no need for tax deduction. But employer says that we will recover the tax proportionately in the final settlment.
Whether we have to deduct tax in his final settlement.

pankaj sharma (CA ) (324 Points)
Replied 23 August 2009

as per the provision of TDS if the employess preaasumes dat income is likely to exceed max exepmtion limit then tds is to be deducted . if it doesnt excess den an individual can take refund after filing a return..