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TDS Deductions for Employees | Proprietorship Firm

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Lucky

Director

35 Points Posted on 30 March 2022

Hi,

I have a proprietorship firm with annual Turnover of INR 60 Lakhs with 10 employees. Is it mandatory to deduct TDS while paying salary as we donot come under Tax Audit.

Replies (14)

Quick Summary

This discussion clarifies whether proprietorship firms with a turnover of INR 60 Lakhs and 10 employees must deduct Tax Deducted at Source (TDS) on salaries. While not being liable for tax audit might lead some to believe TDS isn't mandatory, it is generally the employer's responsibility to deduct and deposit TDS on salaries. The key factor is the employee's taxable salary after exemptions and deductions; if it falls below the threshold (currently INR 5 Lakhs due to rebate), TDS may not be required. However, if the taxable salary exceeds this limit, the firm should obtain a TAN, deduct TDS, and remit it on time to avoid compliance issues for employees.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 30 March 2022

Not required but employees have to pay tax at the time of filing ITR

Lucky

Director

35 Points Posted on 30 March 2022

Thank You @ Eswar Reddy. Appreciate your response. Would you be able to mention the section which you are referring?

Lucky

Director

35 Points Posted on 30 March 2022

Also what is the threshold limit, under how much income can I be exempted from deducting tds on salary?

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 30 March 2022

For salaries upto 5lacs per employee there won't be tax due to rebate.

Lucky

Director

35 Points Posted on 30 March 2022

No my question is, I have a proprietorship firm with annual Turnover of INR 60 Lakhs with 10 employees having average salary of INR 7,00,000 Per employee per Year. Is it mandatory to deduct TDS while paying salary as we donot come under Tax Audit.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 30 March 2022

How much is the salary after deductions ?

Lucky

Director

35 Points Posted on 30 March 2022

There are no deductions, 7,00,000 Gross

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 30 March 2022

I mean taxable salary .

700000/-

Minus : Standard deduction, 80C , HRA etc

Lucky

Director

35 Points Posted on 30 March 2022

Can we connect over email to discuss further?

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 30 March 2022

If the employees taxable salary after section 10 exemptions and Chapter VI deductions is below 5lacs then Tds deduction is not required.

Else obtain the TAN , deduct Tds on salary and pay it before deadline