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TDS Rate on salary

Shyam Lal Naik (Service) (6156 Points)

16 June 2010

The income from salary does not exceed the exemption limit. The employee does no have PAN. Should TDS be deducted @ 20% u/s 206AA.

In response to a query, eminent author Dr. V. K. Singhania has opined that, in such a case TDS has to be deducted @ 20%, In case PAN is furnished, the rate will be 0%. Ref - [2010] 18 CPT 117

If the law is constructed in the above manner, it shall be a undue hardship to employers and employees in the unorganised sectors.

Whether contrary construction possible ?

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3 Replies

CA VINAY BANSAL (In job with KPMG) (289 Points)
Replied 16 June 2010

NO TDs is to be made if total salary does not exceed basic exemption limit.

Refer Section 192.

RITESH KOTHARI (B.COM, FCA, DISA(ICAI)) (778 Points)
Replied 16 June 2010

Yes liability to deduct TDS arises only when the salary of employee exceeds the minimum exemption limit

V Sumanth (CA Final student) (77 Points)
Replied 16 June 2010

The deduction of TDS arises when the salary exceeds the maximum exemption limit . But in cases where PAN is required to be quoted but not quoted, TDS is maximum of 20% or the TDS rate which ever is higher as per the recent amendment. So what Dr. V. K. Singhania said is correct.

But per IT Act, The employer should also consider the information given by the employee while deducting tax at source regarding his other incomes and deductions.