Dear All,
I need information regarding TDS, PF, and allowances in salary. Can anyone tell me how much salary TDS is deducted and how we should start deducting it? Is there any company we have to look for taking care of TDS, and where is PF applicable? What is the number of employees required to deduct the PF, and is there anything else you would like to add to it? If possible, give me a salary structure for the salary of Rs. 40,000, and the allowances we can add are HRA, CCA, LTA, Mobile reimbursement, medical allowance, and anything else you can suggest. I will be thankful if you can solve my query.
Regards,
Priya
From India, Ludhiana
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28I need information regarding TDS, PF, and allowances in salary. Can anyone tell me how much salary TDS is deducted and how we should start deducting it? Is there any company we have to look for taking care of TDS, and where is PF applicable? What is the number of employees required to deduct the PF, and is there anything else you would like to add to it? If possible, give me a salary structure for the salary of Rs. 40,000, and the allowances we can add are HRA, CCA, LTA, Mobile reimbursement, medical allowance, and anything else you can suggest. I will be thankful if you can solve my query.
Regards,
Priya
From India, Ludhiana
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The sections 192 to 196 of the Income Tax Act direct, "Any person responsible for paying any income chargeable to tax" to deduct income tax thereon at the rates specified respectively.
Salaries: While making the payment of salary, the deductor should consider the following and deduct the correct TDS from the payment being made.
1. Calculate the annual approximate/actual salary.
2. Calculate the exact taxable salary amount paid/payable till the current month for the financial year.
3. Calculate the approximate salary that will be paid for the rest of the FY, assuming the current month's salary for the rest of the year's salary.
4. Add any other income reported by the Assessee [Employee].
5. Deduct if any loss declared by the Employee from the annual taxable salary. Note that only House property loss (interest in the case of Self-Occupied House Property) should be considered.
6. Deduct the allowed deductions declared by the employee under Section 80C, 80D, 80G, etc.
7. Calculate the Income Tax, Surcharge, and cess on the net Income, as per the "Rates in Force".
8. Deduct if any rebate U/s 88E or Relief U/s 89. (explain the heads)
9. Keeping it as total tax, now deduct the TDS made till the last month from it.
10. Divide the net TDS by "Remaining number of months in the FY, including the current month".
11. Deduct this amount from the employee's Salary.
Non-Salaries: A deductor accordingly should follow the below points while making/preparing each payment.
1. Categorize each payment to the relevant "type of Payment" or "Section".
2. Check that the payment is not a payment being done to the Government, Reserve Bank, certain corporations established under Central Act, or Mutual Funds. [comes under Section 196]
3. Refer to the Threshold limit for such section or Type of Payment.
4. Refer to the Rate of Tax.
5. Check the Assessee [party] has not submitted his declaration under Section 197A for non-deduction of TDS. [Only for payment of Interest (Securities and Other than securities), Dividends and Interest on NSC, Viz: sections 194, 194A, 193, 194EE]
6. Check the Assessee [party] has not submitted a certificate by the Assessing Officer under Section 197 for non-deduction of TDS or deduction at a Lower Rate.
7. Check the relevant rate of TDS under the respective type of payment [sections 193 to 196]
8. Get the effective rate TDS, including Surcharge and Cess [if any].
9. Deduct the amount as per the effective rate of TDS from the amount being paid.
Consequences of not making Tax deduction: If the Deductor fails to deduct the "whole or any part of the tax" as TDS, then,
1. Any payment made as interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services, or amounts payable to a contractor or subcontractor, on which TDS is deductible and such TDS has not been deducted or after deduction, has not been paid during the previous year [or within the appropriate time limit], such an amount will be added back to the income chargeable to tax.
2. Simple interest will be payable at 1% per month on the amount of tax [TDS] from the date on which such tax was deductible to the date on which such tax is actually paid. Such interest should be paid before furnishing the quarterly statement for the respective quarter. [Refer Section 201(1A)]
3. Attracts a penalty, which is equal to the amount of tax which such person failed to deduct. There can also be some additional penalty imposable by the Joint Commissioner. [Refer Section 271C]
From India, Bangalore
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Salaries: While making the payment of salary, the deductor should consider the following and deduct the correct TDS from the payment being made.
1. Calculate the annual approximate/actual salary.
2. Calculate the exact taxable salary amount paid/payable till the current month for the financial year.
3. Calculate the approximate salary that will be paid for the rest of the FY, assuming the current month's salary for the rest of the year's salary.
4. Add any other income reported by the Assessee [Employee].
5. Deduct if any loss declared by the Employee from the annual taxable salary. Note that only House property loss (interest in the case of Self-Occupied House Property) should be considered.
6. Deduct the allowed deductions declared by the employee under Section 80C, 80D, 80G, etc.
7. Calculate the Income Tax, Surcharge, and cess on the net Income, as per the "Rates in Force".
8. Deduct if any rebate U/s 88E or Relief U/s 89. (explain the heads)
9. Keeping it as total tax, now deduct the TDS made till the last month from it.
10. Divide the net TDS by "Remaining number of months in the FY, including the current month".
11. Deduct this amount from the employee's Salary.
Non-Salaries: A deductor accordingly should follow the below points while making/preparing each payment.
1. Categorize each payment to the relevant "type of Payment" or "Section".
2. Check that the payment is not a payment being done to the Government, Reserve Bank, certain corporations established under Central Act, or Mutual Funds. [comes under Section 196]
3. Refer to the Threshold limit for such section or Type of Payment.
4. Refer to the Rate of Tax.
5. Check the Assessee [party] has not submitted his declaration under Section 197A for non-deduction of TDS. [Only for payment of Interest (Securities and Other than securities), Dividends and Interest on NSC, Viz: sections 194, 194A, 193, 194EE]
6. Check the Assessee [party] has not submitted a certificate by the Assessing Officer under Section 197 for non-deduction of TDS or deduction at a Lower Rate.
7. Check the relevant rate of TDS under the respective type of payment [sections 193 to 196]
8. Get the effective rate TDS, including Surcharge and Cess [if any].
9. Deduct the amount as per the effective rate of TDS from the amount being paid.
Consequences of not making Tax deduction: If the Deductor fails to deduct the "whole or any part of the tax" as TDS, then,
1. Any payment made as interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services, or amounts payable to a contractor or subcontractor, on which TDS is deductible and such TDS has not been deducted or after deduction, has not been paid during the previous year [or within the appropriate time limit], such an amount will be added back to the income chargeable to tax.
2. Simple interest will be payable at 1% per month on the amount of tax [TDS] from the date on which such tax was deductible to the date on which such tax is actually paid. Such interest should be paid before furnishing the quarterly statement for the respective quarter. [Refer Section 201(1A)]
3. Attracts a penalty, which is equal to the amount of tax which such person failed to deduct. There can also be some additional penalty imposable by the Joint Commissioner. [Refer Section 271C]
From India, Bangalore
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Dear Priya, Do check with the attachment. Will try to push in more..
From India, Bangalore
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From India, Bangalore
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Hi! Thanks a tonnz for the quick response but still need to know how much TDS will be of an employee earning Rs. 40,000 and Rs. 50,000 and salary structure of the same. Regards, Priya
From India, Ludhiana
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From India, Ludhiana
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Dear Priya,
Tax rates Total Income Slab
Tax rates for resident Senior Citizens
Tax rates for resident Women below 65 years of age
Tax rates for Others
Upto Rs.1,50,000
- Nil for all categories
Rs. 150,000 to Rs. 180,000
- Nil for Senior Citizens and Women below 65 years of age
- 10% for Others
Rs. 180,001 to Rs. 225,000
- Nil for Senior Citizens
- 10% for Women below 65 years of age and Others
Rs. 225,001 to Rs. 300,000
- 10% for all categories
Rs. 300,001 to Rs. 500,000
- 20% for all categories
Above Rs. 500,000
- 30% for all categories
Thank you.
From India, Bangalore
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Tax rates Total Income Slab
Tax rates for resident Senior Citizens
Tax rates for resident Women below 65 years of age
Tax rates for Others
Upto Rs.1,50,000
- Nil for all categories
Rs. 150,000 to Rs. 180,000
- Nil for Senior Citizens and Women below 65 years of age
- 10% for Others
Rs. 180,001 to Rs. 225,000
- Nil for Senior Citizens
- 10% for Women below 65 years of age and Others
Rs. 225,001 to Rs. 300,000
- 10% for all categories
Rs. 300,001 to Rs. 500,000
- 20% for all categories
Above Rs. 500,000
- 30% for all categories
Thank you.
From India, Bangalore
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EMPLOYEE SALARY INCOME TAX CALCULATION.xls x
SALARY CALCULATOR & INCOME TAX.zip