Dear All, I joined as an HR executive, and the company gave me responsibility for calculating monthly TDS. But I don't have that much knowledge.
So please share a TDS calculation example with me.
From India, Mumbai
So please share a TDS calculation example with me.
From India, Mumbai
Certainly! Calculating TDS (Tax Deducted at Source) on salary involves several steps based on the income tax slab rates applicable to an individual's income. Here’s a simplified example to illustrate how TDS on salary is calculated:
### Example Scenario:
**Basic Details:**
- Monthly Salary: Rs. 50,000
- Employee Category: Below 60 years (for general assessment)
**Assumptions:**
- No other income or deductions (for simplicity)
- PAN (Permanent Account Number) is available and provided by the employee
- Financial year: 2023-24 (current financial year)
### Steps to Calculate TDS on Salary:
1. **Gross Salary Calculation:**
- Gross Salary = Monthly Salary × 12 (for annual salary calculation)
- Gross Salary = Rs. 50,000 × 12 = Rs. 6,00,000 per annum
2. **Determine Taxable Income:**
- Taxable Income = Gross Salary - Standard Deduction (if applicable) - Other exemptions under Chapter VI-A (if any)
In this example, assuming no deductions or exemptions are claimed:
- Taxable Income = Rs. 6,00,000
3. **Apply Income Tax Slab Rates:**
- For the financial year 2023-24 (FY 2023-24), the income tax slab rates for individuals below 60 years are as follows:
- Up to Rs. 2,50,000: Nil
- Rs. 2,50,001 to Rs. 5,00,000: 5% of income exceeding Rs. 2,50,000
- Rs. 5,00,001 to Rs. 10,00,000: 20% of income exceeding Rs. 5,00,000
- Above Rs. 10,00,000: 30% of income exceeding Rs. 10,00,000
4. **Calculate Tax Liability:**
- Determine the tax liability based on the slab rates:
- Up to Rs. 2,50,000: Nil
- Rs. 2,50,001 to Rs. 5,00,000: 5% of (Rs. 6,00,000 - Rs. 2,50,000) = 5% of Rs. 3,50,000 = Rs. 17,500
- Remaining Rs. 1,00,000 (Rs. 5,00,001 to Rs. 6,00,000): 20% = 20% of Rs. 1,00,000 = Rs. 20,000
- Total Tax Liability = Rs. 17,500 + Rs. 20,000 = Rs. 37,500
5. **Calculate TDS:**
- TDS is deducted each month based on the projected annual income and tax liability. For monthly calculation:
- Monthly TDS = Annual Tax Liability / 12
- Monthly TDS = Rs. 37,500 / 12 = Rs. 3,125
### Conclusion:
In this example, the monthly TDS deduction for an employee with a salary of Rs. 50,000 per month, considering no deductions or exemptions, would be Rs. 3,125. This amount would be deducted from the employee’s salary each month and deposited with the government on behalf of the employee.
Note: This example is simplified for illustration purposes. Actual TDS calculations may vary based on specific deductions, exemptions, and changes in tax laws. It’s advisable to consult a tax professional or refer to the latest income tax slab rates and rules for accurate calculations.
From India, Guwahati
2### Example Scenario:
**Basic Details:**
- Monthly Salary: Rs. 50,000
- Employee Category: Below 60 years (for general assessment)
**Assumptions:**
- No other income or deductions (for simplicity)
- PAN (Permanent Account Number) is available and provided by the employee
- Financial year: 2023-24 (current financial year)
### Steps to Calculate TDS on Salary:
1. **Gross Salary Calculation:**
- Gross Salary = Monthly Salary × 12 (for annual salary calculation)
- Gross Salary = Rs. 50,000 × 12 = Rs. 6,00,000 per annum
2. **Determine Taxable Income:**
- Taxable Income = Gross Salary - Standard Deduction (if applicable) - Other exemptions under Chapter VI-A (if any)
In this example, assuming no deductions or exemptions are claimed:
- Taxable Income = Rs. 6,00,000
3. **Apply Income Tax Slab Rates:**
- For the financial year 2023-24 (FY 2023-24), the income tax slab rates for individuals below 60 years are as follows:
- Up to Rs. 2,50,000: Nil
- Rs. 2,50,001 to Rs. 5,00,000: 5% of income exceeding Rs. 2,50,000
- Rs. 5,00,001 to Rs. 10,00,000: 20% of income exceeding Rs. 5,00,000
- Above Rs. 10,00,000: 30% of income exceeding Rs. 10,00,000
4. **Calculate Tax Liability:**
- Determine the tax liability based on the slab rates:
- Up to Rs. 2,50,000: Nil
- Rs. 2,50,001 to Rs. 5,00,000: 5% of (Rs. 6,00,000 - Rs. 2,50,000) = 5% of Rs. 3,50,000 = Rs. 17,500
- Remaining Rs. 1,00,000 (Rs. 5,00,001 to Rs. 6,00,000): 20% = 20% of Rs. 1,00,000 = Rs. 20,000
- Total Tax Liability = Rs. 17,500 + Rs. 20,000 = Rs. 37,500
5. **Calculate TDS:**
- TDS is deducted each month based on the projected annual income and tax liability. For monthly calculation:
- Monthly TDS = Annual Tax Liability / 12
- Monthly TDS = Rs. 37,500 / 12 = Rs. 3,125
### Conclusion:
In this example, the monthly TDS deduction for an employee with a salary of Rs. 50,000 per month, considering no deductions or exemptions, would be Rs. 3,125. This amount would be deducted from the employee’s salary each month and deposited with the government on behalf of the employee.
Note: This example is simplified for illustration purposes. Actual TDS calculations may vary based on specific deductions, exemptions, and changes in tax laws. It’s advisable to consult a tax professional or refer to the latest income tax slab rates and rules for accurate calculations.
From India, Guwahati
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
BASICS OF TDS ON SALARY-1.doc
Monthly Salary Statement - CTC and TDS Calculator.xls