Hello Seniors,
I need your help in resolving one issues.I am working with a pvt ltd firm in Delhi as Asst. Manager HR. one of our employee is getting 3 Lacs annual salary. My company has the provision to deduct TDS on every month since starting to avoid the interest charges etc at the end of the financial year. Employee had submitted the investment details as rent allowance 7000/month, PF contribution-approx 9000, conveyance allowance-9600, medical allowance -15000 and projected investment details of approx 20000.
My question from you is, do we need to consider projected investment details during TDS calculation. 2nd thing, do we need to deduct TDS of approx 704 Rs. every month thats what is being deducted from employees salary as of now as instructed by our C.A.. If yes to deduct TDS then how, calculation please. 3rd and last, do we really need to deduct TDS in salary of 3 Lac/ annum. Being an HR can't we adjust his 1 lac salary to avoid deducting TDS.
Please send your replies to
Look forward for your earliest response.
With Thanks
Barkha
From India, Jaipur
I need your help in resolving one issues.I am working with a pvt ltd firm in Delhi as Asst. Manager HR. one of our employee is getting 3 Lacs annual salary. My company has the provision to deduct TDS on every month since starting to avoid the interest charges etc at the end of the financial year. Employee had submitted the investment details as rent allowance 7000/month, PF contribution-approx 9000, conveyance allowance-9600, medical allowance -15000 and projected investment details of approx 20000.
My question from you is, do we need to consider projected investment details during TDS calculation. 2nd thing, do we need to deduct TDS of approx 704 Rs. every month thats what is being deducted from employees salary as of now as instructed by our C.A.. If yes to deduct TDS then how, calculation please. 3rd and last, do we really need to deduct TDS in salary of 3 Lac/ annum. Being an HR can't we adjust his 1 lac salary to avoid deducting TDS.
Please send your replies to
Look forward for your earliest response.
With Thanks
Barkha
From India, Jaipur
i think, it is better for you go as per your CA's advise, who has been kept by your company to do a job in which he is a professional.
So, if u need to know how to calculate TDS or how to avoid tax, its better that you sit with your CA & understand it, as tt would be too cumbersome to explain the nitty-gritty of IT Act in this forum.
Further, being in HR does not give you un-fettered right to tinker with the salary structure of your employees. Pls go as per IT Act provisions in this respect.
From India, Mumbai
118So, if u need to know how to calculate TDS or how to avoid tax, its better that you sit with your CA & understand it, as tt would be too cumbersome to explain the nitty-gritty of IT Act in this forum.
Further, being in HR does not give you un-fettered right to tinker with the salary structure of your employees. Pls go as per IT Act provisions in this respect.
From India, Mumbai
Dear Barkha
This man is not liable to pay tax based on the figures you have posted, hence no TDS deduction is required. Take care to take declaration from him for the following
1. House rent 7000/- per month- take rent receipt on record. This is assuming he is being paid HRA as part of salary, which is around the amount of rent he is paying
2. Medical 15000/- per year
3. Other investments for 20000/-
Once he submits the declaration, the onus is on the employee to follow up on his promises. However in January do a recheck and see what promises he has kept with documentary evidence and accordingly work out his taxes or make deductions under TDS accordingly. Hope this helps
Robin Varghese
HR consultant, New Delhi
+91-8800747161
From India, Delhi
This man is not liable to pay tax based on the figures you have posted, hence no TDS deduction is required. Take care to take declaration from him for the following
1. House rent 7000/- per month- take rent receipt on record. This is assuming he is being paid HRA as part of salary, which is around the amount of rent he is paying
2. Medical 15000/- per year
3. Other investments for 20000/-
Once he submits the declaration, the onus is on the employee to follow up on his promises. However in January do a recheck and see what promises he has kept with documentary evidence and accordingly work out his taxes or make deductions under TDS accordingly. Hope this helps
Robin Varghese
HR consultant, New Delhi
+91-8800747161
From India, Delhi
Yes, But take a declaration from employee. Anything he gives as declaration irrespective of whether he follows up accurately or not, the onus remains with employee.
Regards
Robin Varghese
HR Consultant, New Delhi
+91-8800747161
Contact us for Recruitment/Payroll Management/HRMS
From India, Delhi
Regards
Robin Varghese
HR Consultant, New Delhi
+91-8800747161
Contact us for Recruitment/Payroll Management/HRMS
From India, Delhi
Dear Robin ji,
The queriest said that employee had submitted the investment details as:
Rent allowance (not HRA) 7000/month;
PF contribution-approx 9000/annum;
Conveyance allowance 9600/annum;
Medical allowance 15000/ annum; and
Projected investment 20000.
The queriest has also not mentioned whether all those allowances are paid to the employee and the quantum.
My question to you sir, if the employee is not paid those allowances or irrespective of the amount paid and spent, is the employee entitle for the declaration / IT exemption?
From India, Mumbai
The queriest said that employee had submitted the investment details as:
Rent allowance (not HRA) 7000/month;
PF contribution-approx 9000/annum;
Conveyance allowance 9600/annum;
Medical allowance 15000/ annum; and
Projected investment 20000.
The queriest has also not mentioned whether all those allowances are paid to the employee and the quantum.
My question to you sir, if the employee is not paid those allowances or irrespective of the amount paid and spent, is the employee entitle for the declaration / IT exemption?
From India, Mumbai
Dear Mr. Korgaonkar
The HR needs to specify details of salary- Basic, HRA, Conveyance etc.(salary components). This has already been conveyed to the HR in question and all calculations and advise are based on this assumption. What I gather from HR is the question whether employees intimation to make these investments is enough so as not to deduct IT or should HR wait for actual proof of investments and meanwhile deduct TDS. Here it is well defined law that declaration is enough to absolve the employer (deducting authority) from penalties which could otherwise amount to a jail term. Once the declaration is give the onus falls on employee to furnish proof of investment failing which he will stand liable for penalties etc.
Now it is obviously taken for granted that an employee will provide Rent receipt only if he is paid HRA as component of salary. Likewise for conveyance no declaration is needed as an amount of 800 pm is deductible. PF again is deducted by the employer so the amount is known more to the employer than the employee (especially where mid term increments take effect). Again for Medical- employee has to provide proof irrespective of whether he gets anything in lieu of this as part of salary. Again an employee will make Rs20000 investments only when he has to provide for IT liabilities. So no employee will do anything on his own without having to allocate for tax liabilities on account of components of salary which are taxable.
Warm regards
Robin Varghese
HR Consultant, New Delhi
+91-8800747161
Contact us for your Recruitment/Payroll/HRMS needs.
From India, Delhi
The HR needs to specify details of salary- Basic, HRA, Conveyance etc.(salary components). This has already been conveyed to the HR in question and all calculations and advise are based on this assumption. What I gather from HR is the question whether employees intimation to make these investments is enough so as not to deduct IT or should HR wait for actual proof of investments and meanwhile deduct TDS. Here it is well defined law that declaration is enough to absolve the employer (deducting authority) from penalties which could otherwise amount to a jail term. Once the declaration is give the onus falls on employee to furnish proof of investment failing which he will stand liable for penalties etc.
Now it is obviously taken for granted that an employee will provide Rent receipt only if he is paid HRA as component of salary. Likewise for conveyance no declaration is needed as an amount of 800 pm is deductible. PF again is deducted by the employer so the amount is known more to the employer than the employee (especially where mid term increments take effect). Again for Medical- employee has to provide proof irrespective of whether he gets anything in lieu of this as part of salary. Again an employee will make Rs20000 investments only when he has to provide for IT liabilities. So no employee will do anything on his own without having to allocate for tax liabilities on account of components of salary which are taxable.
Warm regards
Robin Varghese
HR Consultant, New Delhi
+91-8800747161
Contact us for your Recruitment/Payroll/HRMS needs.
From India, Delhi
@ Barkha
Kindly refer the link given below.
Nithya's Tax Calculator
Download the latest excel format to calculate the TDS amount of any salaried employee for the financial year 2014-15. (Note: Read the Instructions carefully before using this format to get the accurate results)
Being an HR professional I also need to calculate TDS for my eligible employees I am using this since last few years. It's really useful.
You may refer this to you CA to check authenticity. Please revert for any queries.
From India, Ahmedabad
Kindly refer the link given below.
Nithya's Tax Calculator
Download the latest excel format to calculate the TDS amount of any salaried employee for the financial year 2014-15. (Note: Read the Instructions carefully before using this format to get the accurate results)
Being an HR professional I also need to calculate TDS for my eligible employees I am using this since last few years. It's really useful.
You may refer this to you CA to check authenticity. Please revert for any queries.
From India, Ahmedabad
Dear Robin ji,
Thank you very much for responding my post.
Dear Barkha ji,
You, being Asst. Manager HR, are expected to know exemptions, deductions and maximum permissible investments under Income Tax.
You said your company has the provision to deduct TDS every month from starting to avoid the interest charges etc at the end of the financial year. It is not your company’s provision but a provision under the Income Tax Law according to which the employer has to deduct the tax at source if the projected income of an employee during the financial year is in tax bracket after considering exemptions, deductions and maximum permissible investments as declared by him.
Exemption means certain allowances / special allowances or salary heads which are exempted from Income Tax subject to certain conditions. House Rent Allowance, Transport Allowance, Education Allowance, Leave Travel Allowance and many more special allowances are exempted from Income Tax but not Medical Allowance.
Generally, any Allowance received by an employee is fully taxable unless specifically exempted. The employee has to claim the exemptions. I repeat, the employee has to earn those allowances and claim the exemptions.
Medical Allowance is taxable fully. However, medical expense reimbursement up to Rs. 15000 is not treated as a taxable perquisite as per Clause (v) of the Proviso to Section 17 (2) of the Income Tax Act.
Deduction means deduction from total income in respect of various investments / expenditures / payments. Under section 80c, 80ccc & 80ccd maximum deduction available is Rs. 1 lac.
Apart maximum limit of Rs. 1 lac under Section 80c, 80ccc & 80ccd, there are other deductions allowed such as mediclaim premium under section 80d and donation under 80g and many more.
If, one go through the Form 16 can gather some information on it.
I am not Finance man or Income Tax expert but any HR person should know some knowledge in this area and therefore I have it. When we recruit the staff at various level and decide their compensation, we must have this much knowledge. If not, the finance department will take over your functions related to employee compensation and taxation. I have seen in many companies those functions are taken over by finance department……
From India, Mumbai
Thank you very much for responding my post.
Dear Barkha ji,
You, being Asst. Manager HR, are expected to know exemptions, deductions and maximum permissible investments under Income Tax.
You said your company has the provision to deduct TDS every month from starting to avoid the interest charges etc at the end of the financial year. It is not your company’s provision but a provision under the Income Tax Law according to which the employer has to deduct the tax at source if the projected income of an employee during the financial year is in tax bracket after considering exemptions, deductions and maximum permissible investments as declared by him.
Exemption means certain allowances / special allowances or salary heads which are exempted from Income Tax subject to certain conditions. House Rent Allowance, Transport Allowance, Education Allowance, Leave Travel Allowance and many more special allowances are exempted from Income Tax but not Medical Allowance.
Generally, any Allowance received by an employee is fully taxable unless specifically exempted. The employee has to claim the exemptions. I repeat, the employee has to earn those allowances and claim the exemptions.
Medical Allowance is taxable fully. However, medical expense reimbursement up to Rs. 15000 is not treated as a taxable perquisite as per Clause (v) of the Proviso to Section 17 (2) of the Income Tax Act.
Deduction means deduction from total income in respect of various investments / expenditures / payments. Under section 80c, 80ccc & 80ccd maximum deduction available is Rs. 1 lac.
Apart maximum limit of Rs. 1 lac under Section 80c, 80ccc & 80ccd, there are other deductions allowed such as mediclaim premium under section 80d and donation under 80g and many more.
If, one go through the Form 16 can gather some information on it.
I am not Finance man or Income Tax expert but any HR person should know some knowledge in this area and therefore I have it. When we recruit the staff at various level and decide their compensation, we must have this much knowledge. If not, the finance department will take over your functions related to employee compensation and taxation. I have seen in many companies those functions are taken over by finance department……
From India, Mumbai
I think that its a better for you go as per finical accountant (CA) he will take you best suggestion, Who has been kept by your company to do a job in which he is a professional. If you want to know that how to calculate TDS or how to avoid tax. Your finical adviser he will give you best suggestion about this stuff.
From Pakistan, Lahore
From Pakistan, Lahore
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