Dear All, What is the role of TDS in salary. Please Help me. With Regards, Vineet
From India, Yavatmal
25From India, Yavatmal
Dear Friend,
TDS means (Tax deduction at source) in other words Income Tax.
According to Income tax norms every employer should deduct tax from his employees those who are falling into income tax purview
You need to understand few pointes here about TDS for salaried employees.
Employer has to compute employee’s tax liability during the financial year with considering of all tax exemptions according to norms. One who attain tax bracket after all savings and exemptions will be coming into tax purview and tax to be deducted equally, mean tax has to be deduct every moth that is from 1st April to 31st march (12months).
While computing tax liability of employees, employer has to consider the following exemptions…………….
1) HRA, Conveyance ( up to Rs. 9600/-), LTA (if applicable), Professional Tax, Medical Allowance ( up to Rs. 15,000/-)… and deductions under section VI A like 80G, 80D, 80DD etc, Housing Loan ( interest as well as repayment, if applicable ) and 80C exemptions ( PF, PPF, LIC, NSC, Mutual Funds etc ) and 80CCF ( Infrastructure bonds up to Rs. 20,000/-) etc….
The above exemptions are given only for an idea purpose apart from these exemptions there are more exemptions are there and these exemptions differs from employee to employee.
These kind of queries were posted number of times earlier in this forum, Hence use search button I hope you will get bunch of appropriate answers.
I wish you all the best.
From India, Hyderabad
TDS means (Tax deduction at source) in other words Income Tax.
According to Income tax norms every employer should deduct tax from his employees those who are falling into income tax purview
You need to understand few pointes here about TDS for salaried employees.
Employer has to compute employee’s tax liability during the financial year with considering of all tax exemptions according to norms. One who attain tax bracket after all savings and exemptions will be coming into tax purview and tax to be deducted equally, mean tax has to be deduct every moth that is from 1st April to 31st march (12months).
While computing tax liability of employees, employer has to consider the following exemptions…………….
1) HRA, Conveyance ( up to Rs. 9600/-), LTA (if applicable), Professional Tax, Medical Allowance ( up to Rs. 15,000/-)… and deductions under section VI A like 80G, 80D, 80DD etc, Housing Loan ( interest as well as repayment, if applicable ) and 80C exemptions ( PF, PPF, LIC, NSC, Mutual Funds etc ) and 80CCF ( Infrastructure bonds up to Rs. 20,000/-) etc….
The above exemptions are given only for an idea purpose apart from these exemptions there are more exemptions are there and these exemptions differs from employee to employee.
These kind of queries were posted number of times earlier in this forum, Hence use search button I hope you will get bunch of appropriate answers.
I wish you all the best.
From India, Hyderabad
If annual income crossed the below mentioned limit of tax exempted limit,then TDS needs to be deducted at source of salary of employee.(the maximum saving can be done with Rs.80000 to save the tax from the income )
Male Female Senior Citizen Tax (%)
For Income Between 0 to 1,60,000 For Income Between 0 to 1,90,000 Income Between 0 to 2,40,000 0
For 1,60,001 to 5,00,000 1,90,001 to 5,00,000 2,40,001 to 5,00,000 10
Between 5,00,001 to 8,00,000 Between 5,00,001 to 8,00,000 Between 5,00,001 to 8,00,000 20
above 8,00,001 above 8,00,001 above 8,00,001 30
Surcharge 0
Education Cess 3
From India, Delhi
Male Female Senior Citizen Tax (%)
For Income Between 0 to 1,60,000 For Income Between 0 to 1,90,000 Income Between 0 to 2,40,000 0
For 1,60,001 to 5,00,000 1,90,001 to 5,00,000 2,40,001 to 5,00,000 10
Between 5,00,001 to 8,00,000 Between 5,00,001 to 8,00,000 Between 5,00,001 to 8,00,000 20
above 8,00,001 above 8,00,001 above 8,00,001 30
Surcharge 0
Education Cess 3
From India, Delhi
Dear Garima,
I shall insert an Excel worksheet for Income Tax Calculation on salary for the Financial Year 2010-11 (Assessment Year 2011-12). Prior to that I wish to explain some details to get an idea to enter the inputs.
On gross salary the following deductions are applicable.
1) Professional Tax
2) House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA
3) Interest on Housing loan subject to ceiling Rs. 1,50,000.
4) Refund on Housing loan, savings, tution fee to 2 children etc. altogether subject to ceiling Rs.100,000.
5) In addition savings on infrastructure bonds upto Rs. 20,000.
5) Other than the above one lakh, 15000 to 20000 towards medi claim premium, 40000 to 60000 towards treatment on specified diseases like Motor Neuron disease, 75000 to 100,000 towards disabilty etc. are also admissible for deduction.
Now taxable income can be calculated as follows.
Gross salary - total deductions = Taxable income
Tax payee can be categorised into 3.
1) Non Seniors - Male
2) Non Seniors - Female
3) Senior Citizens (65 years old & above)
If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non Senior Female has to pay in excess of Rs.1,90,000 & Non Senior Male in excess of Rs.1,60,000.
Beyond the above income, one has to pay 10% upto Rs.5,00,000, 20% there after upto Rs.8,00,000 and 30% in excess of Rs.8,00,000. In addition, an education cess @ 3% will be charged on Total Tax.
I shall quote on example.
Gross income of a Non Senior Male - Rs. 12,00,000
Deductions (actual) : Professional Tax - 12000, Housing loan interest - 2,00,000, Total savings/deductions - 2,50,000, Savings on Infrastructure bond - 25,000, other deductions over 1,00,000 - 50,000.
Admissible total deductions (subject to ceiling limits) - 12000+150000+100000+20000+50000 = 332000
Taxable income, 1200000 - 332000 = 868000
For Non Senior Male :
Rs. 1,60,000 is exempted.
For next 340000 (500000-160000), 340000x10% = 34000 -(1)
For next 300000 (800000-500000), 300000x20% = 60000 -(2)
For next 68000 (868000-800000), 68000x30%= 20400 -(3)
Tax - (1)+(2)+(3) = 114400
Also For Non Senior Female Tax is, 114400-3000 = 110400
and Senior Citizens Tax is, 114400-8000 = 106400
Education Cess, 114400*3% = 3432.
Total Tax - Rs. 1,17,832
See Excel Sheet. Enter gross salary and deductions/savings applicable in green colour column. Results will be occured in yellow colour. The red colour is used for static datas.
ABBAS.P.S,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. +91 9447 467 667
From India, Bangalore
I shall insert an Excel worksheet for Income Tax Calculation on salary for the Financial Year 2010-11 (Assessment Year 2011-12). Prior to that I wish to explain some details to get an idea to enter the inputs.
On gross salary the following deductions are applicable.
1) Professional Tax
2) House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA
3) Interest on Housing loan subject to ceiling Rs. 1,50,000.
4) Refund on Housing loan, savings, tution fee to 2 children etc. altogether subject to ceiling Rs.100,000.
5) In addition savings on infrastructure bonds upto Rs. 20,000.
5) Other than the above one lakh, 15000 to 20000 towards medi claim premium, 40000 to 60000 towards treatment on specified diseases like Motor Neuron disease, 75000 to 100,000 towards disabilty etc. are also admissible for deduction.
Now taxable income can be calculated as follows.
Gross salary - total deductions = Taxable income
Tax payee can be categorised into 3.
1) Non Seniors - Male
2) Non Seniors - Female
3) Senior Citizens (65 years old & above)
If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non Senior Female has to pay in excess of Rs.1,90,000 & Non Senior Male in excess of Rs.1,60,000.
Beyond the above income, one has to pay 10% upto Rs.5,00,000, 20% there after upto Rs.8,00,000 and 30% in excess of Rs.8,00,000. In addition, an education cess @ 3% will be charged on Total Tax.
I shall quote on example.
Gross income of a Non Senior Male - Rs. 12,00,000
Deductions (actual) : Professional Tax - 12000, Housing loan interest - 2,00,000, Total savings/deductions - 2,50,000, Savings on Infrastructure bond - 25,000, other deductions over 1,00,000 - 50,000.
Admissible total deductions (subject to ceiling limits) - 12000+150000+100000+20000+50000 = 332000
Taxable income, 1200000 - 332000 = 868000
For Non Senior Male :
Rs. 1,60,000 is exempted.
For next 340000 (500000-160000), 340000x10% = 34000 -(1)
For next 300000 (800000-500000), 300000x20% = 60000 -(2)
For next 68000 (868000-800000), 68000x30%= 20400 -(3)
Tax - (1)+(2)+(3) = 114400
Also For Non Senior Female Tax is, 114400-3000 = 110400
and Senior Citizens Tax is, 114400-8000 = 106400
Education Cess, 114400*3% = 3432.
Total Tax - Rs. 1,17,832
See Excel Sheet. Enter gross salary and deductions/savings applicable in green colour column. Results will be occured in yellow colour. The red colour is used for static datas.
ABBAS.P.S,
ITI Ltd, PALAKKAD - 678 623,
KERALA, INDIA.
Ph. +91 9447 467 667
From India, Bangalore
Thanks Mr. Abbas for detailed clarification.
That means if a person's taxable income is Rs. 6,00,000
For Non Senior Male :
Rs. 1,60,000 is exempted.
For 340000 (500000-160000), 340000x10% = 34000 -(1)
For 100000 (600000-500000), 100000x20% = 20000 -(2)
Tax - (1)+(2) = 54,000
Add Education cess 3% = 1,620
Total TDS = 55,620 hence monthly TDS = 4,625
Hope I am right, pls. confirm.
Thanks and regards,
Vaishalee Parkhi
From India, Pune
That means if a person's taxable income is Rs. 6,00,000
For Non Senior Male :
Rs. 1,60,000 is exempted.
For 340000 (500000-160000), 340000x10% = 34000 -(1)
For 100000 (600000-500000), 100000x20% = 20000 -(2)
Tax - (1)+(2) = 54,000
Add Education cess 3% = 1,620
Total TDS = 55,620 hence monthly TDS = 4,625
Hope I am right, pls. confirm.
Thanks and regards,
Vaishalee Parkhi
From India, Pune
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TDS circular.pdf
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BASICS OF TDS ON SALARY-1.doc