If you are receiving any income in the form of Salary under section 192 and if the amount paid exceeds the Basic Exemption Limit, every Employer is required to withhold TDS at the time of payment of Salary and the tax must be deducted at the applicable average income tax rate.
Conditions for Deduction of TDS on Salary
TDS should be deducted only if the employee falls under below conditions:
- The employer-employee relationship must exist between the deductor and the deductee.
- The employer makes payment to the employee.
- It is in the nature of salary.
- Payment is made to resident/ non-resident employees.
- The income under the head salary is above the maximum amount not chargeable to tax. (i.e; total salary for a financial year is more than Rs. 2,50,000)
What is the average rate of income tax under section 192?
The average rate of income tax is to be calculated on the basis of Income Tax Slab Rates in force for a particular financial year.
Let’s take an example to understand:
Suppose, Jay is earning INR 60,000 per month as salary income for FY 2021-22 and his total deduction under Chapter VI-A for a year amounts to INR 1,00,000.
| Particulars | Amount (In INR) |
|---|---|
| Jay’s Total Income (60,000 * 12 months) | 7,20,000 |
| Deductions under Chapter VI-A | (1,00,000) |
| Income Chargeable to tax | 6,20,000 |
| TAX as per the current slab rate | 36,500 |
| Education Cess and SHEC @ 4% of TAX | 1460 |
| Net Tax Payable | 37,960 |
TDS to be Deducted per month = 37960/12 = INR 3163
The average rate of tax in the case of each individual is different for each financial year and keeps varying based on the estimated income of the taxpayer and the Income Tax Slab Rates in force for that assessment year.
When to deduct and deposit TDS under section 192?
The deduction should be made at the time of payment and not when the payment is due or an obligation arises.
TDS deducted by the employer on salary payments are required to be deposited with the government before the prescribed due date. The employer needs to mention his TAN at the time of depositing TDS with the government.
Further, The Due date for the deposit of TDS deducted from the salary for every month is the 7th of the next month, however, for the month of March, it is the 30th of April. The deposition of TDS can be made via challan No. ITNS 281. The challan can be paid through TIN NSDL or the Income Tax portal.
What is the TDS on salary if an employee changed jobs?
In the case of an employee who has changed his employer during the year, the employee is required to submit his previous salary details and TDS to the subsequent employer. These details are to be submitted in Form 12BB according to new rule 26C.
Based on such form, the Employer will consider the aggregate salary and TDS paid so far and will deduct TDS for the remaining income earned by the employee.
FAQs
The TDS deducted from salary is reflected in Form 16, which is issued to the employee at the end of the financial year by his employer. Also, Form 16 contains details of quarterly TDS deducted by the employer along with total income earned and tax deductions. Further, an Employee can also check the details of the TDS deducted and deposited by his employer through Form 26AS from his e-filing login.
An employer needs to file Form 24Q for TDS deducted from their salary by him. Form 24Q is filed quarterly on or before the due date. Further, it contains details of salary paid and TDS deducted and deposited by an employer.
Deductor will be liable to pay the fine of INR 200 per day u/s Section 234E till the failure continues. However, the penalty should not exceed the amount of TDS for which the statement was required to be filed.
Hi @Amitava_Chowdhury
There shall be no such impact on the TDS either monthly or at once.
Hi @Rocky_Kota
If you have TDS u/s 192 it is for salary income and TDS u/s 194JB is for professional income.
Since you’ve profession income you will be filing ITR 3 (along with salary income) and can claim both the TDS when filing your return for FY 2022-23/AY 2023-24.
Here’s how you can Prepare & E-file your ITR on Quicko : Help Center on Quicko.
Hope this helps.
Hey if I pay 4.8 lakh salary then do I need to deduct tds. I am an individual and provide service.
My main concern is if rebate under section 87A to be considered while calculating TDS or not.
Thanks
Hey,
TDS is calculated after considering all the deductions and exemptions an employee is eligible for. Hence, if the tax liability after rebate comes to nil, TDS will not be deducted.
Follow up question
First of all thanks for your reply.
I wanted to know if a sole proprietorship pays 80k per month then does he needs to deduct tds on salary considering 0 tax upto 12L tax from next FY.
I know under 44ad the minimum profit should be 6-8%. My question is about upper limit.
Can we show 70-80% profit under 44ad?
As a sole proprietorship if we pay to freelancer in India then do we need to deduct TDS?
What about individual limit of 50L inside 194M
Thanks
Hello @love4u_now
TDS is calculated after considering all the deductions and exemptions. Hence, if the tax liability after the rebate comes to NIL, then TDS is not required to be deducted.
While Section 44AD presumes a minimum profit of 6-8% of turnover, there is no upper limit on the profit you can declare.
As a sole proprietorship, if your business turnover does not exceed ₹1 crore, and you are not liable for a tax audit under Section 44AB, you are not required to deduct TDS. However, if your business is covered under a tax audit, you must deduct TDS under Section 194J for professional service payments exceeding ₹30,000 in a financial year.
Hope this helps!
Hi @Surbhi_Pal ,
Is there a provision where an employee can submit a form to ensure that TDS is not deducted by the employer, and the responsibility for tax payment falls on the employee?
Hello @sachinsp15
There is no form to instruct the employer not to deduct Tax Deducted at Source (TDS) on salary income. As per Section 192 of the Income Tax Act, 1961, employers are legally required to deduct TDS on salary income based on the applicable tax slab rates.
However, employees can take the following actions to minimize or adjust TDS deductions:
For other types of income (such as interest, commission, or rent), individuals can submit Form 15G/15H to avoid TDS if their total income is below the taxable limit. However, this is not applicable for salary income.
Hope this helps!
Is there any form for this? Is there formal way to pass on this information to employer?
Hi @sachinsp15 ,
If you wish to provide details of TDS/TCS other than salary then you can submit form 12BAA.
In case of advance tax, you can self declare the details to your employer either through their HRMS or through an email. You can include the below details:
Hope this helps!