Procedure for Tax Deduction (TDS) on Salary

PROCEDURE AND PROVISIONS FOR TAX DEDUCTION (TDS)FROM SALARY

Under Section 192, the employer or disbursing officer is required to deduct income-tax while making the payment of salary during financial year in cash/cheque to the employees, at the rate of the income-tax applicable to the individuals for payment of advance tax for that Assessment Year.

TDS paid by employer on behalf of Employee

An employer may, at his option, pay tax on behalf of an employee, without making any deduction from his income, on any income in the nature of perquisites. The tax payable on perquisites shall be computed on average of income-tax payable on income under the head 'salary' including such perquisites. The tax so paid shall be deemed as T.D.S.

TDS on Monthly Basis

Tax should be deducted every month on the estimated income under the head'Salaries' for the financial year by dividing the estimated tax by 12 and rounding off to the nearest rupee.

Where and how to Deposit ?

The tax so deducted should be desposited with the Govenment Treasury within one week from the last date of month in which tax is deducted(in case of deduction of tax by or on behalf of the Government, it should be deposited on the same day) in challan No. 281. Tax on perquisites borne by the employer u/s 192(1A) should also be deposited into the Govenment treasury within on e week from the last day of each month (in case of payment on behalf of Govenment, it should be deposited on the same day), in challan No. 281.

If Employee Resigns

An employee resigns or otherwise leaves the service, tax shall not be deducted from the future salary, only the salary due and payable upto the date on which he leaves service shall be considered.

TDS Certificate for Salary

After Tax Deduction at source the employer shall issue TDS Certificate on 30th April. So that an employee can Claim refund accordingly.

Form 16AA : In case of individuals having gross salary (before standard Deduction etc.) up to Rs. 1,50,000.

Form 16 : In case of other salaried employees

Form 12BA: Form 12BA is required to be attached with form 16 if salary is more than 150000 and perks has been provided to the employees ,stating detail and value of the perquisites provided to the employee.