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Section 192: TDS on Salary

Updated: May 30


Understanding TDS on Salary as per Section 192 for Tax Compliance
Understanding TDS on Salary as per Section 192 for Tax Compliance
 

Table of content

 

What is Section 192?

The Income Tax Act of 1961 addresses Tax Deducted at Source,  TDS on salary in Section 192. It requires that income tax be withheld from the assessee's estimated income under the head salaries for everyone accountable for paying any chargeable income under that heading.  Under Section 192, the following organizations are required to deduct TDS:

  • Companies (Private or Public)

  • Individuals

  • HUF

  • Trusts

  • Partnership firms

  • Co-operative societies

All of these employers must take out TDS each month and deposit it with the government within a certain time frame. The employer's HUF, firm, or company status has no bearing on the tax deduction at source allowed by this section. The relationship between an employer and employee is the only one that counts.


TTDS is deducted under Section 192 when salary is disbursed, regardless of whether it is paid on time or in advance. This means that tax will be withheld even during delayed salary payments. If your anticipated income falls below the basic exemption threshold, no tax will be applicable, and consequently, TDS will not be deducted.


When is TDS Deducted under Section 192?

According to Section 192, TDS is deducted at the time of salary payment rather than during salary accrual. Tax will be deducted when your employer pays you in advance, on time, or in arrears (late payment). If your estimated salary does not exceed the basic exemption limit, the tax payable will be zero, and TDS will not be deducted. This rule applies even to those who do not have a PAN. The table below shows the basic exemption limit by age, which does not require TDS to be deducted:

Age

Minimum Income

Below 60 years

Rs. 2.5 Lakh

Between 60 years and 80 years

Rs 3 Lakh

Above 80 years

Rs 5 lakh

How is TDS calculated on salary under Section 192?

TDS is computed based on the employee's estimated income for the applicable fiscal year, as per Section 192. First, the employer estimates the worker's salary for the applicable fiscal year. This should include base pay, dearness allowance, employer-granted perks, additional employer-granted allowances (such as meal coupons, LTA, or HRA), EPF contributions,, bonuses, commissions, gratuities, and any salary from a prior employer, among other things. After that, the employer determines exemptions under Income Tax Act Section 10. 


Allowances such as HRA, uniform costs, travel expenses, and children's education allowances are all exempt from the rules. Reduce the entertainment allowance, professional tax paid, and the standard TDS deduction rate of Rs 50,000 1. The net amount is considered taxable salary income after the employer deducts such an exemption from gross monthly income.


The estimated tax liability of the employee for the fiscal year is divided by the number of months the employee worked for that specific employer to determine the TDS that will be withheld. If the employee does not have a PAN, TDS will be withheld at the rate of 20% plus 4% cess.


Responsibilities of the employer

Employers are required by Section 192 to take out TDS each month and deposit it with the government within the allotted time frame. Any government employer that deducts TDS is required to deposit the money the same day. If an employer other than a government office deducts TDS and does so in March, the TDS must be deposited by April 30 at the latest. The HUF, firm, or company status of the employer has no bearing on the tax deduction at source allowed by this section. The relationship between an employer and employee is the only one that counts. 


How to File TDS Returns Online

To file your TDS returns online, please follow these steps:

  • Visit the Income Tax Department's official e-filing portal.

  • Click 'Login Here' to enter your TAN or user ID, password, and Captcha code.

  • Click 'Login' and navigate to the 'TDS' section.

  • Choose 'Upload TDS' and enter the relevant statement information, such as the FVU version, Form name, fiscal year, upload type, and quarter.

  • To check the statement details, click 'Validate'.

  • If there are errors, correct them, and then re-verify the file using Protean's File Validation Utility (FVU).

  • Once the file has been prepared per the file format, it should be verified using Protean's File Validation Utility (FVU).

  • The generated.fvu file can be submitted at TIN-FC or uploaded to the Income Tax Department's website.

  • Organizations must register on the Income Tax Department website to upload their TDS/TCS statements online.

Conclusion

All parties involved must comprehend TDS on salary, particularly Section 192. It involves more than just money; it involves abiding by the guidelines outlined in the Income Tax Act. Employees must understand what TDS deductions are made out of their pay. Comprehending the stipulations of Section 192 facilitates workers in anticipating their tax obligations and guarantees openness in fiscal dealings. 


Compliance is essential for both employers and employees. All employers must correctly deduct the appropriate amount and timely deposit it with the government. This guarantees that everything goes smoothly and fairly for everyone.


Frequently Asked Questions

Q1. What is Form 16?

It is a TDS certificate that the employer issues to salaried staff by Section 203 of the 1961 Income Tax Act. TDS is subtracted from your salary each month. A comprehensive breakdown of the employee's pay, tax withheld at source (TDS), and employer-provided government deposit is given on Form 16.


Q2. What is Form 24Q?

Form 24Q is a TDS (Tax Deducted at Source) return filed by an employer who deducts TDS from employee salaries. It contains information about TDS deducted and deposited by the employer on behalf of the employees. Form 24Q needs to be filed quarterly. 


Q3. What is under Section 192 2B of income tax?

Section 192, sub-section (2B), allows taxpayers to provide details of income earned under any head other than "salaries" and any tax deducted at the source. 


Q4. Is TDS mandatory for salary?

Section 192 of the Income Tax Act makes TDS salary deductions mandatory. Every employer who pays salaried income to his employees must deduct TDS if the income exceeds the basic exemption limit.


Q5. Is TDS calculated on gross salary or CTC?

The employer must first estimate the taxable net salary and then deduct the TDS to calculate the TDS. The net salary income is calculated by deducting tax-free exemptions and allowances from the gross salary.


Q6. What are the new rules for income tax in 2023-24?

Individuals with taxable incomes of less than Rs 7 lakh will not be required to pay any taxes under the new tax regime in fiscal year 2023-24. The highest surcharge rate was reduced to 25% from 37% under the new tax regime. There have been no changes to the old fiscal year 2023-24 tax regime.


Q7. What is Section 192 of the pension?

Section 192 requires TDS to be deducted from all monetary amounts paid by the employer under the heading 'Salary'. Since 'salary' includes pension, TDS must be deducted per Section 192.


Q8. What is the limit of the 192A section?

The TDS threshold limit under Section 192A is Rs. 50,000. Tax is deductible at 10% of the taxable component of a lump sum payment. However, tax is not deductible if the total taxable component of a lump sum payment is less than Rs. 50,000. If the employee has not provided his or her PAN, the rate of TDS will be 34.608%.


Q9. What is the difference between 192A and 192B?

Section 192A and Section 192B of the Income Tax Act pertain to the deduction of Tax Deducted at Source (TDS) on remuneration. Still, they apply to different categories of employees:

  • Section 192A - Remuneration given to government employees other than those employed by the Union Government. 

  • Section 192B - Compensation for non-governmental employees.


Q10. How is TDS calculated on FD?

Banks or financial institutions must deduct TDS on fixed deposits at a 10% rate on the interest earned in a given fiscal year. 


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