As\nper Section 192 of Income Tax Act, \u201cany person responsible for paying any\nincome chargeable under the head \u201cSalaries\u201d shall at the time of payment deduct\nincome tax (TDS) on the amount payable at the average rate of income tax\ncomputed on the basis of rates in force for the financial year in which the\npayment is made, on the estimated income of the assessee under this head for\nthat financial year.\u201d<\/p>\n\n\n\n
What this apparently means is that deducting tax at source or TDS against the amount payable to an employee under the \u201csalaries\u201d head is mandatory for every employer\/company in India, if the employee salary exceeds the basic exemption limit for the given financial year<\/strong><\/a>.<\/p>\n\n\n\n Taxes,\nalong with additional surcharges and education cess on employee salary or\npayments is calculated as per the rates of the relevant financial year. <\/p>\n\n\n\n The article sheds light on some very important points that must be kept in mind by the deductors or employers while deducting TDS from employee\u2019s salary under section 192 of the Income Tax Act. Section 192 of the Income Tax Act<\/strong><\/a> is applicable on all registered taxpayers in India, including individual, HUF, Firm or a company. <\/p>\n\n\n\n The\nemployer must collect written statement from employees that disclose\ninformation about rent paid, landlord name, address of the property, etc. in\norder to calculate HRA exemption. <\/p>\n\n\n\n PAN\ndetails of the landlord should also be collected by the employer from the\nemployee if the total annual rent paid by him exceeds INR 1 lakh rupees. <\/p>\n\n\n\n According\nto the CBDT notice, there is no need to collect rent receipt from the\nemployees, if the HRA paid to him is INR\n3000 per month or below.<\/p>\n\n\n\n In\ncase, the employee claims for medical reimbursement, then employers can allow\nexemption up to INR 15,000 on submission of original medical bills or receipts.\n<\/p>\n\n\n\n For\ntravel related concession, the employee should submit expenditure details or\nany evidence for the travel expenditure.<\/p>\n\n\n\n If\nthe TDS from employee\u2019s salary has been deducted at the previous employer, then\nit should be considered by the new employer while deducting TDS. <\/p>\n\n\n\n Therefore,\nTDS calculation should always be done on the basis of previous and present\nemployer\u2019s salary. Employees should disclose details about TDS deduction while filing returns. <\/p>\n\n\n\n Employees\nshould disclose details about all other income that is subject to tax deduction\nwhile filing their returns. If all other income sources are declared by the\nemployee, then it also helps the employer to calculate TDS easily. <\/p>\n\n\n\n Although,\nthe total TDS deducted by the employer post reveal of other income sources by\nan employee cannot be less than the amount which would have been deductible in\ncase of non-disclosure of other income sources by the same employee. <\/p>\n\n\n\n Any\nloss other than loss under the \u201cIncome from house property\u201d head should not be\nconsidered by the employer while TDS calculation. <\/p>\n\n\n\n Any\nemployee should provide details like name, address, PAN, interest paid\/payable\netc. in order to claim the deduction of interest under the income from \u201cIncome\nfrom house property\u201d head. The employee should also provide a bank statement to\nthe employer that highlights principal and interest component separately for\nthe same. <\/p>\n\n\n\n Employees\ncan claim a deduction of tax under different section like 80C, 80CCC, 80CCD, 80CCG, 80D, 80DD, 80DDB,\n80E, 80EE, 80GG, 80GGA, 80TTA and a80U. Although to claim tax deduction under\nthese sections, the employees should provide valid evidence for investment or\nexpenditure to the employer. <\/p>\n\n\n\n For\nclaiming tax deduction under 80G, the employee should provide evidence, i.e.,\nreceipt copy, about the money that he has donated to various government schemes\nlike Prime Minister national relief fund, Prime Minister drought relief fund,\nEarthquake relief fund, etc. <\/p>\n\n\n\n The\nemployers are not allowed to give any deduction to employees under section 80G.\nFor claiming tax relief against the donation made to the notified public\ncharitable institutes, the taxpayers should mention it separately while filing\ntheir tax returns. <\/p>\n\n\n\n The\ntaxpayers should furnish the Form No 10E to the employer during TDS calculation\nfor consideration of such relief. <\/p>\n\n\n\n In\ncase the employee does not have any Permanent Account Number (PAN), TDS from salary\nshould be deducted at a rate of 20% without including SHEC or education cess if\nthe normal tax rate is less than 20% by the employer. This means that TDS\ndeducted from employee salary in case of no PAN should be either at a normal\nrate or 20% rate, whichever is higher. <\/p>\n\n\n\n The\ntax from the employee\u2019s salary needs to be deducted every month. After TDS\ndeduction, the employee should furnish the same to the tax department. <\/p>\n\n\n\n If\nthe TDS gets deducted from government office, then it should be deposited:<\/p>\n\n\n\n If\nTDS has been deducted at any other office apart from the office of the\ngovernment, i.e., all other cases) then it must be furnished: <\/p>\n\n\n\n After TDS deduction, the employer should submit the TDS statement on a quarterly basis to the income tax department in an electronic format along with Form 27A for verification of the statement.<\/p>\n\n\n\n Here are the dates and Forms that should be\nsubmitted to the tax department by the employer: <\/p>\n\n\n\nDocuments Required for HRA, LTA and Medical Reimbursement<\/h3>\n\n\n\n
Previous Employer\u2019s Salary<\/h3>\n\n\n\n
TDS on Employee\u2019s Income Other Than Salary<\/h3>\n\n\n\n
TDS Deduction Under 80G<\/h3>\n\n\n\n
TDS Deduction from Employee Salary in Case of No PAN<\/h3>\n\n\n\n
TDS Deposit Time Limit <\/h3>\n\n\n\n
TDS statement <\/strong>Submission to the Tax Department<\/strong><\/h3>\n\n\n\n