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All that you need to know about TDS on salary!
Do you always get annoyed that every month, some money from your salary is snatched away, before even getting it in your hands in the name of TDS or do you wonder even after paying your TDS, why do you need to file Income Tax Return?
Let's understand the ins and outs of TDS in this Blog post:
What is TDS on salary?
TDS or Tax Deducted at Source is the amount of money that is deducted every month by your employer from your salary if it exceeds the basic exemption limit after giving benefits of deductions for various items of investments and expenses specified in chapter VI-A.
Why is TDS deducted?
As per section 192 of Income Tax Act, it is mandatory for your employer to deduct TDS if your salary exceeds the basic exemption limit regardless of the fact that whether your employer is a public company or an individual.
Requirement of PAN in case of TDS:
You need to provide your PAN if anybody is deducting TDS from your income because only through PAN your TDS will appear in your Form-26AS. This form contains the comprehensive list of all TDS that have deducted from your income during the year whether it is from salary income or interest income or any other income that is liable for TDS. So this form serves as a proof that your TDS has been deducted which you can deduct from your tax liability at the time of filing of Income Tax Return.
How is TDS calculated by my employer?
The basis of deduction of your TDS is the applicable income tax slab rates.
At the starting of the year, your employer asks you to submit "Income Tax Declaration" which includes the list of investments and expenses that you are going to make in the relevant year.
After deducting all the Income tax deductible investments and expenses as per the "income Tax Declaration" from your gross salary, tax is calculated on it which is divided into 12 monthly installments and every month this installment of tax is deducted from your salary under the name of TDS.
I have paid my TDS; Do I still need to file Income Tax Return?
Even if TDS is deducted from your salary every month, you still need to file Income Tax Return because there may be difference between your tax liability and TDS arising due to various reasons like any other income which your employer is not aware of or any investment for which you forgot to submit its proof or any other reason. Filing Income Tax Return helps in ensuring that your tax liability is correct.
We hope that from next time when you'll receive your salary after deducting TDS, you'll not get annoyed!
For any other assistance, feel free to contact us anytime!