Your employer is responsible to deduct TDS under Section 192. This law impacts crores of people working as an employee on salary income. Section 192 is attracted to the employee where the salary income exceeds the basic exemption limit (Rs.2,50,000/Rs.3,00,000/ Rs.5,00,000). The important condition for TDS deduction under section 192 is the presence of Employer-Employee relationship (irrespective of the government employee, private or other).What is the rate and time of tax deduction u/s 192?
TDS under this section is calculated on the estimated income to be earned by you during the year at an average rate. To compute the rate, the estimated total tax liability on such estimated income is divided over the period of employment i.e. months. And when the employer makes payment of salary every month, the amount of TDS for that month is withheld & deposited to the government on your behalf.
It also happens that many employees make investments to enjoy tax benefits i.e. to reduce their tax liability. But as the employer does not know about such investment, TDS amount increases than the actual liability. In such cases, you can declare information about all your tax saving investments to the employer using Form 12BB. When an employer sees this, he/she will consider these investments and calculate your TDS amount accordingly.
If salary income is less than the basic exemption limit (Rs.2,50,000/ Rs.3,00,000/ Rs.5,00,000) then there is no requirement to deduct TDS u/s 192.
Now, let us take an example to understand these provisions.
Meet Mr. Win, an engineer aged 30 years, is working at a software company in Jaipur (since 2015). He earns a total annual salary of Rs.9,60,000. Since every year he deposits Rs.1,50,000 in PPF, therefore, he has given Form 12BB to his employer where details of such investment are declared. Mr. Win’s monthly salary, as well as TDS, will be calculated as follows:
If the employee resigns and joins another employer i.e. change job during the FY. Then, he should provide the details of his previous employment in Form 12B to his new employer.
Accordingly, the next employer will consider his previous salary and TDS deducted while calculating TDS for the remaining months of the financial year.
However, if the employee is not able to furnish the details of income from both the employment. Then,each employer shall deduct tax in respect of salary paid by him respectively. Consequently, you end up paying the higher tax at the time of filing your ITR. Therefore, in such cases, it is recommended to furnish old income details to your new employer so that he/she can consider the effect while calculating TDS amount.
Similarly, when an employee is engaged with more than one employer simultaneously. In such a case, he should provide details about his salary and TDS in Form 12B to any one of the employers. The employer will consider such details while estimating the total salary income of the employee for the purpose of TDS deduction.
Though this section hits comparatively less number of the employee, it’s relevance can’t be ignored. Whenever an employee withdraw the amount from Recognised Provident Fund (RPF),before completion of 5 years of tenure.Then section 192A comes in picture.When TDS u/s 192A is required to be deducted?
TDS u/s 192A is required to be deducted on the withdrawal of the amount exceeding Rs. 50,000 from a recognized provident fund before the completion of five years.What is the rate & time of tax deduction u/s 192A?
The tax deduction is made at 10%, but if the employee has not furnished his PAN then tax will be deducted at the maximum marginal rate. Incase, the total amount of withdrawal in a year is less than Rs.50,000, then TDS will not be deducted.
No Requirement of TDS u/s 192A in the following cases when :
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Ans. PF can be withdrawn maximum 2/3 times during service period on non-refundable basis. You can withdraw maximum o6 month on the gross pay on refundable criteria during the tenure of service.There should be a minimum gap of 6 months between two loans.
Ans. Yes, It is possible to withdraw the PF amount if you leave your current company before 5 years of service. The amount withdrawn will be taxable in case it is withdrawn before completion of 5 years.
TDS is deducted @ 10% on EPF balance if withdrawn before 5 years of service. If withdrawal amount is less than Rs 50,000 no TDS is deducted.
Ans. PAN is required during EPF withdrawal/settlement if you do not want some excess tax to be deducted from your EPF account. If you fail to submit PAN, the tax deducted at source (TDS) can be as high as 34.6%.
Ans. As per Section 192, tax is required to be deducted at source from salary at the time of its payment. Hence, we can say that TDS has to be deducted every month from salary if it is expected at the beginning of the year that it will exceed the basic exemption limit at the end of the financial year. However, if the fact that it exceeds BEL comes to be known at the end of the year, then monthly TDS is required to be deposited at the year end with interest.
Ans. The section for TDS on salary is Section 192 of The Income Tax Act, 1961.
Ans. TDS on salary is deducted at the average rate of income tax for that financial year. The average rate of income tax has to be calculated on the basis of income tax slab rates in force for that year.
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