Unpublished Blog

Section 192 : TDS on Salary

Who is required to deduct TDS u/s 192?

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.

No Requirement of TDS u/s 192 in the following case :

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:

Requirement of TDS
salary per month Salary from Multiple Employers

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.

Section 192A: TDS on Premature Withdrawal from RPF

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 :

  • The balance of your old EPF account is transferred to another EPF account.
  • When you have been terminated from service due to ill health.Or when discontinuation happens due completion of a project /contraction of business by an employer. Else it happens incase of any other cause beyond the control of the employee.
  • You can withdraw the money from EPF account after 5 years of continuous service.
  • The amount of withdrawal from EPF account is less than Rs.50000/-.
  • You have submitted Form I5G/15H as your income is below taxable limit.

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CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.