TDS on Salary – Section 192

TDS on Salary – Section 192

Tax Deduction at Source, commonly known as TDS is the portion of Income, which is to be deducted at the source of Income itself. It is deducted to ensure there is no tax evasion and to collect tax smoothly and easily. There are some specified nature of income which comes under the TDS Provisions for deduction as TDS.

Today, we will discuss in details about the TDS on salary which is specifically provided under section 192.

Who is to deduct?

The said provisions are applicable to all, whether Resident or Non Resident, paying salary to any Person, whose salary is taxable under the Income Tax Act, 1961.

Rate of Deduction?

This is the only section which allows the deduction at the rate in force on average basis. It provides all the deduction such as HRA, Standard deduction, Section 80C Deduction, etc. for computation of tax liability. After computing the Tax liability for the whole year, the tax needs to be deducted from monthly salary on average basis.

Incomes to be considered?

For the computation of tax payable, all known incomes such as, house property rent, interest from Bank, Salary from previous employer, etc. can be considered by the Salary payer, on the basis of information provided by the employee to him.

Deductions and other consideration?

  • Section 89(1) can be considered, if applicable.
  • Chapter VI-A such as tution fees, house property principal repayment, LIC Insurance premium, PPF, health insurance premium, interest on education loan, etc.
  • Any loss from House Property such as for self occupied property interest.
  • Tax Slabs to be considered
  • All the deductions such HRA, Standard Deduction, Professional tax, etc.
  • Section 87A to be considered

New Slab vs. Old Slab

Employee needs to decide whether he/she wants to opt for either new slab or old one. The rates for both slabs are as mentioned here:

Old Slab RatesNew Slab Rates
Upto Rs. 250000NilUpto 2,50,000Nil
Upto Rs. 5000005%Upto 5,00,0005%
Upto Rs. 10,00,00020%Upto 7,50,00010%
More than 10,00,00030%Upto 10,00,00015%
Upto 12,50,000 20%
Upto 15,00,000 25%
More than 15,00,000 30%
Tax Slab Rates Old vs. New Rates

Surcharge on Tax as mentioned below:

Income upto 50,00,000Nil
Income more than 50,00,000, but upto 1 crore10%
Income more than 1 crore but upto 2 crore15%
Income more than 2 crore but upto 5 crore25%
Income more than 5 crore37%

Option to Choose New slab vs. Old Slab

Every employee has the option to choose between these two slabs for the tax computation considering the lower tax liability as per their salary structure and various benefits.

Computation of Tax Payable

Suppose Miss Tanvi Rawat, having salary income of Rs. 10,00,000(including HRA available for exemption 2,00,000). She deposits in PPF Rs. 50,000, Pays LIC Insurance 20,000 for herself and family(age below 60 years).

Tax Payable, if she chooses Old vs. New Tax Slab

Old Slab Tax Liability

ParticularsAmount (Rs.)
Salary Income10,00,000
Less: HRA exemption(2,00,000)
Less: Standard Deduction (50,000)
Gross Income7,50,000
Less: Deduction under Chapter VI-A
Section 80C(PPF, LIC Insurance premium) (70,000)
Total Income6,80,000
Tax Liability
Tax (5% on 2,50,000 + 20% on 1,80,000) + Cess @ 4% on Tax50,440
Tax Liability as per Old Slab Rates

New Slab Tax Liability

ParticularsAmount(Rs.)
Salary Income10,00,000
Total Income 10,00,000
Tax LiabilityTax + Cess @4% on Tax78,000
Tax Liability as per New slab Rates

No deduction or exemption is available for HRA, Standard deduction of Rs. 50,000, Chapter VI-A and other specified deductions.

Then, Average monthly needs to be calculated to deduct the said amount from the salary portion.

Due Date for the Payment

TDS deducted to be paid on or before the 7th day of the next month. Except for the march month, tthe due date is the 30th April of the next following year.

TDS Statement

Every Deductor, needs to file the statement on quarterly basis on the dates mentioned below:

Quarter for the PeriodDue Date
April to June31st July
July to September31st October
October to December31st January
January to March31st May

Deepa Kaintura

Semi Qualified CA.....Content Writer.....Entrepreneur.....Financial Analyst.....Business Consultant

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