Home > TDS > TDS On SalariesLast Updated: Dec 05th 2023
TDS On Salaries Under Section 192
Employers must deposit a certain amount of income tax from employee salaries with IT Department monthly. Individuals pay income tax throughout the financial year rather than at the end.
This document covers
- What is Salary?
- Applicability of TDS
- Rate of deduction of TDS
- Time of deduction of TDS
- Requirement to obtain evidence or proof of claims from the employee by the employer
- Due Date for TDS Payment
- TDS Returns
- Form 16 (TDS certificate)
1. What is Salary?
Salary is a comprehensive term that includes both monetary and non-monetary compensation. All remuneration provided by an employer in exchange for services rendered by an employee is subject to taxation in the form of salaries. Salary includes the following
- Wages
- Annuity or Pension
- Gratuity
- Fees, Commission, Perquisite or profits in lieu of or in addition to any salary or wages
- Any advance of salary
- Leave Salary or Leave Encashment
- Provident fund
- Contribution by Central Govt or any other employer u/s 80CCD to the account of employee
2. Applicability of TDS
Section 192 covers salary TDS. Everyone who pays “Salaries” income must deduct TDS.
3. Rate of deduction of TDS
- The employer must deduct TDS based on the average income tax rate for the financial year the payment is made.
- Employee can declare to the employer whether he wants to choose old or new tax regime.
- If the employee declares Old Tax Regime: The employer will deduct the TDS at the rates of 5%, 20%, 30% including surcharge and education cess on the total income of the employee. Employer will also consider the investments declared by the employee while computing the taxes.
- If the employee declares New Tax Regime: The employer will deduct the TDS at the rates of 5%, 10%, 15%,20%, 30% including surcharge and education cess on the total income of the employee. Under New tax regime, no deduction will be given for the investments declared by employee.
- If there is no declaration by the employee, the employer needs to deduct the TDS under New Tax regime as it is default tax regime.
4. Time of deduction of TDS
TDS u/s 192 needs to be deducted at the time of payment to employee.
5. Requirement to obtain evidence or proof of claims from the employee by the employer
As per Section 192(2D), it is the responsibility of employer to obtain the evidence or proof of prescribed claims (Investments) for the purpose of computation of Income and Income tax payable
| S.No | Nature of Claim | Evidence of investments claimed |
|---|---|---|
| 1 | House Rent Allowance (HRA) | Name, Address and PAN of the landlord where the aggregate rent paid during the previous year exceeds Rs 1 lakh |
| 2 | Leave travel Allowance (LTA) | Evidence of expenditure |
| 3 | Interest on Home Loan | Name, Address and PAN of lender |
| 4 | Deduction u/s Chp VIA | Evidence of Investment or expenditure |
NOTE: If the employee is having any other income apart from salary, he needs to declare such other income and particulars of any tax deducted at source to employer.
6. Due Date for TDS Payment
The due date for payment of TDS deducted u/s 192 is within 7 days from the end of the month in which deduction is made. However, for the March month, due date is April 30
For due dates related to taxes, refer Latest Tax Calendar
7. TDS Returns
- TDS Returns needs to be filed in Form 24Q for all persons
- TDS Return filing is Quarterly
- The due date for the TDS Returns are as follows
- April to June – July 31
- July to September- October 31
- October to December – January 31
- January to March – May 31
8. Form 16 (TDS Certificate)
The employer is required to issue Form 16 no later than 15 days after the date on which Form 24Q was filed for the previous quarter. Yearly, Form 16 will be generated.