TDS on Salary – Comprehensive Guide

A. Who is Responsible to deduct TDS on Salary ?

Any person responsible for paying any income chargeable under the head “Salaries” is required to deduct tax on the amount payable. Following shall be treated as “person responsible for paying” salary income -

1. In case of Employees of Central/State Government          – The appropriate Disbursing officer

2. In case of Employees of Private Non-Corporate Sector  – The Employer himself

3. In case of Employees of Private Corporate Sector             – The Company and The Principal Officer thereof

B. Time of Deduction of tax at Source

1. Tax is to be deducted at the time of actual payment of salary.

2. If the employer transfers salary to the personal account of employee in his books of accounts, tax is not deductible at the time of transfer.

 C. Employee is in Employment of More than One Employer

1. In such a case tax is to be deducted by the present employer.

2. Employee has to furnish details of income received from previous employer in Form 12B to present employer.

3. The obligation of the present employer to deduct TDS arises only when the employee has furnished Form 12B.

D. Tax payable on Perquisites (Non Monetary) [Section 192(1A) & (1B)]

1. As per Section 192(1), employer may pay tax on perquisites out of own pocket.

2. For the purpose of section 192(1), tax shall be calculated on the basis of rates in force foe financial year.

3. Monetary perquisites are irrelevant for the purpose of this section, as they are taxable as normal salary.

E. Income Under Other Heads [Section 192(2B)]

1. Employee may/may not declare his other incomes to the employer.

2. Employee may declare Loss under the head “Income from House Property”. Please note that no other loss can be declared by the employee.

3. After receipt of such information, employer shall calculate and deduct TDS on total/net income on the basis of rates in force for the financial year.

F. Deposit of Tax Deducted at Source

Tax deducted at source on salaries has to be deposited with Central Government within prescribed time limits.

 

S.No. Particulars Time of Deposit of TDS
1 Tax is deducted by office of Government and tax is paid without production of challan On the same day on which the tax is deducted
2 Tax is deducted by office of Government and tax is accompanied by income tax challan Within 7 days from the end of month in which TDS is deducted.
3 Tax deducted by any other person a) For the month of March – April 30th b) Otherwise – Within 7 days from the end of month in which the TDS is deducted

In special cases, Joint Commissioner may allow quarterly payment of TDS. In such cases, TDS will be paid within 7 days from the end of relevant quarter.

G. Issue of Certificate of TDS in Form 16

Person deducting TDS on salary shall issue certificate in Form 16 to the employee on or before 31st May after the end of Financial Year. For example- Form 16 for Financial Year 2014-15 shall be issued on or before 31st May 2015.

H. Submission of Quarterly Return of tax Deduction to Government 

1. Employer has to furnish quarterly return of TDS deducted on salary in Form 24Q to the government.

2. A control chart in Form 27A has to be submitted along with Form 24Q.

Recommended Read -

How to calculate TDS on salary ?

Forms and Due date for filing TDS return

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