TDS Deduction on Salary – Section 192

TDS or Tax deducted at source is a concept of deducting tax by the payer from the income of any individual or HUF, provided the payer is an authorized deductor. TDS applies to different incomes such as salary, interest on bank deposits, dividends and other similar incomes. Here in this article, we will read about tds on a salary which falls under section 192 of the Income Tax Act.

What is TDS on salary?

TDS on salary is the tax that your employer deducts from your salary before making the payment. The prevailing tds rate on salary depends on the tax slab that the assessee falls under. The employer deducts the amount and then deposits the same to the government. So, TDS is advance tax paid on your behalf by your employer to the government.

When is TDS Deducted under Section 192?

TDS on salary is only deducted when your taxable income is above the tax exemption limit. For instance, as per the recent updates in the new tax regime, if your taxable income is above Rs. 7 lakhs then only the employer will deduct the TDS. However, under the old regime is calculated on taxable income above Rs. 5 lakhs only. Unlike other TDS, there is no particular tds percentage for TDS on salary.

How is TDS Deducted from Salary?

TDS calculation on salary is simply like normal income tax calculation where you need to find out the taxable income and then calculate the tax as per the current tax slabs. Let’s understand this with an example.

Suppose, your gross salary is Rs. 10 lakhs per annum which include an HRA of Rs. 5000 per month, and you have a LIC plan running where you have to pay Rs. 50000 per annum as a premium and also invest in ELSS funds via monthly SIP of Rs. 5000.

Therefore, your taxable income would be –

Calculation of Taxable Income of the Employee

Now, as per the old tax regime, the TDS would be -

Now the TDS is deducted per month from each salary and thus the amount of TDS would be
Rs. 68500/ 12 = Rs. 5708.33

So, the total tax payable by you is segregated monthly and this also reduces your tax burden as you do not have to pay the entire tax together.

TDS Deduction under New tax Regime (Default Regime as per Union Budget 2023-24)

Under the new tax regime, you cannot claim any deductions and exemptions apart from the standard deduction. So, your taxable income would be Rs. (1000000 – 50000) = Rs. 950000.

As per the tax slab under this regime, TDS would be –

Note: Here we have taken certain deductions under section 80C only for example, where there can be any other deductions that can be a part of the calculation if you are opting for the old regime.

You can also calculate the TDS on your salary using the tds on the salary calculator. It is available online like an income tax calculator where you need to enter the income details and other deductions and exemptions and allowances details to derive the TDS deduction value.

Who can Deduct TDS under Section 192?

The TDS on salary can only be deducted by those who have an employer-employee relationship. It can be an individual employer, HUF, organization, trust, and partnership firm that has employees working with them and whose salaries are above the tax exemption level. The employer needs to get TAN registration done to deduct TDS. TAN is a ten-digit alphanumeric number assigned to the employers who need to deduct TDS and this TAN number helps the employee and the government to keep track of the TDS deducted by the employer, whether deposited or not.

How to get a refund for your TDS on salary?

Usually, TDS on salary is deducted considering the deductions and exemptions for which the assessee is eligible however, for the same, the employee needs to give a declaration of his or her investments, and other income for exact tax assessment. In case the employee doesn’t provide the details, and the employer deducts TDS based on the salary that the employer receives after deducting the standard deduction amount, then later on, if the employee is eligible for a tax refund, he or she needs to file the income tax return and they claim the refund. After processing the ITR, the refund gets credited to the employee’s account within a stipulated period.

What happens if the TDS deducted is not deposited?

TDS deducted needs to be deposited with the government that is the IT Department of the central government if the employer is deducting the TDS from the employees within 30 days from the last day of the month in which the TDS has been deducted. However, in case the same is deducted from the employees but not deposited with the IT department, then as an employee, you can take certain actions.

If the employer has provided you with Form 16 which is the TDS certificate that proves that the employee has deducted TDS from your salary, but you haven’t been able to see the TDS deposited or refund is not get credited, then there is a lag in IT department for processing the TDS payment made by the employer. You can check with the IT department for the update on the same or wait until it gets processed.

However, in case of the employer deducting your TDS from your salary, and that is mentioned on your salary slip but they haven’t provided you with the TDS certificate, then the TDS may not have been deposited by the employer only with the IT department or it is stuck between two of them. In this case, you can complain to both the employer and the government IT department providing the salary slip as proof.