Salary TDS -Tax Deducted at Source

Salary TDS is the amount of tax getting deducted from the Employee by the person paying Employer.

On this page:

Section Reference
Person responsible to Deduct
Payee
Nature of Income
Additions & Exemptions
When Tax is to be deducted?
Rates
Whether shortfall or excess TDS can be adjusted in future payments?
Notes

Section Reference

192(1)

Person responsible for Paying (or) Person Liable to Deduct (PAYER)

Any person responsible for paying any sum chargeable under the head 'Salaries' (Employer)

Person from whom tax is to be deducted (PAYEE)

Employee

Nature of Income

Salaries

Additions & Exemptions

Individual receiving income may furnish details of -

Salary from other employments during the financial year in Form No.12B
Relief under section 89(1) in Form No.10E (Note: benefit available only to a Government Servant or an employee of a Company, Co-operative Society, Local Authority, University, Institution, Association or Body)
Other incomes earned by him (not being a loss, other than loss under the head 'Income from House Property') and tax deducted thereon during the financial year which shall considered by the employer while deducting tax at source

When Tax is to be deducted?

At the time of payment of Salary

Rate of Salary TDS

Average rate of Tax (ART) on the estimated income of the employee for the financial year.

Refer Tax Rates for AY 2012-13 and AY 2013-14

Whether shortfall or excess TDS can be adjusted in future payments

Yes

Other Notes

Person responsible to make payment of Salary, in the form of perquisites may opt to pay the tax on his own (instead of deducting it from the employee).

In such an event, tax on such amount shall be determined on the basis of ART for the financial year (including such income) and paid by such person directly, which shall be treated as tax deducted at source - section 192(1A).

There should not be reduction in tax to be deducted by reason of including any other income and TDS thereon, than that would have been deducted without considering the other incomes not being the loss under the head "Income from House Property".

Person responsible for making any payment chargeable under the heads 'Salaries' should provide complete and correct particulars of perquisites and profit in lieu of salary in Form 12BA and Form 16 to the employee.

For salaries paid in foreign currency, it shall be converted into Indian Rupees at the SBI TT buying rate on the last day of the month preceding the month in which such salary is due or paid. The amount deducted shall be converted at the SBI TT buying rate on the date of deduction.

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