Jan 152013
 

TDS Projections for Salaried Employees.

TDS is one of the easiest way of collecting income tax from Employee’s Salary who come under tax payer’s bracket. This sort of income tax from the income of an employee is collected on the day of making salary payment at source and is  deposited to the credit of the Central Government in a given time frame.

Employer does the Tax projection of Employees in the beginning of the year. Employees can plan their Investments to save tax. Investments can be done in Life Insurance Schemes, Tax Savings Mutual Funds, National Saving Certificates, Long term Bank deposits, Education fees paid for the children, Medical Reimbursements, Provident Fund etc.  Based on this declaration, Employers will deduct tax from the projected taxable salary for the whole year.

TDS is deducted from the monthly salary of an employee before making payment of salary to an employee. The TDS is deducted by deductor who is an employer and from whose salary the tds is deducted is deductee.

Benefits to the Employee :

1.TDS is cut off every month and the entire record is maintained. An employee does not need to pay the large sum of tax at one time.
2. As the TDS projection is generally given in the beginning of the year, Employee can plan his investments to save tax.
3. Employee comes to know the TDS, which is done every month by an employer and taking into consideration the amount which he actually gets in his hand, he will be able to plan his monetary transaction or financial investment.
4. Employee does not have to worry about maintaining a record of tds transaction and it becomes employer’s burden of handling and keeping an employee’s record of tax deducted at source.

Nov 292012
 

TDS on Salaries

If a person is running his own business firm and have a regular staff on his payroll, it is mandatory under section 192 of the Income Tax Act  1962 to make tax deduction from the income of his employee, if the employee comes under the taxable limit.

An employer is supposed to make tax deduction at source from the payment made to the employees. If he has paid some advance salary or arrears thereon, he has to take such payment into consideration for tax deduction.

The computation of tax deduction also called as TDS projection must be done at the start of the Financial Year. If employee has got some other income source it has also to be considered. Through careful consideration of exemptions, deductions, investments under section 80C etc. Employee’s tax liability needs to be calculated and the tax rates imposed there-upon should be in force in the respective financial year. Every month 1/12th of the net tax liability has to be deducted.

Rates of Income Tax for the FY 2012-13.

Male Citizen Female Citizen Rate of Tax
The Total Income is less than Rs. 2,00,000/-. The Total Income is less than Rs. 2,00,000/-. Nil
The Total Income is between Rs. 2,00,000/- and Rs. 5,00,000/- The Total Income is between Rs. 2,00,000/- and Rs. 5,00,000/- 10 per cent, of the amount by which the total income exceeds Rs. 2,00,000/-
The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/-. The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/-. Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
The Total Income exceeds Rs. 10,00,000/-. The Total Income exceeds Rs. 10,00,000/-. Rs. 130,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-.

 

Sr. Citizens between 60years and 80 years Rate of Tax
The Total Income is less than Rs.2,50,000/-. Nil
The Total Income is between Rs. 2,50,000/- and Rs. 5,00,000/- 10 per cent, of the amount by which the total income exceeds Rs. 2,50,000/-
The Total Income is between Rs. 5,00,000/- and Rs. 10,00,000/- Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-.
The Total Income exceeds Rs. 10,00,000/-. Rs. 125,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-

TDS Deposit

After the TDS has been deducted from the salary of the employee, the deducted tax has to be deposited to the government online using challan 281. The tax has to be deposited within 7 days from the end of the month in which tax gets deducted. Except tax deducted in the month of March, should be deposited before 30th of April.

Due date for submitting Quarterly TDS return

  • By July 15th after the end of the first quarter. [April, May and June (Q1)]
  • By 15th October after the end of the second quarter.[ July, August and September (Q2)]
  • By 15th January after the end of the third quarter [October, November and December (Q3)]
  • By 15th May after the end of the fourth quarter [January, February and March (Q4)]

Issuance of TDS certificate

The deductor has to issue a certificate which comes in Form 16  containing name of the employer, salary details, exemptions, investment details, tax deduction and payment details like  BSR code, date of TDS deposit, serial no. of challan and tax amount . The due date for furnishing TDS certificate to the employee or deductee is May 31st

There are penalties for default of TDS for not deducting TDS or not depositing TDS into Central Government Account in the prescribed manner. Along with penalties, the person can be prosecuted. So being familiar with the provisions concerning with Tax deduction at source is very important.