Salary TDS

Tax Deducted at Source or TDS is the amount which is deducted from the income of an individual by an authorised deductor and deposited to the IT department.TDS on salary basically means that tax has been deducted by the employer at the time of depositing the salary into the employee’s account. The amount deducted from the employee’s account is deposited with the government by the employer. Before an employer deducts tax at source from an employee’s salary, he/she must obtain TAN registration. The Tax Deduction and Collection Account Number or TAN number is essentially a 10-digit alphanumeric number that is used to track TDS deduction as well as remittance by the Income Tax Department.

Your benefits

TDS is required to be deducted by the employer, when taxable income of an employee exceeds basic exemption limit.

• Tax Calculation based on salary structure
• Investment Declaration
• Employee Tax Worksheet
• Form 16, Form 24-Q (Quarterly Return)
• Summary of TDS Month wise / Employee wise

How do I calculate TDS on my salary?

While the basic salary is fully taxable according to respective tax bracket, some exemptions are available for payments made as allowances and perks. You can calculate TDS on your income by following the below steps.

Calculate gross monthly income as a sum of basic income, allowances and perquisites.
Calculate available exemptions under Section 10 of the Income Tax Act (ITA). Exemptions are applicable on allowances such as medical, HRA, travel.
Reduce exemptions according to step (2) for the gross monthly income calculated in step (1).
As TDS is calculated on yearly income, multiply the corresponding figure from above calculation by 12. This is your yearly taxable income from salary.
If you have any other income source such as income from house rent or have incurred losses from paying housing loan interests, add/subtract this amount from the figure in step (4).
Next, calculate your investments for the year which fall under Chapter VI-A of ITA, and deduct this amount from the gross income calculated in step (5).
An example of this would be exemption of up to Rs.1.5 lakh under Section 80C, which includes investment avenues such as PPF, life insurance premiums, mutual funds, home loan repayment, ELSS, NSC, Sukanya Samriddhi account and so on.
Now, reduce the maximum allowable income tax exemptions on a salary. Currently, income up to Rs.2.5 lakhs is fully exempt from paying taxes, while income from Rs.2.5 lakhs to Rs.5 lakhs is taxed at 10%, and Rs.5 lakhs to Rs.10 lakhs income bracket is taxed at 20%. All income above this amount is taxed at 30%.
Do note that senior citizen have different tax slabs and receive higher exemptions than those discussed above.