How to Calculate TDS on Salary under Section 192 with Web Online CA

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How to Calculate TDS on Salary under Section 192?

You must have heard about TDS (Tax Deduction at Source) at some point or the other. Many people find it challenging to learn about TDS. In this article your will learn about how to claculate TDS on Salary.

Tax Slabs on Salary for FY 2023-24
Check Income Tax Slab Rates Before Calculating TDS on Salary.

Tax Slab Income Tax Rates
Up to Rs. 3,00,000 Nil
Rs. 300,001 to Rs. 6,00,000 5% (Tax Rebate u/s 87A)
Rs. 6,00,001 to Rs. 900,000 10% (Tax Rebate u/s 87A up to Rs 7 lakh)
Rs. 9,00,001 to Rs. 12,00,000 15%
Rs. 12,00,001 to Rs. 1500,000 20%
Above Rs. 15,00,000 30%
What is TDS?

TDS, or Tax Deducted at Source, is a system introduced by the government to collect tax at the point of income generation. Under this system, the payer deducts a certain percentage of tax from the payment made to the recipient, and this deducted amount is deposited with the government. TDS is applicable on various types of payments like salary, interest, rent, commission etc. Its primary objective is to ensure stable collection of taxes, prevent tax evasion and simplify the tax collection process.

Let us understand with example : When an employer makes a payment to an employee, he has to deduct a part of the payment as TDS before giving it to the employee. Then, the employer has to pay this deducted amount to the government.

Who is eligible for TDS deduction under section 192?

Hindu Undivided Families (HUF)

Partnership firms

Trusts

Cooperative societies

Public and private companies

How to calculate TDS on Salary?

Follow the steps given below to calculate your TDS:

Step 1 :The employer calculates the employee's salary for the respective financial year. Salary includes basic salary, allowances, perquisites, and any other benefits received by the employee such as HRA and meal coupons.

Step 2 : Certain components of salary can be exempted from tax, such as HRA (House Rent Allowance), LTA (Leave Travel Allowance), medical reimbursement etc. Subtract these exemptions from the gross salary to get the taxable salary.

Step 3 : This step involves adjusting this figure by subtracting any applicable discounts. This ensures that only the taxable part of the income is considered for TDS calculations.

Step 4 : TDS is computed annually, the derived amount from the prior calculation should be multiplied by 12. This resultant figure represents your annual taxable salary income.

How to Save TDS (Tax Deducted at Source)?

Read the points given below to save TDS:

Use investment options like Public Provident Fund (PPF), Equity Linked Savings Scheme (ELSS), National Savings Certificate (NSC), and Employees Provident Fund (EPF) under Section 80C of the Income Tax Act. These investments not only help you save tax but also reduce your taxable income.

Provide investment proof to your employer for tax-saving investments made during the financial year. This ensures that your employer considers these investments when calculating TDS on your salary.

Apart from Section 80C, explore other sections to claim deduction like 80D (Health Insurance Premium), 80E (Education Loan Interest), 80G (Donation), and more. These deductions reduce your taxable income and consequently reduce your TDS liability.

What is TDS Certificate?

TDS (Tax Deducted at Source) Certificate is an official document issued by the deductor (employer or any other deducting entity) to the deductee (employee or payee) as proof of tax deducted at source on income.

When is TDS (Tax Deducted at Source) Deducted on Salary?

TDS (Tax Deducted at Source) on salary is deducted on monthly basis by the employer while distributing salary to the employee. This tax deduction does not occur during the accumulation of your salary. The employer calculates TDS based on the salary income of the employee and the applicable tax slab. The amount deducted is determined as per the income tax slab applicable for the financial year, taking into account any exemptions and deductions claimed by the employee.

FAQ's

What are the advantages of e-filing?

E-filing is a fast, convenient, secure, and sometimes free way to file taxes. E-filing is processed quickly, even if you wait until the last submission date.

If you file electronically and direct deposit your refund, the funds will be transferred to your bank account within a few days of receiving and processing your return. If you have a balance, you can pay by direct debit. And with e-filing, you don't have to worry about making mistakes, as errors are corrected immediately.

How does Online Income Tax Return Filing work in India?

Taxes imposed on the income of individuals, corporations, and other legal entities are formally called income taxes. There is no uniform tax rate for all income ranges, and it varies by industry and region, and in some cases, lower incomes are eligible to pay income tax.

There are two types of taxes: direct and indirect. A direct tax is a tax that is collected directly from the taxpayer, whereas an indirect tax is a third-party tax such as a value-added tax.

An Indian Income Tax Return (ITR) is a form for filing income and tax details with the Income Tax Authority. The tax eligibility of the taxpayer is calculated based on income. Sometimes, taxpayers are bound to get refunds from the Income Tax Department if their income tax returns show excess tax paid during the previous year.

All registered taxpayers with taxable income must file their Income Tax Returns online. However, people over 80 who do not have income from regular business or profession can also file paper returns.

 What is a GST return, and how many GST returns are filed?

GST Return is a document giving details of income that a registered GST dealer must submit to the Government of India's tax authorities. This return confirms the payment of the registered GST dealer and calculates the tax liability.

GST returns are filed monthly or quarterly, or annually by GST-registered dealers depending on the nature of the business and whether there is an option to file returns monthly or quarterly. 25 GST returns should be filed in a year.

Taxpayers who have opted for Quarterly Return and Monthly Payment Plan (QRMP) must file eight quarterly returns and one annual return. Hence, 9 GST returns are to be filed in a year.

What is the role of a Digital Signature Certificate?

A certificate serves as proof of a person's identity for a specific purpose. For example, a driving license identifies someone legally driving in a particular country. Similarly, a digital certificate may be presented electronically to identify a person, access information and services online, or digitally sign certain documents.

A licensed Certificate Authority (CA) may issue a digitally signed certificate. Certificate Authority (CA) means a person licensed under section 24 of the Information Technology Act, 2000 of India to issue Digitally Signed Certificates.

How do I register for MSME Udyam Online in India?

MSME stands for Micro, Small, and Medium Enterprises. There was no clear definition of MSME till the Atma Nirvana package was announced by the Finance Minister in May 2020. These companies were classified based on manufacturing and service industries. But after the Atmanirbhar package, this distinction between manufacturing and service industries has disappeared. The classification of these companies is currently based on investment and sales. Earlier, this process was known as Aadhar Udyog Registration.

MSMEs can register through MSME Govt Portal only. Users can register for a new MSME through this portal or re-register an already registered Udyami Aadhaar Memorandum Part II (EM-II) or Udyog Aadhaar Memorandum. The Ministry of Small and Medium Enterprises manages and operates this portal, so it is safe and reliable.

What are the benefits of having a FOSCOS/FSSAI License/Registration?

Consumers are becoming more aware of food quality, standards, and hygiene in this information age. It is more convenient for online grocery stores to be personally FSSAI certified before buying anything from outside, as it provides better assurance of food quality without contamination or foreign ingredients.

Legal Benefits: Most people still believe that getting a food license is a slow and challenging process with lots of paperwork and paperwork. There is also a need for clarification that getting a food license costs much money.

Use of FSSAI Logo: FSSAI licenses only those businesses that meet minimum hygiene standards. If you have a food sales license, you can display it on menu cards, pamphlets, packaging bags, etc. The FSSAI logo on the food will show the products in the competition.

Business expansion: All newly established companies want to expand their operations to all other places and explore new markets and consumer bases.

Customers should feel comfortable buying new products as they set up their business in recent locations. A valid food license also makes expanding your business to new places or opening new stores easier.

Quality upgrade: An FSSAI License/Registration facilitates the provision of high-quality food products and improves the overall performance of your food business.

What is a Store or Establishment License?

A shop and establishment license is a legal document issued by a state government that allows a business owner to operate legally. This license indicates that the owner has complied with the labor laws, welfare rules, and safety rules related to the store or establishment. Employers can also avail of benefits provided by the government, such as employee wages, insurance, and sick leave.

Who should apply for a Stores and Facilities License?

A store and convenience license is a mandatory registration that all businesses operating at a physical location must obtain. The specific requirements for obtaining a license may vary depending on the state in which your business is located. Generally, companies such as stores, restaurants, hotels, cafes, theaters, and other commercial establishments operating in physical locations must apply for a store and establishment license. Businesses that work from home offices or coworking spaces may also require this license. Standard documents required to obtain a store and facility license include proof of address, identity, and PAN card. Getting a license usually involves completing an application and submitting the required documents to your local municipal or state labor office.

Why is it essential to obtain a trademark registration?

Public Notice of Trademark: A registered trademark is a visible expression of ownership of a brand. Trademark registration also establishes a brand's reputation and lets consumers know that the products or services associated with the trademark meet the brand's quality and control standards. It is an acronym that helps consumers make purchasing decisions by quickly identifying and differentiating their products and services from those of their competitors.

National Validity and Ownership Estimates: Trademark registration applies nationwide and provides a presumption of trademark validity and trademark ownership. Under federal trademark law, all registered trademarks are deemed to meet all critical USPTO registration requirements and have actual requests with the trademark registration owner.

Resistance Against Trademark Infringement: Trademark registration allows us to stop competitors from infringing our trademarks and tells the police how our brands are being used. You can ask the infringer to stop using your marks or use the social media provider or online marketplace to remove the infringing content.

What is company registration?

Before filing for company registration, let us understand the concept of a company. What is a company? A company is a business entity having at least two directors and employees/shareholders. It is a legal business entity established under the Companies Registration Online Rules established under the Companies Act 2013.

So how do you register a company in India? Although the process is simple, it requires the assistance of a company registration service provider. Web Online CA provides end-to-end support, guiding you through every step required to register your company in India.

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