TDS ON SALARY UNDER SECTION 192

TDS on Salary under TDS section 192 (updated)

TDS AND TCS

TDS on Salary under Section 192 of the Income Tax Act, Tax deducted at source (TDS) on salary helps in aims to collect revenue at the very source of income. It is an indirect method of “collecting tax which combines the concepts of pay as you earn” and “collect as it is being earned.”

For TDS on salary, Your employer will be liable to deduct TDS from the salary payable to you. The salary you receive from your employer is categorized in ‘Income’ under the head ‘Salary’ and the employer will be responsible for deducting TDS at normal income tax slab rates applicable to you on your estimated income. In this post, we will understand all provisions and processes of TDS on salary under section 192.

What is TDS on salary with the full form?

TDS on salary means a tax amount payable to the Government on a salary of an employee by the employer as per the TDS section 192 of the income tax act. And Section 192 includes section 192A (Payment to Government employee other than a union government employee and section 192B (Payment of employees other than Govt. employees. Here TDS on salary full form is “Tax Deducted at source on salary”.

How to calculate TDS on salary for example?

The Indian Income Tax Act provides for chargeable tax on the total income of a person on an annual basis. The quantum of tax determined as per the statutory provisions is payable as :

  1. Advance Tax
  2. Self Assessment Tax
  3. Tax Deducted at Source (TDS)
  4. Tax Collected at Source
  5. And Tax on Regular Assessment

For TDS calculation, An employer will calculate the annual provisional taxable salary and tax on that of his employee then the tax amount will be divided monthly for monthly TDS deduction on salary. Here are some examples of TDS calculation on salary are given-

TDS on salary-Example 1

A resident employee Raman (aged 40), who works for a Pvt Ltd company, is fixed as Rs 1,00,000 per month as salary during the FY 2022-23. Raman has investment Rs 50,000 in ELSS funds, Rs 60,000 in PPF, Rs 40,000 in NSC. What will be the monthly TDS deducted u/s 192?

  1. His total income would be estimated as Rs 12,00,000.
  2. A standard deduction of Rs 50,000 is allowed on salary income.
  3. Deduction (as declared by an employee) under Chapter VI A would be Rs 1,50,000.
ParticularsWorkingAmount (Rs)
Gross Salary12,00,000
Less: Standard deduction 50,000
Gross Taxable income 11,50,000
Chapter VI-A deductions 1,50,000
Taxable income10,00,000
Tax as per applicable slab rates
0 to Rs 2.5 lakh – Nil
Rs 2.5 lakh to Rs 5 lakh – 5%
Rs 5 lakh to Rs 10 lakh – 20%
0
12,500
1,00,000


1,12,500
Cess @ 4% 4,500
Total tax1,17,000

If there are 12 months remaining for TDS deduction in the financial year the employer will deduct TDS u/s 192 = Rs 1,17,000 / 12 = Rs 9,750.

In the above case, if the employee makes a declaration to the employer for opting new tax regime, the employer shall deduct tax at the source as below:

In the new tax regime, a standard deduction of Rs 50,000 and deduction for investment in ELSS, PPF, and NSC will not be allowed as a deduction. And tax will be calculated as per the new slab rate of individual residents for calculation of TDS on salary u/s 192, i.e. Rs 1,05,000.

Education and higher education cess of 4% on the income tax = Rs 4,200.
Therefore, the net tax payable = Rs 1,09,200. 

Accordingly, TDS u/s 192 to be deducted per month = Rs 1,09,200 / 12 = Rs 9100.

TDS on salary-example 2

Mr. Toni receives a pension of Rs 40,000 per month and income from interest on his pension account (savings account) is Rs 12,000 during the FY 2021-22. What will be the monthly TDS amount deducted from the pension?

As per Section 192, TDS is required to be deducted from all the monetary amounts paid by the employer under the head ‘Salary’. Since, ‘Salary’ also includes pension, TDS on the same needs to be deducted as per Section 192.

ParticularsWorkingAmount (Rs)
Income from salary
Pension4,80,000
Less: the standard deduction50,000
Net income from salary4,30,000
Income from other sources
Interest on savings account 12,000
Gross total income4,42,000
Taxable income4,42,000
Income tax thereon
0 – Rs 3,00,000 – Nil
Rs 3,00,000 – Rs 4,42,000 – 5%

7,100

7,100
Less: Rebate under Section 87A (up to Rs 12,500)7,100
Income tax payableNil

Hence, since the income tax payable is zero, no TDS will be deducted by the employer from the monthly pension.

What is the TDS rate on salary?

TDS on salary section 192 does not specify a TDS rate. TDS will be deducted as per the income tax slab and the rates thereof applicable to the taxpayer for the relevant financial year for which the salary is paid.

As per Section 192, the employer is required to deduct tax at source on the amount payable at the average rate of income tax. This is to be computed on the basis of rates in force for the financial year in which payment is made.

The tax calculation is usually done by the employer at the beginning of the financial year. The TDS is to be deducted by dividing the estimated tax liability of the employee for the financial year by the number of months of his employment under the particular employer.

However, if there is no PAN of an employee, TDS shall be deducted at the rate of 20% plus 4% cess.

Income Tax Slabs & Rates for Individuals below 60 years for FY 21-22 & AY 22-23

Income SlabsOld RegimeNew Regime
Up to Rs. 2,50,000NILNIL
Rs. 2,50,001 – Rs. 5,00,0005%5%
Rs. 5,00,001 – Rs. 7,50,00020%10%
Rs. 7,50,001 – Rs. 10,00,00020%15%
Rs. 10,00,001 – Rs. 12,50,00030%20%
Rs. 12,50,001 – Rs. 15,00,00030%25%
Above Rs. 15,00,00030%30%

Income Tax Slab & Rates for Senior Citizens (60 to 80 Years) for FY 21-22 & AY 22-23

Income SlabsOld RegimeNew Regime
Up to Rs. 2,50,000NILNIL
Rs 2,50,001 – Rs 3,00,000NILNIL
Rs. 3,00,001 – Rs. 5,00,0005%5%
Rs. 5,00,001 – Rs. 7,50,00020%10%
Rs. 7,50,001 – Rs. 10,00,00020%15%
Rs. 10,00,001 – Rs. 12,50,00030%30%
Rs. 12,50,001 – Rs. 15,00,00030%25%
Above Rs. 15,00,00030%30%

Income Tax Slab & Rates for Super Senior Citizens (Above 80 Years) for FY 21-22 & AY 22-23

Income SlabsOld RegimeNew Regime
Up to Rs. 2,50,000NILNIL
Rs 2,50,001 – Rs 3,00,000NILNIL
Rs. 3,00,001 – Rs. 5,00,000NIL5% (Tax Rebate U/S 87A is available)
Rs. 5,00,001 – Rs. 7,50,00020%10%
Rs. 7,50,001 – Rs. 10,00,00020%15%
Rs. 10,00,001 – Rs. 12,50,00030%20%
Rs. 12,50,001 – Rs. 15,00,00030%25%
Above Rs. 15,00,00030%30%

List of surcharge rates & cess applicable to different levels of income-

Taxable Income (Rs.)Surcharge Rate
50 Lakhs to 1 Crore10%
1 Crore to 2 Crore15%
2 Crore to 5 Crore25%
5 Crore to 10 Crore37%
10 Crore & Above37%

Education cess- 4% applicable and the tax liability of the employee should be determined on the basis of the rates in force for the financial year. Every month, the monthly calculated TDS on salary will be deposited to the govt.

Who is liable to deduct TDS on salary?

For the various categories of employers, the persons responsible for making payments under the head salaries and for deduction of tax are as below:

No.Types of entityLiable Person to deduct TDS
1Private & Public CompaniesThe company itself is also the principal officer thereof. In the case of a company, it is to be noted, that the company may designate an officer /employee to make payments on the behalf of the company.
2FirmThe managing partners/partners of the firm.
3HUFKarta of HUF
4TrustManaging Trustees of Trust
5Proprietorship concernThe proprietor of the said concern.
6Central/State Government/P.S.UThe designated drawing & disbursing officers.

When is TDS on salary required?

As per section 192, TDS will be required to deduct at source when

  1. Payment is made by the employer to the employee.
  2. The payment is in the nature of salary and
  3. The income under the head salaries is above the maximum amount not chargeable to tax.

When is TDS to be deducted?

TDS on salary Section 192 says that the TDS deduction responsibility will be on the employer. At the time of actual payment of salary to the employee. Unlike the provisions of TDS, pertaining to payments other than salary where the obligation to deduct tax arises at the time of credit or payment, whichever is earlier, the responsibility to deduct tax from salaries arises only at the time of payment.

Thus, when advance salary and arrears of salary have been paid, the employer has to take the same into account while computing the tax-deductible.

How to Pay TDS on salary?

There are simple steps required to use for payment of TDS on salary online-

1st step: Firstly, Go to NSDL’s website for e-payment of taxes directly or through https://eportal.incometax.gov.in/ then the e-payment option.

TDS on Salary Payment by challan no 281

2nd step: Select ‘CHALLAN NO./ITNS 281’ under TDS/TCS section. You will be directed to the e-payment page.

3rd step: On this show page, the following details have to be entered as per the requirement

  1. Under ‘Tax Applicable’ select ‘Company Deductees’ if the TDS deducted by you is while making a payment to a company. In any other case select ‘Non-Compay Deductees’.
  2. Then enter the TAN and Assessment Year for which the payment is made.
  3. Then enter the ‘Pin Code’ and select ‘State’ from the drop-down.
  4. After that, select whether the payment is made for TDS deducted and payable by you or TDS on regular assessment.
  5. Then select the ‘Nature of Payment’ and ‘Mode of Payment’ from the drop-down.
  6. Now click on the ‘Submit’ button.

4th step: On submission, a confirmation screen will display. If TAN is valid, the full name of the taxpayer as per the master will be displayed on the confirmation screen.

5th step: On confirmation of the data entered, you will be directed to the net banking site of your bank.

6th step: The taxpayer should log in to the net banking site with the user id and password provided by the bank and make the payment.

7th & final step: On successful payment, a challan counterfoil will display containing CIN, payment details, and bank name through which e-payment has been made. This counterfoil is proof of the payment. After payment of TDS, you have to file your TDS return.

What are the due dates for TDS on salary payments & returns?

Here is the table showing the due dates for payment of TDS on Salary and TDS returns for any financial year–

Months of deductionQuarter-endTDS Payment due dateThe due date for TDS return filing
April
May
June		30 June7th May
7th June
7th July		31st July
July
Aug
Sept		30 Sept7th Aug
7th Sept
7th Oct		31st Oct
Oct
Nov
Dec		31 Dec7th Nov
7th Dec
7th Jan		31st Jan
Jan
Feb
March		31 March7th Feb
7th March
7th April Govt,30th April (other)		31st May

What is the TDS certificate for TDS on salary?

Every person deducting tax at source is required as per Section 203 to furnish a certificate to the payee to the effect that tax has been deducted along with certain other particulars. This certificate is the TDS certificate. Even the banks deducting tax at the time of payment of pension are required to issue such certificates.

In the case of employees receiving salary income including pension, the certificate has to be issued in form No.16. The certificate is to be issued in the deductor’s own stationery.

However, there is no obligation to issue a TDS certificate in case of tax at source is not deducted /deductible by virtue of claims of exemptions/ deductions.

Is TDS refundable on salary?

Yes, You can claim a refund if you have paid excess TDS. Tax Deducted at Source (TDS) is the sum that is deducted from a taxpayer’s income like salary, interest from bank accounts, rent, etc. If the TDS collected is more than what you owe to the government, you can get a TDS Refund.
A TDS Refund arises when the taxes paid by way of TDS are greater than the actual tax payable calculated for the Financial Year. It is calculated after consolidating income earned from various sources.
When the tax deducted does not match your actual tax payable, you can calculate your taxable income and taxes, file an income tax return (ITR), and claim a refund.

What if TDS is not deducted?

In normal course liability to deduct TDS is imposed on the person making payment for consumption of services or goods i.e. deductor. If the deductor does not deduct TDS then he shall face interest, penalty, and prosecution proceedings. But assessee is also not relieved from the payment of taxes if TDS has not been deducted by the deductor. Every person has to do his work with honesty whether the other person does or not. You are always required to declare correct income whether TDS has been deducted by another person or not.

Section 191 provides that the assessee shall pay the tax directly where TDS has not been deducted by the deductor. If the assessee does not pay taxes directly then the assessee shall also be treated as assessee in default u/s 201 and interest shall be leviable subsequently.

How can I save tax on my salary?

You can save taxes on your salary by investing in tax-saving investments such as LIC, PPF, and Sukanya Yojna.

Further faqs for TDS on salaries

  1. What is the section of TDS on salary?

    TDS section 192.

  2. What is the current TDS rate on salary?

    TDS on salary will be calculated on the basis of income tax slabs for the taxable current financial year.

  3. How to deduct if Salary from More Than One Employer?

    If you are engaged with two or more employers simultaneously, you can provide details about your salary and TDS in Form 12B to any one of the employers. Once the employer receives all kinds of information from you, he/she will be responsible for computing your gross salary to deduct TDS. Subsequently, if you resign and join a different employer, you can provide details of your previous employment in Form 12B to your new employer. This employer will consider your previous salary and TDS will be deducted for the remaining months of the financial year. If you choose not to provide details of income of other employment, each employer will deduct TDS only from the salary paid by him respectively.

  4. What is TDS Statement?

    The employer is required to provide Form 16 to you containing the details of salary such as the amount paid and tax deducted. This can also be accompanied by Form 12BA, to show particulars of perquisites, and profits in lieu of salary.

  5. Which challan is used to pay TDS?

    TDS is to be made vide challan No.ITNS 281.

  6. Which form of return is used for TDS on salary?

    Every deductor is required to file the quarterly statement of TDS in form No. 24Q for each quarter as per the dates specified above.

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