Section 192 – TDS on salary

Employers including an individual or HUF who are responsible for paying any salary to any of their employee has to compulsorily deduct TDS from salary paid, if such salary amount is exceeding the basic exemption limit applicable to the financial year.

As per section 192 of income tax act, TDS on salary has to be deducted at the time of payment to employee. TDS will not be deducted if salary for the month has not been paid to employee.Section 192 - TDS on salary

Employer has to estimate employee’s salary for the whole year based on the current month’s salary. On such estimated salary employer has to calculate income tax liability and deduct TDS based on the rates in force for the financial year in which salary is paid. Such total amount of tax as arrived has to be divided by the number of months of his employment during the financial year and TDS has to be deducted based on the average rate derived.

The employer in the above case has to make an honest estimate. The onus to prove that the estimate is bona fide is on the employer. 

While calculating TDS on salary employer has to consider income tax including education cess and SHEC i.e. the amount of tax payable should be increased by education cess @ 2% and SHEC @ 1%.

TDS on salary in the case of non monetary perquisite

Any non monetary perquisite paid to employee by the employer will be included in salary for calculation of TDS. If income tax on non monetary perquisites is paid by the employer then such tax amount will not again be taxable in the hands of employee. Employee can also take tax credit of such amount as paid by the employer.

However the tax amount paid by the employer on non monetary perquisites will not be allowed as business expenditure while calculating income tax liability of the employer. – Section 40(a) (v) of income tax act, 1961.

Employer also has option to deduct tax from such non monetary perquisite instead of paying it from own pockets.

Basic exemption limit for the financial year 2012-2013 and 2013 – 2014

Types of person Basic Exemption Limit in Rs.
Individual resident in India of the age of 60 years and above but less than 80 years 2, 50,000
Individual resident in India of the age of 80 years or more 5, 00,000
Any other individual 2, 00,000

When TDS on salary has to be deposited

Deposit of TDS on salary depends on the type of employer who deducts tax from salary of the employee.

TDS deducted by the office of Government

Where TDS on salary has been deducted by an office of the government from its employees then such TDS amount has to be deposited;

  1. On the same day where TDS has been paid without production of Income tax challan;
  2. On or before 7 days from the end of the month in which the tax deduction on salary is made if such amount has been deposited with an income tax challan.

TDS deducted by other employers

Where TDS on salary has been deducted by an employer other than the office of government then TDS amount has to be deposited;

  1. On or before 30th day of April where the income or amount is credited or paid in the month of march; and
  2. in any other cases, on or before 7days from the end of the month in which the tax deduction of salary is made

TDS on salary can be deposited quarterly if the assessing officer with the approval of joint commissioner allows the employer to do so. After such approval TDS has to be deducted on July 7, October 7, January 7 and April 30th for their respective quarters.

TDS Statements

After depositing TDS with income tax department the employer need to file quarterly TDS statements in form 24Q on or before following days;

TDS deposited for the Period Due date
April to June 15th July
July to September 15th October
October to December 15th January
January to March 15th May

If TDS on salary has been deducted by an office of the government then it has to be filled on or before following days;

TDS deposited for the Period Due date
April to June 31st July
July to September 31st October
October to December 31st January
January to March 15th May

Certificate of TDS on salary

Form 16 as a proof of deduction of TDS on salary has to be issued by the employer to employee with the salary break up in form 12BA. Such certificates are to be issued before 31st may after the end of the financial year.

If you are eligible for any relief under section 89 of income tax act then you need to furnish such details to your employer in form no: 10E. Employer has to consider such relief amount and calculate income tax liability accordingly.