TDS ON SALARY UNDER SECTION 192 OF INCOME TAX ACT

TDS U/S 192: SALARY & ITS APPLICABILITY

1. What do you mean by TDS?

TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

Note: -

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

2.  What is TDS under Section 192 of Income Tax Act?

Section 192 of the Income Tax Act, 1961 specifies that every responsible for paying any income which is chargeable under the head Income from “Salaries”, shall be liable to deduct TDS u/s 192.

Rate of tax is to be calculated as per the slab rates applicable to a person and TDS is to be deducted at the time of payment only.

3. Who is required to deduct TDS under Section 192?

TDS under Section 192 is required to deducted by every person responsible for making salary payments at the rate as per their respective slab rates.

Following are the various categories of person who is responsible for TDS deduction U/S 192.

4. When is TDS Deducted under Section 192?

Normally the TDS is to be deducted at the time of payment or at the time of crediting the party in the books of accounts whichever is earlier but in case of TDS u/s 192 the TDS must be deducted at the time of payment only.

Few examples of date of deduction are: -

NOTE: -

In case the payee estimated salary is less than the basic exemption limit then there is no need to deduct TDS under this section.

Below is the Basic exemption limit under old and new scheme.

5. Rate of TDS under section 192?

There is no specific rate of deduction under section 192, the rate is based on the slab rate applicable to the person. The current slab rates are as follows: -

Slab rate under New Scheme (F.Y 2024-25)

NOTE: -

Tax rebate upto Rs. 25,000 is applicable if the total income does not exceed Rs. 7,00,000. This rebate is not applicable for non-residents.

Slab rate under Old Scheme. (F.Y 2024-25)

Residents aged below 60 years.

Residents above 60 years below 80 years.

Residents above 80 years.

          Example (Calculation of monthly rate).

         Suppose Mr. Rahul is aged 35 years and earning a salary of Rs. 10 lakhs per year and has deposited Rs. 50,000 in tax saver FDR, 50,000 in NPS and 1,00,000 in ELSS.

        Tax at 10,00,000 under old scheme:-

                        Average Tax to be deducted monthly = 65,000/12 = 5417(approx.)

6. Time limit for deposit of TDS?

The due date for deposit of TDS is as below: -

7. What is the due date for filing of TDS return under Section 192?

TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: -

8. Type of TDS return & form to be issued?

TDS under this section has to filed quarterly through FORM 24Q and the employer has to issue FORM 16 to the employee after filing of return.

9. Fees/ Penalties for Late/ Non- Filing of TDS u/s 192?

Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.