Section 192 of Income Tax - TDS on Salaries - Provisions and procedures
This article describes complete provisions and procedures relating to TDS on Salaries under section 192 of the Income Tax
TDS ON SALARIES UNDER SECTION 192 OF INCOME TAX - PROVISIONS ELABORATED
Section 192 of the Indian Income Tax Act, 1961 deals with the provisions relating to TDS on Salaried Income.
What is TDS on Salary and to whom it is applicable?
The Employer pays a salary to the employee as per the terms of the employment. The Salary is generally bifurcated into various heads such as Basic Salary, HRA, and Allowances and there are some perquisites also which may be monetary or non-monetary.
When the salary income for any Financial year exceeds the exemption limit under Income Tax, the employer is required to deduct tax at source from the salary payment made to the employee.
The TDS is required in case the net salary income falls under the taxable income slab. There is no fixed rate of deduction of TDS on salaries. It is based on the average tax on the total salary for the whole year as per the income tax slab rates. The whole tax is generally divided into 12 months and every month fixed amount is deducted. The same can be changed when there is a change in salary or any deductions etc.
What type of deductions are available from Salary Income for TDS?
Some deductions can be provided by the Employer while calculating TDS.
These are :
1. Standard Deduction which is 50000/- at present.
2. Deductions under Chapter VIA i.e. 80C, 80D, 80CCD, 80G etc.
3. House Rent Allowance
4. Leave Travel Concessions
5. Deduction under the head "Income from House Property" in respect of interest on housing loan and its repayment.
6. Relief u/s 89(1) i.e. Arrears of Salaries
How to compute TDS when there are multiple Employer during the year?
There can be cases when an employee has worked with more than one employer during the year i.e. a Job change has been made during the year.
In such cases, the employee has the option to provide the details of Salaries and TDS of the previous employer to the current employer in Form 12B. The current employer takes into account the salary of the previous employer and calculates the annual TDS based on the whole year's salary and the balance TDS is deducted by the current employer.
Can other Income be declared for the purpose of calculating TDS to the employer?
The Employee has the option to declare other income to the employer so that extra TDS can be deducted by the Employer on that income also. The other income can be Bank SB/FDR Interest, any other income/ commission, etc.
There is also an option to declare loss under head House Property to the employer such as Interest on a House loan. However, no loss other than house property income can be declared to the employer for TDS calculation.
Does the Employee have to provide proof of claims of deductions to the Employer?
Yes. In respect of all deductions claimed through the employer, proof of claims needs to be provided such as HRA exemption, House Property loss, leave travel expenditure, Deduction proof of 80C, 80D, etc. In respect of the HRA claim, in respect of rent claimed more than 1 lakh, the name address, and PAN of the landlord has to be provided.
Is the Employer required to file a TDS return?
Every Employer who is liable to deduct tax at source in respect of eligible employees is also required to file a TDS Return in Form 24Q. The periodicity of Form 24Q filing is Quarterly. i.e. for TDS deducted in each quarter Form 24Q has to be filed quarterly.
What are the due dates for Filing Form 24Q?
Due dates for filing Form 24Q are:
Quarter April - June 31st July
Quarter July - Sept. 31st Oct.
Quarter Oct.- Dec. 31st Jan.
Quarter Jan. to March 31st May
What is the due date of payment of TDS by the Employer?
The TDS deducted every month has to be paid by the 7th of next month through challan ITNS-281.
i.e. the payment frequency of TDS on salary is every month. However, in respect of the TDS deducted in March, the due date to pay the TDS is 30th April.
Is there any Interest on late payment of TDS?
Yes. In respect of late payment of TDS, Interest is charged @ 1.5% per month from the date of deduction. i.e. if TDS is deducted in April of Rs. 5000 and not paid by 7th May, then interest will be charged @ 1.5% for April as well as May i.e. for 2 months.
Is there any late fee for non-filing of TDS Return i.e. Form 24Q?
Yes, there is a late fee of Rs.200 per day for non-filing of TDS return in Form 24Q within the due date. However, the maximum late fee can not exceed the total TDS amount.
What is Form 16 and who issues the same?
Form 16 is an annual Form which is issued by the Employer to every employee whose Tax has been deducted from their Salary. It is a summary of Total earnings for the year, the calculation of tax, and the TDS details.
It is the employer who is required to issue Form 16 to the employee at the end of the year. The due date of generation of Form 16 is within 15 days of the last date of filing the IV quarter TDS return in Form 24Q i.e. 15th June.
Form 16 is generated through the TRACES website after the filing of the IV quarter TDS return. Thus any manually generated Form 16 is not valid now.
What is Form 26AS and what is the difference between Form 16 and Form 26AS?
As above Form 16 is to be generated by the Employer and to be provided to the Employee at the end of the year i.e. up to 15th June. It is a summary of the annual earnings of the employee and the TDS deducted.
Form 26AS is an annual summary of all TDS/TCS and some other information of the taxpayer. Form 26AS is available online on the Income Tax portal. Any taxpayer can log in to his IT portal account and access Form 26AS. However, Form 26AS is updated for the F.Yr. at around 15th June only since the due date of TDS return filing is 31st May in most cases.
Thus to file ITR, updated Form 26AS can be accessed around 15th June, and then return filing should be initiated for taxpayers having TDS/TCS so that no entries are missed.
You have reached the end of this article.