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Updated on Sep 14, 2022
The term TDS on salary stands for taxes deducted at source. This is basically the amount that is taken away from your salary by authorized deductors and deposited with the IT (income tax) department.
Following are the steps that you need to follow in this context:
Also Read: How To Avoid Excess TDS On Salary?
| Amount earned in a year in rupees | Latest tax rate |
| 2,50,000 and less | 0% |
| between 2,50,001 and 5,00,000 | 5% of the aggregate income which is over the minimum threshold and cess of 4% |
| between 5,00,001 and 7,50,000 | 10% of the aggregate income which is over the minimum threshold and cess of 4% |
| between 7,50,001 and 10,00,000 | 15% of the aggregate income which is over the minimum threshold and cess of 4% |
| between 10,00,001 and 12,50,000 | 20% of the aggregate income which is over the minimum threshold and cess of 4% |
| between 12,50,001 and 15,00,000 | 25% of the aggregate income which is over the minimum threshold and cess of 4% |
| over 15,00,000 | 30% of the aggregate income which is over the minimum threshold and cess of 4% |
The answer to this question depends on the tax bracket that you belong to.
The term taxes deducted at source on salary implies that your employer has deducted the same when they were depositing the money in your account. In this case, your employer would deposit the money that they have deducted from your salary with the national government itself. However, before your employers can make such deductions they need to get TAN (Tax Deduction and Collection Account Number) registration.
This happens to be an alphanumeric number of 10 digits and is extremely important in the context of TDS deduction on salary. The number comes in handy for tracking the TDS deduction along with the remittance being made to the IT department.
You can use as much TDS on salary calculator as you want to. However, it is also important for you to know what your TDS is being calculated on. The CTC (cost to company) that the company quotes to you while employing your services has several components. They may be enumerated as below:
There are two major categories into which your CTC gets divided – perquisites and salary. The perquisites are also referred to popularly as perks.
They include all the benefits and facilities that your employer is providing you with. This includes the likes of travel expenses, fuel and canteen subsidies, and hotel costs, to name a few. You need to know all these things so that you have a better picture of the TDS on salary applicable for you.
A good way to reduce the TDS deduction on salary is to invest in the various tax-exempt investment options that are backed by sections 80C and 80D of the ITA. In these cases, the TDS to be deducted from your salary would be computed by subtracting these from the total salary you are earning in a year. The IT department has some rules and regulations in this regard and you have to follow them to the letter.
As per these rules, you – the employee – have to provide your employer with proof of your investment and a declaration of the same. This way, you can get the tax exemption you are seeking and thus reduce the TDS on salary that you have to pay in that financial year. Apart from these, you can also get an exemption for allowances such as HRA, medical allowance, and travel or conveyance allowance. However, please understand that there are certain limits to the extent of exemptions that are provided in these cases. Also, in these cases, you have to be entitled by your employer to claim such deductions.
The process of TDS deduction on salary is a rather detailed one that may be enumerated as below:
Also Read: Section 115BAC of Income Tax Act
We already know that you can reduce your TDS on salary by investing in various instruments that have been granted tax exemption to the tune of 1.5 lakh rupees a year by Section 80C. Section 80CCG provides you a maximum tax exemption of 25,000 in a year for investing in certain equity-saving schemes. As per Section 80D, you get tax exemptions for the premiums of medical insurance for yourself and your dependents.
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Tax deductions under Section 80C are available for expenses such as:
# Premium payments made towards Life insurance policies
# Tuition fees for children's education
# Repayment of principal amount on home loan
# Registration fees and stamp duty for house property, etc.
Yes, you can have partial or complete exemption of HRA from income tax. However, there are certain parameters to calculate HRA for tax benefits:
The house rent that you pay should be less than 10% of your basic salary. For metropolitan cities, it is 50% of your basic salary, while for non-metro cities, it is 40% of your basic salary.
Employer deducts TDS on the net taxable income of the employee. Thus, it is gross taxable income minus tax-saving deductions (as declared by the employee) under the old tax regime of sections 80C to 80U.
Yes, TDS is deducted every month on salary. Section 192 states the employer must deduct TDS on employees' salary at the time of paying salary.
Where an employee is employed with more than one employer, he/she is required to furnish Form No. 12B to one of the employers with the details of salary due/received by the employee from the other employer/employers. The employee can select the employer whom he/she wants to furnish the information of other employers.
Once the submission of information in Form No.12B is done, the employer deducts tax at source taking into considertion the information offered by the employee.
PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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