Example of TDS on Salary | Income Tax Deduction on Salary TDS on Salary


Example of TDS on Salary | Income Tax Deduction on Salary TDS on Salary

Example of TDS on Salary | Income Tax Deduction on Salary TDS on Salary | Example of TDS on Salary | Income Tax Deduction on Salary TDS on Salary

 In certain cases when the employer might have deducted more or less Tax from salary than actually deductible, the same can be adjusted in the year subsequent to the previous year. 
Example: 

Tax to be deducted in the Financial Year 2011-12                                               Rs. 15000
Tax actually deducted by the Employer                                                                  Rs. 17500
Tax to be deducted in the Financial Year 2012-13                                               Rs. 18000
Solution:

Tax Deductible in the Financial Year 2012-13                                                                        Rs. 18000
Excess tax deducted by the employer in the year 2011-12 (17500-15000)                Rs.  2500

Net tax to be deducted by the employer in the Financial Year 2012-13  Rs. 15,500

  When the salary is payable in foreign currency, the value in rupees of such salary shall be calculated at the prescribed rate of exchange.
Let us understand the above concept with the help of an example:
Example:

Details of Mr. X of age 59 years in the financial year 2012-13 are as below:

Basic Salary                                                         Rs. 3,60,000
HRA                      

                                                 Rs.    60,000

Medical Reimbursement                              Rs.    12,000
Calculate tax to be deduced by an employer for the year and take home pay of the employee.
Solution:
Tax to be deducted by the employer:

Basic Salary                                                         Rs. 3,60,000
              HRA (Note 1)                                                     Rs.    60,000
              Medical Reimbursement (Note 2)                           NIL      
Total Taxable Amount                    Rs. 4,20,000       
Tax to be Deducted (Note 3)      Rs.    22,000
Net Home Pay of the Employee:

                              Basic Salary                                                         Rs. 3,60,000
                              HRA                                                                       Rs.    60,000
                              Medical Reimbursement                              Rs     12,000     
                                                                                                                Rs. 4,32,000
                Less:      Tax Deducted by employer                         Rs.   22,000
                                          &nbs

p;     Net Home Pay                                  Rs. 4,10,000

Note (1)
It is assumed that Mr. X resides in his own house, so whole HRA is taxable.
Note (2)
Medical Reimbursement is exempted under section 10. So the same should not be considered for calculating tax.
Note (3)
Tax to be deducted by the employer:
Total Taxable Salary (as above)                                                                                  Rs. 4,20,000

Income Tax Slab for Individual with Age less than 60 Years
10% of the income exceeding Rs.2,00,000 Upto Rs. 5,00,000                         Rs.    22,000
[(Rs. 4,20,000 – Rs. 2,00,000)*10]
____________________________________________________________________________________
Extension of example:


       Mr X. turns 60 years of age during the Financial Year 2012-13.

       Mr. X has been gifted a Bike worth a value Rs. 60,000.

       Along with Tax Deductible Annually and Net Home Pay; Calculate the Average Tax to be deducted by the employer each month.
Solution:
Tax to be deducted by the employer:

 Basic Salary                                                        Rs. 3,60,000
               HRA&nbs

p;                                                                     Rs.    60,000

               Medical Reimbursement                                           NIL
               Perquisite (Bike)                                             Rs.    60,000     
Total Taxable Amount                    Rs. 4,80,000       
Tax to be Deducted (Note 1)      Rs.    23,000
Net Home Pay of the Employee:

                Basic Salary                                                         Rs. 3,60,000
                               HRA                                                                      Rs.    60,000
                              Medical Reimbursement                              Rs.   12,000
                              Perquisite (Bike)                                              Rs.    60,000     
                                                              Total Salary                        Rs. 4,92,000
                Less:      Tax Deducted by employer                         Rs.   23,000
                                                Net Home Pay                                  Rs. 4,69,000
Average Tax to be deducted by the employer each month:

o   Average Rate of total tax on Total Salary: = 23000/492000*100 = 4.67%
Basic Salary                                         Rs. 3,60,000  / 12 Months  *

4.67% =  Rs. 1401

                               HRA                                                      Rs.    60,000  / 12 Months  * 4.67% =  Rs.  234
                              Medical Reimbursement              Rs.   12,000   / 12 Months  * 4.67% =  Rs.    47
                                Perquisite (Bike)                              Rs.    60,000  / 12 Months  * 4.67% =  Rs.  234
          Rs. 1916
Note (1)
Tax to be deducted by the employer:

Total Taxable Salary (as above)                                                                                  Rs. 4,80,000

Income Tax Slab for Individual with Age More than 60 Years
but less than 80 Years
10% of the income exceeding Rs.2,50,000 Upto Rs. 5,00,000                         Rs.    23,000
[(Rs. 4,80,000 – Rs. 2,50,000)*10]
 v  Certain Procedures to be followed by the person responsible to deduct such TDS onSalary:

o   The employer i.e. person responsible to deduct such TDS on Salary is supposed to pay the deducted TDS on Salary on or before 7thof next month and for the month of march on or before 30th April of the next Financial Year.
o   If the above is not fulfilled he is liable to pay interest &18% p.a.  i.e. 1.5% per month for lapse of every month commencing from the month in which TDS is deducted.
o   PAN and TAN are must for him.
o   He is required to file the quarterly E-TDS Return 24Q on or before 15th of month succeeding the quarter.


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