Section 192 – TDS on Salary

what is sec 192, what amount of TDS required to be deducted, What will be the Standard Deduction, What are the due date for salary Deductions and filing, how much cess and Surcharge required to be levied?

section 192

What is sec 192 (TDS On Salary)?

When the Employer or any other person in some other capacity is paying Income Under head ‘salary‘, then he is responsible for deducting TDS on an average rate of income tax, based on the prevailing rate during the Financial Year by considering the estimated Income of assessee. All Employers making such payments like Individual, HUF, Partnership Firms, Companies, Co-operative societies, trust, artificial judicial persons are liable to deduct TDS.

Prerequisites for sec 192:-

  • Payment made to resident employees.
  • Payment made to non-resident employees.
  • For the deduction of TDS under section 192  under the head salary, it is mandatory to have the employer-employee relationship between deductor and deductee.
  • Payment should be made by the employer to the employee under the Employment relationship.
  • The payment is in the nature of salary
  • Amount on which TDS is required to be deductible should be exceeded the maximum amount chargeable to Tax 

Standard Deduction

Standard deduction:-

For the AY 19-20, instead of giving the deduction in medical allowance and transport allowance, the government has provided a standard deduction of Rs. 40,000/- or amount of salary whichever is less.

NOTE: 2019 budget update: The benefit of standard deduction has been increased to Rs.50,000.

Surcharge and cess(A.Y-2020-21):-

Surcharge: –

10% Surcharge is applicable for taxpayers under category Individuals, Hindu undivided family HUF), for Income slabs between 50 lacs to 1 crore and  15 % surcharge is applicable for Income above 1 crore in case of individual or huf.

Health and Education cess 

Health and Education cess is applicable @ 4% on Income tax for Resident and the non-resident assessee

Example:-

ABC ltd company’s employer paying salary to Mr. Raman of Rs.17,50,000 then in this case if the Gross total Income of the Raman is expected to exceed maximum Taxable Income slab then Employer required to deduct Tds U/S 192 on the salary amount. And accordingly, the employee can claim the same deducted TDS through Form 26AS (showing deducted amount) in the Income Tax Return for the relevant Financial year for the TDS is deducted.

The requirement of TAN (Tax Account Number):-

The person responsible for paying or deducting TDS will be required to obtain TAN Number mandatorily to deduct TDS if the Employee’s income exceeds the Income Tax slab. However, in certain TDS sections, there is exemption given to Deductor for not having TAN number EG:-sec 194IB (Rent Paid by Individual)  

Due Dates of 24Q:-

For the Tds Deductor for the salary, the following due dates have to be considered:-

Quarter Due Date
April to June 31st July
July to September 31st Oct
October to December 31st Jan
January to March 31st May

TDS Return

Form 16 &  Form 12 BA:-

When the deducted TDS required to be Deposited to Government then a FORM 16 is also required to be issued to employees. He can claim the TDS amount while submitting a tax return against the total tax payable. The cut-off date for issuing Form 16 is  31 May of the Next Financial year in which tax is deducted. Along with form 16, form 12 BA is also required to be  issued in case the employer is giving perquisites & Profit lieu of salary under section 17 (3).

Key points to consider:-

  • Verify all the PAN numbers
  • Verify the challans, and try to match them through OLTAS or NSDL
  • Signed Form-27A is to be filed with the TDS return

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