Section 192 TDS on Salary- Rate of TDS, Time limit, New tax Regime

Last Updated On: July 18, 2020, 11:16 p.m.
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SECTION 192- TDS ON SALARY

Section 192 covers the provision related to Tax Deducted at Source on Salary Income. As per section 192 the employer, at the time of paying salary to the employee, is required to deduct TDS.

In case of an advance salary, the employer has to deduct TDS at the time of paying an advance salary.

The main purpose of ‘Tax Deducted at Source’ is to collect tax from all sources of income. The deductor is required to deduct approximate tax and deposit the same to the Government.

This article would help you to understand the provisions relating to section 192 i.e TDS on salary.

Section 192 says that every person who is responsible for paying any income chargeable under the head ‘Salary’ is required to deduct TDS. Thus, provisions of section 192 apply only if the following conditions are satisfied –

1. There is an employer and employee relation;

2. The payment made by the employer to the employee is in nature of ‘Salary’; and

3. The income chargeable under the head ‘Salary’ is over and above the maximum amount not chargeable to tax.

In case of salary from more than one employer:

If the employee is engaged with two or more employers simultaneously, the employee can provide details about your salary and TDS in Form 12B to anyone of the employers. Once, the employer receives all kinds of information from the employee he will be responsible for computing your gross salary to deduct TDS.

If the employee resigns and joins a different employer, the employee can provide details of the previous employment in Form 12B to the new employer & will deduct TDS accordingly on gross salary for the remaining month.

 

What is Standard Deduction?

Every employee is eligible to get the standard deduction of Rs. 50000

 

What is the Rate of TDS to be deducted?

In case of TDS on salary, there is no fixed rate for deduction of tax. The employer is required to deduct tax at source at the average rate of Income Tax. The Average rate is computed based on the rates in force during the financial year.

 

What is the Time limit to deduct TDS on salary?

The liability to deduct TDS arises at the time of the actual payment of Salary. It is important to note that the liability arises at the time of payment of Salary and not at the time of accrual.

Time Limit for depositing TDS on Salary:

Type of Deductor Time Limit Remarks
Other than Government office Within 7 days of the subsequent month in which TDS is deducted On or before 30th April in case of income credited /paid in the month of March
Applicable for the months of April to February Applicable for the month of March
Government office Same day Within 7 days of the subsequent month in which TDS is deducted.
Where the sum deducted has been paid without the production of a challan Where the tax is paid accompanied by an Income Tax challan

 

NOTE: TDS is to be deposited vide challan no. ITNS 281

 

Issuance of TDS Certificate:

The Deductor / Employer who has deducted TDS on Salary is required to issue a TDS certificate in Form 16 within 31st May of the next Financial Year in which the TDS is deducted.

 

Filing of TDS Return:

The Deductor / Employer is required to furnish a quarterly return in Form 24Q within the following prescribed due dates –

Period Due dates
April to June On or before 31st July
July to September On or before 31st October
October to December On or before 31st January
January to March On or before 31st May

 

Effects of non-furnishing of PAN on the rate of tax:

Every person whose receipts are subject to deduction of tax at source shall furnish the PAN to the deductor. If the person does not furnish the deductor will deduct tax at higher rates in the following rates:-

1. At the rate prescribed in the Act

2. At the rate in force or

3. At the rate of 20%

No tax or lower tax is to be deducted when the assessing officer has issued the lower deduction certificate.

New tax Regime of TDS on Salary:

The Central Board of Direct Taxes (CBDT), via a circular dated April 13, 2020, clarified that employers will have to deduct TDS from salary for F.Y.2020-21 as per the tax regime - new or old - chosen by the employee. If an employee wants to choose the new regime then he/she must inform
the employer of this else by default TDS would be deducted as per the old regime.

TDS on Salary is deducted as per the applicable slab rates on your income.

Also, once the choice of tax regime has been communicated to the employer, the employee cannot change the choice of tax regime during the financial year. However, an employee will have the option to switch the tax regime at the time of filing a tax return (ITR).
 

Here are the new tax rates:

  • zero tax for income up to ₹2.5 lakh;
  • 5% for income between ₹2.5 lakh and up to ₹5 lakh;
  • 10% for income between ₹5 lakh and up to ₹7.5 lakh;
  • 15% for income between ₹7.5 lakh and up to ₹10 lakh;
  • 20% for income between ₹10 lakh and up to ₹12.5 lakh;
  • 25% for income between ₹12.5 lakh and up to ₹15 lakh;
  • 30% for income above ₹15 lakh

 

Here is what the Income Tax Department has clarified:

  1. Employees, who are not having income from profession or business will have to inform their employers about their intention to opt for the new tax regime for the purpose of deduction tax at source or TDS from salaries.
  2. If such an option is not intimated by the employee, he/she will continue to be taxed at the old slabs present in the IT Act.
  3. The income tax department said that the employee can change the option of tax structure at the time of filing income tax return and the amount of TDS payment will get adjusted accordingly.

The deductor shall compute his total income and make TDS thereon in accordance with the provision of Section 115 BAC of the Income Tax Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of Section 115 BAC of the Act. 

 

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