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
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 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]
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 7th
of 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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