Salary is best defined as a fixed payment that is received at pre-determined intervals for providing services as per the contract between two parties – an employer and an employee. As per ITA, salary comes under the purview of taxation wherein the liability is calculated according to applicable slab rates. To understand the concept and applicability of TDS on salary, individuals should gather information on its computation and deductions.
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The Income Tax Department follows a progressive tax regime that increases the tax rate with the rise in an individual’s income. As a result, people belonging to high-income groups generally bear a higher taxation rate. While those belonging to the low or middle-income group have to bear a lesser one.
TDS on salary falls under the purview of Section 192 TDS. Under this tax provision, employers are entitled to deduct tax at source on the salary amount payable to an employee. It is because the salary received from the employer is categorised as income, and the same attracts a TDS based on the average prevailing rates of tax.
The ITA makes it mandatory for employers to deduct TDS on salary if they pay a salaried income to their employees. However, such a deduction can only be carried out if the salaried income is more than the minimum exemption limit.
Usually, TDS on the salary section is refundable. However, such a refund is only possible if the amount of tax deducted is more than an employee’s tax liability. Also, at times, the investment detail declared at a fiscal year’s beginning is not the same as the investments that were made at its end. Under such a situation, the T.D.S amount on salary will be refunded.
Salary is best defined as a fixed payment that is received at pre-determined intervals for providing services as per the contract between two parties – an employer and an employee. As per ITA, salary comes under the purview of taxation wherein the liability is calculated according to applicable slab rates. To understand the concept and applicability of TDS on salary, individuals should gather information on its computation and deductions.
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