{"id":7398,"date":"2022-01-21T08:07:27","date_gmt":"2022-01-21T08:07:27","guid":{"rendered":"https:\/\/www.kanakkupillai.com\/new-learn?p=7398"},"modified":"2025-07-02T17:14:03","modified_gmt":"2025-07-02T11:44:03","slug":"how-to-compute-tds-on-salary","status":"publish","type":"post","link":"https:\/\/www.kanakkupillai.com\/learn\/how-to-compute-tds-on-salary\/","title":{"rendered":"How to Compute TDS on Salary?"},"content":{"rendered":"<p>TDS stands for Tax Deducted at the Source from which the income is earned. TDS on salary refers to the tax deduction made by an employer on the salary that is paid by him to the employee for the rendering of employment service by such employee. <span style=\"box-sizing: border-box; margin: 0px; padding: 0px;\"><a href=\"https:\/\/www.kanakkupillai.com\/tds-return\" target=\"_blank\" rel=\"noopener\"><strong>TDS return<\/strong><\/a> on salary aids the government in keeping track of income earned by individuals in the form of cash, and the same would also aid them in collecting income tax from an individual\u2019s paycheck at the point of collection.<\/span><\/p>\n<p>This article would help you understand section 192 and the TDS deducted on salary along with the computation of the same.<\/p>\n<h2>Rate of TDS Deduction on Salary<\/h2>\n<p>The rate of TDS deduction on salary is determined by the amount of income you get from your employer, which determines which tax bracket you belong to. TDS deductions on salaries will range from 10% to 30%, depending on the tax bracket you fall into as an assessee or taxpayer.<\/p>\n<p>Let us understand this with the help of an example.<\/p>\n<p>TDS is deducted from the employee\u2019s compensation at the \u2018average rate\u2019 of income tax. It will be calculated in the following manner:<\/p>\n<p>Income tax payable, which is computed using slab rates divided by the employee\u2019s projected income for the relevant financial year, equals the average income tax rate.<\/p>\n<p>Say, suppose Ms Hema, who is a 35-year-old IT professional, is paid INR 1,00,000 per month throughout the financial year 2020-21, for providing her services to the entity.<\/p>\n<p>Under section 192 of the Income Tax Act, we can calculate her TDS on salary for the fiscal or financial year 2020-21 as follows:<\/p>\n<ul>\n<li>Total Income Earned During 2019-20 INR 12,00,000 (INR 1,00,000*12)<\/li>\n<li>Deductions Estimated under Chapter VI-A INR 1,00,000<\/li>\n<li>Standard Deduction Allowed from Salary INR 50,000<\/li>\n<li>Total Taxable Income \u00a0INR 10,50,000 (INR 12,00,000- INR 1,50,000)<\/li>\n<\/ul>\n<p>While computing Ms Hema\u2019s TDS liability for the year as per section 192, we can say that the same would be INR 1,27,50,0 and adding the Health and Education Cess, the same would become INR 1,32,600.<\/p>\n<p>Now the average rate of TDS on Salary would be computed as (1,32,600\/12,00,000) *1,00, which would equate to 11.05%. So, the TDS to be deducted from the salary of Ms. Hema every month would be INR 1,00,000*11.05% which would equal INR 11,050.<\/p>\n<h2>Computation of TDS on Salary under section 192B<\/h2>\n<p>TDS on pay is calculated by subtracting the amount of exemption from the employee\u2019s total annual paid income. The exemption limit is set by the Internal Revenue Service. Before approving the exemption amount, the employer must seek proof and a declaration from the employee when calculating TDS on salary.<br \/>\nTax exemptions are available for the following items:<\/p>\n<h4><strong> Standard Deduction<\/strong><\/h4>\n<p>Deductions are standard, and at the same time, the government has authorised a blanket deduction of INR 50,000\/- in place of medical and transportation allowance to the employees.<\/p>\n<h4><strong> House Rent Allowance or HRA<\/strong><\/h4>\n<p>An employee who is paying a certain amount as rent for the accommodation can claim the HRA from the employer.<\/p>\n<h4><strong> Leave Travel Allowance or LTA<\/strong><\/h4>\n<p>LTA, or the Leave <span style=\"color: #0000ff;\"><strong>Travel Allowance,<\/strong><\/span>\u00a0is a form of allowance that is given to employees by their employer or organisation. Employees can use LTA to take time off work, cover their travel expenses, and receive reimbursement from the company for travel made by them. As a result, LTA should be included in your pay or salary.<br \/>\nFurthermore, the LTA that is received by the employee is not included in the employee\u2019s net taxable income under Section 10 (5) of the Income Tax Act, 1961. Only the actual trip cost or the component amount in your salary breakup, whichever is smaller, can be claimed as a leave travel allowance. Employees, on the other hand, can use LTA for two trips in four years or a four-year block.<\/p>\n<h4><strong> Children Education Allowance<\/strong><\/h4>\n<p>Children\u2019s Education Allowance is limited to INR 100 per month per child, and also with a maximum of two children.<\/p>\n<h2>Liability to Deduct TDS is Vested Upon<\/h2>\n<p>When making a salary payment to an employee, the employer is required to subtract or make the deduction of TDS. Only when the actual payment is made can TDS be deducted from the salary. It should also be noted that when the employee\u2019s salaried income is taxable, the TDS will also be deducted. TDS on salary, on the other hand, shall not be deducted if the compensation is equal to or less than INR 2,50,000, which is the limit as per the Income Tax Slab.<br \/>\nAccording to Section 192, there must be an employer-employee relationship to deduct TDS from pay as per this particular section, which is Section 192. TDS on pay deductions is also required to be made by the following employers:<\/p>\n<ul>\n<li>Individuals<\/li>\n<li>HUF, or the Hindu Undivided Family<\/li>\n<li>Partnership firms<\/li>\n<li>Companies, which can be either Private or Public<\/li>\n<li>Trusts<\/li>\n<li>Co-operative societies.<\/li>\n<\/ul>\n<p>TDS deduction on the pay is not affected by the employer\u2019s status, such as HUF, company, co-operative society, or trust. In addition, the number of employees employed by the firm does not influence the calculation and deduction of TDS on salary. By downloading your salary slip, you can see how much TDS has been deducted from your pay.<\/p>\n<h2>Is TDS Dedication Made Every Month?<\/h2>\n<p>TDS on salary is deducted on a monthly basis. Section 192B requires the employer to deduct TDS from the employee\u2019s wage at the time of payment and not accrual. Because the employee is paid on a monthly basis, the company will withhold TDS from the salary each month. If the employer fails to deduct the required amount, they will be responsible for the penalty and interest.<\/p>\n<h2>Is the Dedication of TDS a Mandatory Element?<\/h2>\n<p>Yes, pertaining to the Section 192 or 192B of the Income Tax Act, TDS deductions on salaries are required to be made on a mandatory basis. If the salary amount exceeds the basic exemption level, any employer or entity which pays a <span style=\"color: #333333;\">salaried income <\/span>to their employees for the services rendered must withhold TDS from the salary.<\/p>\n<h2>Claiming TDS Deducted on Salary<\/h2>\n<p>There is no form or procedure for claiming TDS refunds. In most cases, the deductee is only required to file income tax returns for the relevant financial year. However, if the amount of TDS on salary charged exceeds what the employee is required to pay in a given year, a refund will be payable and must be included in the returns submitted. In short, the TDS will be adjusted to the tax liability you hold as an assessee for a particular financial year or assessment year.<\/p>\n<h3>How can I be exempt from a TDS deduction by my employer?<\/h3>\n<p>Only if an employee\u2019s expected income falls below the basic exemption ceiling stated as per the Income Tax Slab Rates can he or she be exempt from TDS deduction on salary. Otherwise, every employer is required to deduct TDS from their employees\u2019 wages. Employees who do not have a PAN are likewise subject to this requirement.<br \/>\nThus, we can now conclude that the TDS on salary is an element that is mandatorily deducted by employees based on computing their tax liability arising from the income earned by them in the form of salary or other external incomes. So you must educate yourself and understand how the same is deducted and the basis for such deduction.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>TDS stands for Tax Deducted at the Source from which the income is earned. TDS on salary refers to the tax deduction&#8230;<\/p>\n","protected":false},"author":1,"featured_media":14945,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[4251],"tags":[],"class_list":{"0":"post-7398","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tds"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.1 (Yoast SEO v27.6) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>How to Calculate TDS on Salary under Section 192<\/title>\n<meta name=\"description\" content=\"How to Calculate TDS on Salary under Section 192 - Employer deducts TDS on salary at the employee&#039;s &#039;average rate&#039; of income tax.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.kanakkupillai.com\/learn\/how-to-compute-tds-on-salary\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Calculate TDS on Salary under Section 192\" \/>\n<meta property=\"og:description\" content=\"How to Calculate TDS on Salary under Section 192 - Employer deducts TDS on salary at the employee&#039;s &#039;average rate&#039; 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