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TDS On Salary
Do you know How to Calculate TDS on Salary ? Can you calculate your tax liability by yourself? Although there are so many online calculators available for calculation of tax, but you should know how your income tax is calculated, This is not for your information only. If you consider tax calculation better, you will also be able to tax savings or tax planning.
Here in this article, designed by the team of www.recruitmentinboxx.com, you can get detailed information in concern of Tax Deduction, easy TDS Tax calculation with example. Your total income is not just your salary. Your income can be divided into five parts as:
- Income from Salary
- Income from House property
- Profit or gain from Business or Profession
- Capital gains
- Income from other sources
By combining these five types of income, your total income is calculated:
You can see that the total income is not the only wage. In addition to salary (salaries) you can also get income and you may have to pay tax on it. And you may have to pay tax on different ways (or rates) on different types of income.
TDS On Salary
Keep These Things In Your Mind While Calculating Income Tax:
- You do not have to pay tax on the whole income.
- There may be no tax on your part of income or salaries. Such as part of HRA and Late. Or tax-free bond or PPF or EPF interest.
- After this, you can reduce your tax burden by investing or spending.
- After this, you have to pay tax according to your tax bracket on the income you save.
- Apart from this, some types of income (such as capital gains) are taxed at different rates.
Taxable Income = Gross Income – Exempt Income – Tax Deductions कर योग्य आय = कुल आय – कर मुक्त आय – कर लाभ (टैक्स डिडक्शन) |
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What Is Exempt Income?
I explain with the help of some examples. Have a look:
- Part of your HRA (House Rent Allowance or House Rent Allowance) is tax free. You can find out about how much part is tax free.
- Apart from this, some part of the Leave Travel Allowance (LTA) may also be tax free.
- Until FY2018, you are also tax free from the Conveyance Allowance (Rs 19,200 per month) and Medical Reimbursement (up to Rs 15,000). These two have been removed from FY2019 and replaced with Standard Deduction (Rs. 40,000).
- Meditation You can get the benefit of all these allowances only when it is part of your salary.
- Interest on PPF / EPF Account
- Interest from tax-free bonds etc.
- Savings account interest up to Rs 10,000
- Interest on savings accounts, recurring deposits or fixed deposits for senior citizens (Rs 50,000 tax). This rule will be applicable from FY2019.
Apart from these there can be many types of income which you will not have to pay any tax on. You do not have to pay any tax on such income and your taxable income is reduced.
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You Can Reduce Your Tax Burden By Making Some Investments Or Expenses (Tax Deduction):
- Up to 1.5 lakhs on investing under section 80C (PPF, EPF, ELSS, NSC, life insurance premium payment, home loan principal repayment etc.) Read this post for more information.
- Tax Benefit up to Rs 25,000 on payment of health insurance premium under Section 80D (FY2019 to Rs. 50,000) Read this post for more information.
- On payment of education loan interest under section 80E. Read this post for more information.
- Tax benefit on home loan interest payment under section 24 Read this post for more information.
- An additional tax benefit of 50,000 rupees under Section 80CCD (1B) for investment in NPS. Read this post for more information.
- Tax Benefit under section 80G to make certain donations
After Doing All This, You Have To Calculate Tax According To Your Income Tax Slabs:
Before calculating your tax, you need to know about the slabs rates of tax etc.
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TDS Deduction Rate for Financial Year 2017 – 2018:
The rates of TDS on salaried professionals are calculated according to their income tax slab. Mohan’s monthly income is Rs 70,000 as a gift. That is, the annual income is 8,40,000. On this, Mohan claimed tax rebate of Rs. 1,00,000. In such a case, income of 740,000 will be tax deduction as per income tax slab.
TDS Rate Chart:
Following is the Rates for Tax Deduction at Source for FY 2017-18. Have a look:
| Particulars | TDS Rates (in %) |
| Section 192: Payment of salary | According to Income Slab as specified above |
| Section 192A: Payment of accumulated balance of provident fund which is taxable in the hands of an employee (with effect from 01.06.2015). | 10 |
| Section 193: Interest on securities | |
| a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act; | 10 |
| b) any debentures issued by a company where such debentures are listed on a recognized stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made there under; | 10 |
| c) any security of the Central or State Government; | 10 |
| d) interest on any other security | 10 |
| Section 194: Dividend other than the dividend as referred to in Section 115-O | 10 |
| Section 194A: Income by way of interest other than “Interest on securities” | 10 |
| Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort | 30 |
| Section 194BB: Income by way of winnings from horse races | 30 |
| Section 194C: Payment to contractor/sub-contractor | |
| a) HUF/Individuals | 1 |
| b) Others | 2 |
| Section 194D: Insurance commission | 5 (10% till Assessment year 2016-17) |
| Section 194DA: Payment in respect of life insurance policy | 1 (2% till 31-5-2016) |
| Section 194EE: Payment in respect of deposit under National Savings scheme | 10 (20% till 31-5-2016) |
| Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | 20 |
| Section 194G: Commission, etc., on sale of lottery tickets | 5 (10% till 31-5-2016) |
| Section 194H: Commission or brokerage | 5 (10% till 31-5-2016) |
| Section 194-I: Rent | |
| a) Plant & Machinery | 2 |
| b) Land or building or furniture or fitting | 10 |
| Section 194-IA: Payment on transfer of certain immovable property other than agricultural land | 1 |
| Section 194J: Any sum paid by way of a) Fee for professional services, b) Fee for technical services c) Royalty, d) Remuneration/fee/commission to a director or e) For not carrying out any activity in relation to any business f) For not sharing any know-how, patent, copyright etc. | 10 |
| Section 194LA: Payment of compensation on acquisition of certain immovable property | 10 |
| Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from an SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders. | 10 |
| Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)] | 10 |
| Section 194LBC: Income in respect of investment made in a securitization trust (specified in Explanation of Section 115TCA) | 25% in case of Individual or HUF 30% in case of other person |
| Any Other Income | 10 |
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Tax Applicable For Individuals Below 60 Years:
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
| Up to Rs.2,50,000 | Nil | Nil | Nil |
| Rs.2,50,001-Rs.5,00,000 | 5% | 2% of income tax | 1% of income tax |
| Rs.5,00,001-Rs.10,00,000 | Rs.12,500 + 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 | Rs.1,12,500 + 30% | 2% of income tax | 1% of income tax |
Tax Applicable For Individuals Over 60 Years And Under 80 Years:
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
| Up to Rs.3,00,000 | Nil | Nil | Nil |
| Rs.3,00,001-Rs.5,00,000 | 5% | 2% of income tax | 1% of income tax |
| Rs.5,00,001-Rs.10,00,000 | Rs.10,00 + 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 | Rs.1,10,000 + 30% | 2% of income tax | 1% of income tax |
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Tax Applicable For Individuals Over 80 Years And Above:
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
| Up to Rs.5,00,000 | Nil | Nil | Nil |
| Rs.5,00,001-Rs.10,00,000 | 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 Rs.1,12,500 | Rs.1,00,000 + 30% | 2% of income tax | 1% of income tax |
TDS should be deducted at applicable rates as above along with surcharge and Education Cess.
How To Calculate TDS On Salary?
Here below we have placed an example for tax calculation, you have to look and understand the method of TDS Dedication on salary:
If your taxable income is less than Rs 3.5 lakh, you will also get a tax rebate of Rs 2,500.
Keep in mind that all income taxes are not taxed according to your income tax slab. Like capital gains, tax is charged at a different rate. Just like you will have to pay such tax from FY2019 on the profit on selling equity mutual funds.
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An Example of TDS Deduction
Suppose, your income is 20 lakh rupees.
- You get HRA of 1.5 lakh rupees, out of which 1 lakh is tax free. You do not get any other allowance.
- You had Pay health insurance premium of Rs. 20,000
How Much Do You Have To Pay?
So you have to pay a tax of Rs 2,63,640.
Now suppose, you sold some shares and you got a short term capital gain. You have to pay 15% tax on this and 4% of tax on tax (FY2019). This will increase your tax liability by Rs 7,800.
Note that some of your TDS will also cut your employer. If the extra tax has been deducted in the form of TDS, you can withdraw additional tax by filing income tax return. If the TDS is cut short, you will need to deposit additional tax.
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Final Words:
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