Compliance With TDS & TCS - Section 192

Tax Deducted at Source (TDS) is a crucial part of India's tax system. It ensures timely collection of taxes and helps prevent tax evasion by deducting taxes at the source of income. This blog explains the TDS mechanism in detail, focusing on deduction and collection at source, with individual tables for major TDS sections and descriptions.

If payee does not furnish his PAN to the payer, the TDS rate shall be - [Sec206AA]

• Rate as per respective section
  OR

• Rate @ 20%
  [whichever is higher]

1. Section 192

Scenario:

Mr. Manish works for MNO Pvt. Ltd. and earns a monthly salary of ₹95,000. His annual salary comes to ₹11,40,000 (₹95,000 x 12). He has also submitted investment proofs under Section 80C (like PPF, LIC) totaling ₹1,50,000.

Let’s calculate TDS:

FY 2024-25

OLD REGIME

Step 1: Calculate Total Taxable Income

Annual Salary: ₹11,40,000
Less: Deductions under Section 80C: ₹1,50,000
Net Taxable Income: ₹9,90,000

Step 2: Compute Tax Liability:

Up to ₹2.5 lakh: Nil
₹2.5 lakh – ₹5 lakh: 5% = ₹12,500
₹5 lakh – ₹9.9 lakh: 20% on ₹4.9 lakh = ₹98,000
Total Tax = ₹12,500 + ₹98,000 = ₹1,10,500
Add 4% CESS = ₹4,420
Total Tax Payable = ₹1,14920

Step 3: Monthly TDS Deduction

Since the company pays salary monthly, TDS is spread over 12 months.
Monthly TDS = ₹1,14920 ÷ 12 = ₹9,576.67 ≈ ₹9577

NEW REGIME

Step 1: Calculate Total Taxable Income

Annual Salary: ₹11,40,000
Less: Deductions under Section 80C: NIL
Net Taxable Income: ₹11,40,000

Step 2: Compute Tax Liability:

Up to ₹3 lakh: Nil
₹3 lakh – ₹7 lakh: 5% = ₹20,000
₹7 lakh – ₹10 lakh: 10% on ₹3 lakh = ₹30,000
₹10 lakh – ₹11.4 lakh: 15% on ₹1.4 lakh = ₹21,000
Total Tax =₹20,000 + ₹30,000 + ₹21,000 = ₹71,000
Add 4% CESS = ₹2,840
Total Tax Payable = ₹73,840

Step 3: Monthly TDS Deduction

Since the company pays salary monthly, TDS is spread over 12 months.
Monthly TDS = ₹73,840 ÷ 12 = ₹6,153.33 ≈ ₹6,154

• Employer required to deduct TDS only at the time of Payment.

• If employee intend to opt section 115BAC & submitted declaration to employer, then employee shall deduct TDS considering provisions of sec 115BAC.

• Employer shall consider details of other income & deduction of employee if furnished by employee. Employee has to submit evidences of such deductions, exemptions & losses.

• Employer shall not consider losses of employee except loss under the head house property.

• If employer bear the tax on non-monetary perquisites, then this need not be deducted from the salary of the employee. Amount borne shall not be allowed to employer u/s 40(a)(v) and the same will be exempted in the hands of employee u/s 10(10CC). Also, the tax so borne will be treated as TDS in the hands of employee and credit of the same can be availed by employee.

• Where the employee has worked with more than 1 employer during the year or employee changed the job during the year, he may furnish the details of his salary & TDS deducted by one employer to other/current employer.

• Where firm pays salary to partner, section 192 is NOT attracted as it is taxable in hands of partner under the head Business/Profession.

2. Section 192A

• TDS required to be deducted only at the time of payment.

• No need to deduct TDS if aggregate amount of payment is less than ₹50,000.

• If the employee does not furnish his PAN, TDS should be deducted at MMR.