Income Tax Filing
Know all about TDS on Salary under Income Tax Act1961. Depending on the source, the tax deduction is a means of levying income tax, dividend or sale of assets, which deducts the tax from the taxpayer before the arrears are paid. In
Who is responsible for deducting TDS from salary?
Pursuant to Section 192, each person responsible for the payment of any income applicable to tax under the heading “income from salary” is liable to deduct TDS on the amount payable.
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What is the method of TDS deduction?
Under Section 199 of the Income-tax Act, the assessor has to calculate the average income-tax on the basis of the rate applicable for the amount to be paid based on the estimated total income.
Therefore, the obligation to deduct TDS in case of payment arises only at the time of payment. The average rate of income tax rate means that the rate divided the amount of income tax received based on total income divided by such national income.
We can say that TDS must be calculated considering the existing slab rate. According to the Finance Act 2020, the employee has the option to choose the old rate or the new rate as per Section 115 BAC which is further discussed in the article.
If the assessee is employed under more than one employer or the assessee joins another employer in the financial year after the former employer resigns or retires, he may submit under the head of income statement “salaries” paid by the assessee from the previous employer or Received/
If any other details related to this national salary are given to the TDS and the current employer, then the subsequent employer must consider this information and then deduct the fee payable from both the employers for the corresponding financial year with the consent of the employee.
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In order to deduct TDS from the salary payable in foreign currency, the value of a salary in rupee terms has to be calculated at the rate of exchange prescribed in section 2 rule of the Income Tax Act, 1922.
The employer must send the following, determining that there is salary income in addition to other taxable income for that financial year:
A. Details of this national income
B. Details of tax deduction under any other provision
C. If there is a description of the loss under the heading “Income from home property”
The employer will consider the above details while calculating the TDS.
Is there any requirement to get a deduction or proof of income from an employee?
Yes, there is a need to get proof of discount or income from the employee. The person responsible for the payment of income under the heading "Income from salary" is liable to collect evidence or any other statement relating to the claim or exemption considered with the set-up of loss under these provisions. Or TDS should be made in the prescribed form and manner for the purpose of calculation.
Rule 26C has been inserted in the Income Tax Rules 1962, effective from 1 June 2016, stating that proof of claim will be submitted to the person responsible for payment under Form No. 19 under filed by an employee. For the purpose of calculating his income or calculating his income or source of tax deduction 12BB:
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S. Proof of the need for the nature of any claim
1 House rent allowance is the name, address and PAN of the zamindars where the total rent paid for the year exceeds Rs.1 lakh rupees
2 Evidence of travel waiver or renunciation of assistance
3 Name, address and PAN of the interest rate deductible for a housing loan under the heading "Income from home property"
Chapter 4 Proof of discount or investment or expenditure under VIA
What is the meaning of section 115BAC?
In order to make taxes easier for the people, Budget 2020 has introduced a new tax system under Section 115BAC. This new tax system has given individuals and HUF taxpayers an option to pay income tax at a lower price.
The new tax rates will be applicable for income earned in FY 2010-2011. These new tariffs were proposed for those who wished to disregard certain discounts or rebates when calculating total income for tax purposes and when paying tax at a lower rate.
According to the department, 115BAC employers must take an announcement from the employee. An employee who earns income other than "profit and profit from business or profession" and wishes to take up the option of discount rate under section 114 BAC of this Act, must have his employer as his employer, for this purpose every previous year and so on.
Upon investigation, the cutter calculates his total income and makes TDS in accordance with the provisions of Section 115BAC of this Act.
If such national investigation is not carried out by the employees, the employer will make TDS without considering the provisions of Section 115BAC of this Act. The employer has to deduct TDS considering the old slab rate.
No alternative application should be made in the case of sub-section (5) of section 115 BAC of this Act and the person has to do so in addition to the return under sub-section (1) of section 139 of the Act for the previous year. Thus, it is covered under sub-section (1) of section 139 of the Act
The option at the time of filing the income return may differ from the investigation made by such an employee to the employer for the previous year.
