I could not understand the deducted TDS amount when I was looking at my salary slip the other day. So I asked my employer about the TDS deduction on salary the next day. He told me that all the employers who are paying a salary income to their employees need to deduct TDS from their salary income if it’s more than the basic exemption limit.
This is why every employer has to deduct from the salary of the employee before crediting the same to the employee. I hope now you know what is TDS deduction in salary.
How much TDS is deducted on salaryThere isn’t any specified rate of TDS deduction from salary income according to the present income tax laws. The tax rate depends on the income tax slabs applicable on the employee’s taxable income.
The tax liability is calculated by the employer on the 'Average rate of Income Tax'.
Let me explain how the calculation of the average rate of income tax is done:
| Particulars | Income Tax Payable (in Rs) (FY 2018-19) |
Salary income |
10 Lacs |
Minus: Deductions (according to the declaration deposited by the employee) |
1.5 Lacs |
Net taxable income |
8.5 Lacs |
Tax payable |
82,500 {i.e. (5% of 2.5 lacs) + (20% of 3.5 lacs)} |
Plus: Education and Health Cess at 4 percent |
3,300 (i.e. 82500 x 4%) |
Total Tax Liability (including cess) |
85,800 |
Average rate of income tax {i.e. Tax liability/total income) x 100{ |
8.58% (i.e., (85,800/10 Lacs) x 100 |
Please note while deducting TDS on income other than salary such as professional income, interest income, etc., TDS is deducted at a flat rate, and calculation of cess isn’t taken into consideration.
This is why TDS at the rate of 8.58% would be deducted from the monthly salary income and then the employee would receive the net salary income. Now, you know on how much salary TDS is deducted.
Check Out Government’s TDS Calculator
Read more:
When TDS is applicable on salary?
I hope all your doubts regarding the TDS deduction on salary get cleared now.
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Authors Of The Question
How much TDS is deducted on salary?
Damini
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2 Year
2022-01-06T10:24:29+00:00 2022-01-06T18:02:47+00:00Comment
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