Salary income is subject to TDS deduction under section 192B. Employer deducts a portion of your salary every month and pays it to the Income Tax Department on your behalf. Based on total salary for year and investments in tax-saving schemes submitted by employee, employer determines how much TDS has to be deducted from your salary each month. The TDS deducted by the employer will reflect in form 26AS of the employee. Upon deduction of TDS by the employer, he will provide you with a TDS certificate called Form 16 in the next financial year showing you how much tax was deducted each month.
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What is TDS on Salary?
TDS has to be deducted by an employer who is responsible for paying any income chargeable under head ‘Salaries’. TDS has to be deducted at the average rate of Income-tax computed on the basis of rates in force for that financial year. There is no tax on salary if the annual salary of employee is below maximum amount not chargeable to tax.
1. What deductions and exemptions are allowed for TDS calculations?
Ans: The employer shall take into consideration the following exemptions applicable under Section 10 (HRA, Standard deduction, other allowances exempt from tax) and Deductions allowed under Chapter VI-A (Section 80C to 80U). Employer shall obtain evidences from the employee for allowing exemptions and deductions under income from salary.
2. Whether other income of employee needs to be considered for calculation of TDS?
Ans: If the employee provides the details of his other income, then it is employer responsibility to consider the same in his TDS calculation. Tax shall not be reduced in any case except due to the losses from house property. The tax to be deducted from employee’s salary shall not be less than the amount of tax calculated as if other income and tax deducted thereon have not been taken into account.
What is Form 16?
As already said, upon deduction of TDS by the employer, he will provide you with a TDS certificate called Form 16 in the next financial year showing you how much tax was deducted each month.
Form 16 comprises of Part A and Part B.
Part A of Form 16:
Employer will generate Part A of Form 16 through the TRACES portal after authenticated for the correctness of its contents. It is important to note that if you change your job in one financial year, every employer will issue a separate Part A of Form 16, for the period of employment.
Following are some of the components of Part A:
a. Details of the employer
b. TAN & PAN of employer
c. PAN of the employee
d. Summary of tax deducted & deposited quarterly by the employer
Part B of Form 16:
Part B of Form 16 is an annexure to Part A. If you change your job in one financial year, then it is for the employee to decide whether Part B of the Form 16 required from both the employers or from the last employer.
Following are some of the components of Part B are:
a. Salary breakup
b. Chapter VIA Deductions allowed under the income tax act.
c. TDS deducted details
1. How to get Form 16?
Ans: You can get your Form 16 from your employer and it cannot be downloaded from anywhere.
2. Can file ITR without Form 16?
Ans: Yes, can be filed with the help of pay slips, Form 26AS and deductions available.
3. Is it required to issue a Form 16 if there is no TDS for the employee?
Ans: No, it is not mandatory to issue if no TDS for the employee.
4. Is it mandatory to issue Form 16 by employer?
Ans: If the employee is subject to TDS, then it is mandatory as part of employer to deduct TDS.
What is Form 26AS?
It a statement showing the details of tax deducted on your income by deductors/ collectors and the details advance tax, self-assessment tax paid. It will also shows the details of regular assessment tax paid by the taxpayers, details of refund received etc.
Form 26AS can be viewed from TRACES portal