TDS on Salary u/s 192: Applicability and Calculations

TDS or Tax Deduction at Source is the amount deducted by employers from salary and deposited with the government on behalf of the employees. The Income Tax Act states that the employer is liable to deduct TDS on salaried income based on the applicable slab rates.

In this blog, we will discuss what is TDS on salary under Section 192 of the Income Tax Act, 1961.

What is TDS on Salary under section 192?

Section 192 of the Income Tax Act, 1961 provides that every person responsible for paying any income which is chargeable under the head ‘salary’, shall deduct income tax on the estimated income of the assessee under the head salaries.

The tax is required to be calculated on the basis of the tax slab and the deduction is made at the time of the actual payment.

TDS on Salary is required to be deposited in the government account and a certificate of deduction of tax at source (also referred as Form No.16) is issued to the employee and the employer/deductor is required to prepare and file quarterly statements in Form No.24Q with the Income-tax Department.

Who can Deduct TDS under Section 192?

TDS under section 192 is required to be deducted by any person responsible for making salary payments at the prescribed average rate of tax on the estimated total income of the assessee.

For the various categories of employers, the persons responsible for making payments under the head salaries and for deduction of tax are as below:

When is TDS Deducted under Section 192?

Section 192 for TDS on Salary states that tax shall be deducted at source at the time of actual payment of salary to the employee. Thus, when advance salary and arrears of salary have been paid, the employer has to take the same into account while computing the tax-deductible.

The table below provides TDS on the salary slab (Old Tax Regime for FY 2023-24):

The table below provides TDS on the salary slab (New Tax Regime for FY 2023-24) (Section 115 BAC):

Time Limit for TDS Deposition

Given below is the table for TDS deposition time limit for each quarter,

TDS Return Filed by Employer

Form 24Q is a quarterly statement that encompasses the details of salary paid to the employees for deducting the TDS under section 192.

Form 24Q consists of 2 annexures,

In Annexure I, only the actual figures for the relevant quarter are to be reported.

In Annexures II & III estimated/actual particulars for the whole financial year are to be given. However, Annexure II & III are optional in the return for the 1st, 2nd, and 3rd quarters but in the quarterly statement for the last quarter, it is mandatory to furnish Annexure II & III giving actual particulars for the whole financial year.

TDS Certificate

Every person deducting tax at source is required as per Section 203 to furnish a certificate to the payee to the effect that tax has been deducted along with certain other particulars.

In the case of employees receiving salary income including pension, the certificate has to be issued in form No.16. Form 16 contains Part A and Part B. Part A of Form 16 pertains to tax deposited while Part B of Form 16 pertains the salary breakup as well as the deductions claimed by the employees.

However, there is no obligation to issue a TDS certificate in case tax at source is not deducted /deductible by virtue of claims of exemptions/ deductions.

The employer is required to provide Form 16 to the employee containing the details of salary such as the amount paid and tax deducted. This can also be accompanied by Form 12BA, to show particulars of perquisites, and profits in lieu of salary.

Fees and Penalties for Late/Non-Filing of TDS u/s 192

As per Section 234E, a taxpayer is required to pay a late fee of INR 200 per day, for non-filing of TDS Return u/s 192. It must be noted that the penalty should not exceed the TDS amount for which statement filing was required.

In Case TDS is not deducted at the time of payment of salary, an interest of 1% per month shall be applicable from the date on which tax becomes deductible until the date it is actually deducted.

Moreover, if the TDS is not deposited on time before the 7th of next month in which TDS is deducted, an interest at the rate of 1.5% per month is applicable from the date of deduction until the deposit date.