What is TDS on Salary?
- TDS on Salary is the income tax on salary. It is also termed as withholding tax. Salary or the payment made by an employer to an employee can be bifurcated into two parts – Salary and Perquisite/Perks.
- Salary is purely the amount paid to the employee by his/her employer; while perquisites are the facilities and benefits enjoyed by the employee while providing the service to the organization.
According to Section 10 of Income Tax Act, some portion of allowances and perks are exempted from taxation. For instance – Upto Rs. 800/- per month is exempted on conveyance allowance, HRA exemption, etc.
The tax which is deducted as Tax Deducted at Source on Salary from an employee’s salary is reflects in Form 16. It is issued by the employer at the end of the financial year. Moreover, the employee/ taxpayer can check the details of TDS deducted and deposited by his/her employer.
After verifying his/her details through Form 26AS the taxpayer can easily check the details online. If the employee’s income is less than the income mentioned in tax slab then, he/she is not liable to pay income tax, in that case TDS will not be deducted from his/her income.
If the taxpayer is an employee with more than one employer, it may happen that the taxpayer has switched job and joined a new organization, then he/she must furnish a statement in Form 12B (Form 12B is an income tax form, which should be furnished by an employee who has changed job, the main purpose of this form is to give your current employer, your income details from your previous job. Furnishing Form 12B is not compulsory.) Based on the provided information the new employer will deduct TDS on Salary.
How can I lessen TDS on Salary?
- It is mandatory to deduct TDS on salary if the employee’s income exceeds the tax limit.
- Under Section 80C and 80D, the government allows tax exemptions, where a taxpayer can claim an exemption based on his/her various investments in that financial year.
- It is mandatory for an employer to obtain declaration/proof from the individual to approve their tax exemption.
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