TDS on salary revenue is dealt with in Section 192. It requires any contractor to withhold TDS on payroll payments if the worker’s salary reaches the basic exemption cap.

This segment affects the majority of salaried people in India. We will clarify all of the relevant TDS requirements under Section 192 in this document.

Section 192 requires any contractor who pays a wage to an individual (resident or non-resident) to withhold TDS on a monthly basis.

The employer here means :

Section 192
  • Individual
  • HUF
  • Firm
  • Company
  • Trusts
  • AOP, BOI
  • Local Authority
  • Every Artificial judicial person

The existence of an employer-employee arrangement is a necessary prerequisite for TDS deduction under Section 192.

TDS is expected to be withheld by the employer only at the point of salary payment where an employee’s taxable income (i.e. Gross Total Income minus Deductions under Chapter VIA) approaches the minimum exclusion cap, which really is.

– Rs. 2,50,000/- in case age is below 60 years

– Rs. 3,00,000/- in case age is 60 years or more but below 80 years

– Rs. 5,00,000/- in case age is 80 or above

TDS is expected to be withheld by the employer only at the point of payroll in the case of advanced compensation and arrears of salary.

TDS is expected to be deducted on wages even though the employee doesn’t really have a PAN if the salary crosses the minimum exclusion cap.

TDS rate under section 192

TDS is measured in this section based on the projected income received over the year at an assumed tax rate. Unlike all other parts of TDS under Income Tax, Section 192 does not include a fixed rate of TDS. To calculate the TDS figure, divide the projected gross tax burden on those estimated wages by the number of months of jobs.

How to calculate tax deduction under section 192?

The below aspects must be remembered when calculating TDS on salaries.

  • Benefit apart from wages, such as rent income, shall be accepted by the employer for the purpose of calculating TDS on salary if reports of such income are requested by the employee.
  • If proof is provided in Form 12BB by the employee, interest on home loan (if any) up to Rs. 2,00,000/- will be deducted from salary earnings to reach projected income for the intent of TDS estimation.
  • It is also common for employers to make contributions in order to profit from tax breaks, i.e. to reduce their tax liabilities. However, since the employer is unaware of the investment, the TDS balance exceeds the real tax obligation. In those situations, you will use Form 12BB to remind your boss of all of your tax-saving contributions. When your boss notices this, he or she will take these savings into account and measure your TDS accordingly.