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Section 192B of the Income Tax act – TDS on Salary Payment

section 192b tds on salary
Section 192b tds on salary under the income tax act

Introduction: Section 192B Tds on salary

Income Tax act has made mandatory for employers to deduct Tax at source (TDS) on payment made to employees. As per Income Tax act, Section 192B TDS on salary, any person responsible for paying any income charged or treated under the “Salary” head shall deduct income tax on such payments. 

When to deduct TDS on Salary?

Section 192 of the Income tax act had made compulsory for every employer or person who is responsible for payment of salary shall deduct income tax as TDS on salary payment, if the the total estimated income of employee after availing deductions exceeds the basic exemption limit in force for that financial year.

The application of TDS on salary payment should be made when estimated income of the employee exceed income tax exemption limit.

Rate of TDS on Salary

As per section 192(1B), a employer or person shall deduct income tax on salary at the average of income tax calculated on the income chargeable under the head “salaries” including the perquisites received in the financial year and tax shall be computed on the basis of the tax rates in force for the financial year.

Inclusion of other Income other than salary for TDS deduction

Also when an employee has any additional income under any other head of income i.e. head other than the salary (not being a loss under any such head other than the loss under the “Income from house property” for the same financial year, the employee may send to the employer or person who is making payment of salary the particulars of –

a. such other income and any tax deducted thereon

b. the loss, if any, under the head “Income from house property”

The particulars of other income shall be submitted in such form and verified by the employer or person responsible for payment of salary. Such person shall take into account such income and loss in calculation of TDS to be deducted. 

Such person must obtain the particulars as proof of prescribed claims (including claim for set off of house property loss) in such form or manner as may be prescribed.

In simple, tds on salary should be deducted at rate of income tax on estimated total income of employee computed after all eligible deductions and exemptions.

Calculation of Rate of TDS on salary

For eg: Mr X (an employee) have estimated gross total income from salary (including all perquisites and allowances) for Financial Year 2017-18 as Rs 630000 and have income from house property as Rs 260000 (after section 24 deductions), deduction claimed for Rs 140000.

calculation of TDS rate on salary:

The total income chargeable for tax = 630000 + 260000-140000 i.e. Rs 750000.

Total tax payable on such income= 62500 + 1875 (3% cess) = 64375.

Average TDS Rate on salary = Total tax payable / total salary income * 100 = 64375 / 630000 *100 = 10.22%

The employer shall deduct income tax as tds on salary at 10.22% for the financial year 2017-18.

Computation of Salary Income:

The total income under salary will be calculated as follow:

For in detail Computation of Salary Income – click here

Particulars Amount
Basic Salary xxx
Commission xx
Bonus xx
Dearness Allowance xx
Annuity xx
Fee xx
City compensatory, Overtime allowance xx
Servant allowance xx
Entertainment allowance (For Govt. employees exempted up to Rs 5000) xx
House Rent allowance (less) HRA exempted xx
Car allowance (less) exempted car allowance xx
Special allowances like travelling and uniform etc xx
any other allowances received during the year xx
Add: all Perquisites less eligible exemption xx
Add: all retirement benefits received xx
Provident Fund
Leave salaries, etc

For in detail Computation of Salary Income – click here

When employee employed under more than one employer:

If an employee, during the financial year employed simultaneously under more than one employer, or where he has held successively employment under more than one employer, he may furnish to the current employer the details of salary received from previous employers or other employers and tax deducted thereon by them

The current employer shall verify such information and take into the account while calculating tds on salary.

For more details on Section 192b Tds on salary – click here


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