Article
What is the section of TDS on salary?
As per Income Tax Act, 1961, TDS is deducted under Section 192. If you are a salaried person, your employer is required to deduct TDS from the salary payable to you. The major reason behind this is, your salary is categoried as income under the salary head. TDS is deducted on an average rate of income tax based on the prevailing rate during a given financial year.
Who is eligible to deduct TDS on Salary?
Listed below are some of the employers who can deduct TDS –
- Individuals
- HUF (Hindu Undivided Family)
- Partnership Firms
- Companies
- Co-operative societies
- Trusts
- Artificial Judicial persons
To apply for Section 192 of the Income Tax Act, 1961, there should be an employee-employer relationship, in the absence of which the liability of TDS does not arise. However, this does not include any payment made by one person to another voluntarily.
Unlike the provisions of other TDS Sections in the Act, as per Section 192, income tax needs to be deducted at the time of payment of salary and not at the time of accrual of salary. Also, the employer is required to deduct TDS if he pays the salary in advance or any arrears, if the estimated salary of an individual does not exceed the minimum taxable income, then, in that case, there is no need to deduct TDS.
Once the employer deducts TDS, he is required to deposit it to the Government. If the employer deducts the TDS but fails to deposit it to the Government, the employer will be considered a defaulter. As per Section 191 of the Income Tax Act, 1961, if an employer does not deduct the TDS, then the employee is liable to pay his own tax due. In case, the employer does not deduct and remit the TDS, the expenses related to the salary payment will be disallowed as expenditure for the employer, which in turn will increase the income tax liability of the employee.
The due date for completing and filing tax audit report under section 44AB of Income Tax Act, 1961 is 30th September of the relevant assessment year. Therefore, if a taxpayer gets tax audit, then he/ she is supposed to file income tax return on or before 30th September along with the tax audit report. In case the taxpayer is also liable for transfer pricing audit, then the due date for filing tax audit report is 30th November of the relevant assessment year.
It goes without saying that the Income Tax Return is required to be filed as per the prescribed due dates. Failure to do so, will invite, late filing fees under Section 234E of the Income Tax Act, 1961.
