Mar 14
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How to Calculate TDS on Salary – TDS
The CTC quoted to you at the time of joining includes components such as basic salary, travel allowance, house rent allowance, medical allowance, dearness allowance, special allowances and other allowances. The CTC is divided into two major categories: salary and perquisites. Perquisites, or perks as they are popularly called, include facilities and benefits provided by the employer towards expenses such as traveling, canteen and fuel subsidy, hotel expenses and so on.
TDS Rate Chart :
Rates for Tax Deduction at Source for FY 2017-18
| Particulars | TDS Rates (in %) |
|---|---|
| Section 192: Payment of salary | According to Income Slab as specified above |
| Section 192A: Payment of the accumulated balance of provident fund which is taxable in the hands of an employee (with effect from 01.06.2015). | 10 |
| Section 193: Interest on securities | |
| a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act; | 10 |
| b) any debentures issued by a company where such debentures are listed on a recognized stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made there under; | 10 |
| c) any security of the Central or State Government; | 10 |
| d) interest on any other security | 10 |
| Section 194: Dividend other than the dividend as referred to in Section 115-O | 10 |
| Section 194A: Income by way of interest other than “Interest on securities” | 10 |
| Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort | 30 |
| Section 194BB: Income by way of winnings from horse races | 30 |
| Section 194C: Payment to contractor/sub-contractor | |
| a) HUF/Individuals | 1 |
| b) Others | 2 |
| Section 194D: Insurance commission | 5 (10% till Assessment year 2016-17) |
| Section 194DA: Payment in respect of life insurance policy | 1 (2% till 31-5-2016) |
| Section 194EE: Payment in respect of deposit under National Savings scheme | 10 (20% till 31-5-2016) |
| Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | 20 |
| Section 194G: Commission, etc., on sale of lottery tickets | 5 (10% till 31-5-2016) |
| Section 194H: Commission or brokerage | 5 (10% till 31-5-2016) |
| Section 194-I: Rent | |
| a) Plant & Machinery | 2 |
| b) Land or building or furniture or fitting | 10 |
| Section 194-IA: Payment on transfer of certain immovable property other than agricultural land | 1 |
| Section 194J: Any sum paid by way of a) Fee for professional services, b) Fee for technical services c) Royalty, d) Remuneration/fee/commission to a director or e) For not carrying out any activity in relation to any business f) For not sharing any know-how, patent, copyright etc. | 10 |
| Section 194LA: Payment of compensation on acquisition of certain immovable property | 10 |
| Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from an SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders. | 10 |
| Section 194LBB: Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)] | 10 |
| Section 194LBC: Income in respect of investment made in a securitization trust (specified in Explanation of Section 115TCA) | 25% in case of Individual or HUF 30% in case of other person |
| Any Other Income | 10 |
TDS Deduction Rate for Financial Year 2017 – 2018
Tax applicable for individuals below 60 years
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
|---|---|---|---|
| Up to Rs.2,50,000 | Nil | Nil | Nil |
| Rs.2,50,001-Rs.5,00,000 | 5% | 2% of income tax | 1% of income tax |
| Rs.5,00,001-Rs.10,00,000 | Rs.12,500 + 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 | Rs.1,12,500 + 30% | 2% of income tax | 1% of income tax |
Tax applicable for individuals over 60 years and under 80 years
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
|---|---|---|---|
| Up to Rs.3,00,000 | Nil | Nil | Nil |
| Rs.3,00,001-Rs.5,00,000 | 5% | 2% of income tax | 1% of income tax |
| Rs.5,00,001-Rs.10,00,000 | Rs.10,00 + 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 | Rs.1,10,000 + 30% | 2% of income tax | 1% of income tax |
Tax applicable for individuals over 80 years and above
| Annual Income | Tax Rates | Education Cess | Secondary and Higher Education Cess |
|---|---|---|---|
| Up to Rs.5,00,000 | Nil | Nil | Nil |
| Rs.5,00,001-Rs.10,00,000 | 20% | 2% of income tax | 1% of income tax |
| Above Rs.10,00,000 Rs.1,12,500 | Rs.1,00,000 + 30% | 2% of income tax | 1% of income tax |
How do I calculate TDS on my salary?
While the basic salary is fully taxable according to respective tax bracket, some exemptions are available for payments made as allowances and perks. You can calculate TDS on your income by following the below steps.
- Calculate gross monthly income as a sum of basic income, allowances and perquisites.
- Calculate available exemptions under Section 10 of the Income Tax Act (ITA). Exemptions are applicable on allowances such as medical, HRA, travel.
- Reduce exemptions according to step (2) for the gross monthly income calculated in step (1).
- As TDS is calculated on yearly income, multiply the corresponding figure from above calculation by 12. This is your yearly taxable income from salary.
- If you have any other income source such as income from house rent or have incurred losses from paying housing loan interests, add/subtract this amount from the figure in step (4).
- Next, calculate your investments for the year which fall under Chapter VI-A of ITA, and deduct this amount from the gross income calculated in step (5). An example of this would be exemption of up to Rs.1.5 lakh under Section 80C, which includes investment avenues such as PPF, life insurance premiums, mutual funds, home loan repayment, ELSS, NSC, Sukanya Samriddhi account and so on.
- Now, reduce the maximum allowable income tax exemptions on a salary. Currently, income up to Rs.2.5 lakhs is fully exempt from paying taxes, while income from Rs.2.5 lakhs to Rs.5 lakhs is taxed at 10%, and Rs.5 lakhs to Rs.10 lakhs income bracket is taxed at 20%. All income above this amount is taxed at 30%.
- Do note that senior citizen have different tax slabs and receive higher exemptions than those discussed above.
