TDS

TDS on salary is governed by Section 192 of the Income Tax Act, 1961. Employers are required to estimate each employee's total taxable income for the financial year, apply the applicable income tax slab rates, and deduct TDS on a monthly basis. The deduction is based on the employee's projected annual salary after accounting for declared exemptions (HRA, LTA, standard deduction of INR 50,000) and deductions (Section 80C up to INR 1,50,000, 80D, 80G, etc.). Employees submit investment declarations to the employer at the beginning of the year and provide actual proof before March 31. Employers must deposit TDS by the 7th of the following month (or 30 April for March deductions) and file quarterly TDS returns in Form 24Q. By May 31 of the following year, employers must issue Form 16 to all employees, which serves as their salary TDS certificate and is used to file individual income tax returns. Failure to deduct or remit TDS results in interest and penalties under Sections 201 and 234E.

What is Form 16 and who issues it?

Form 16 is a TDS certificate issued by the employer to the employee by May 31 each year. It contains details of salary paid and TDS deducted during the financial year. Employees use Form 16 to file their personal income tax returns. It has two parts: Part A (TDS summary) and Part B (salary breakup and deductions).

When must TDS on salary be deposited in India?

TDS deducted from employee salaries must be deposited with the government by the 7th of the following month. For TDS deducted in March, the due date is April 30. Late deposit attracts interest at 1.5% per month under Section 234E.