In Companies, Employees are of 2 types

1.Employees On Payroll

2.Employees On Contract

 

Employees on Payroll

It means that Employee has proper job with Company and receiving Salary directly from Company

TDS is deducted in this case as per Income Tax Slab Rate

INCOME

TAX

UPTO 250000

0

250000-500000

10% of (Income-250000)

5000001-1000000

20% of (Income-500000)+25000

>1000000

30% of (Income-1000000)+125000

This we will study in detail in TDS Salary  later

 

Employees On Contract

It means Employee is working with Company for a limited period and does not have proper job

Salary received in this case is taxable under 194 C or 194 J

 

Section 194 C @ 1% is for Blue Collared Employees i,e. Employee doing Manual Work like peon, guard, driver, delivery boy etc)

Or

Section 194 J @ 10% (For White Collared Employees like Accountant,Sales Executive,HR, Admin etc)

 

Salary paid to employees.jpg

 

 

 

Employees  Name

Designation

 

Contract

 

Monthly Salary

 

Annual Salary

 

Covered in

 

TDS @

 

A

Accountant

 

Contract

 

10,000

 

1,20,000

 

View Answer
View Answer

B

 

Driver

 

Contract

 

10000

 

120000

 

View Answer
View Answer

C

 

Peon

 

Contract

 

6,000

 

72,000

 

View Answer
View Answer

 

Employees

Name

Designation

 

Salary

 

TDS @

 

P

Accountant

 

14000

 

View Answer

Q

 

Delivery Boy

 

14000

 

View Answer

 

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
  • hem1717's image

    Hi Respected Team There! In the given chart why TDS shown exempted on peon's salary as it's salary is less than 1,00,000 P.A. while not exempted in driver's case and it's TDS @1 % while his salary is also less than 1,00,000 P.A. (Both are blue collared jobs under contract)? Again in last table , on accountant's & driver's salary; TDS @ 10% and TDS@ 1% have been deducted under sec 194J and sec 194C respectively while theirs salary is less than 1,00,000 P.A. Pls Clarify.

     

    Thanks in advance!

     

    View answer