TDS on Flat Salary

Tax Practical
Practical Payroll (TDS Salary,PF,ESI)

For Salaried Employees,We do not deduct TDS at Flat Rate of 10%/1% etc

We first calculate Annual Tax as per Income tax slab rate and divide it by 12

Following Steps are Involved

1. Take Monthly Salary of Employee
2. Calculate Annual Salary by Multiplying by 12
3. Reducing Standard Deduction
4. Calculating Income from Salary(After Standard Deduction)
5. Calculate Tax,Rebate and Net Tax
6. Calculate Cess
7. Tax+Cess
8. Divide it by 12 to get Monthly TDS

STANDARD DEDUCTION FOR SALARIED EMPLOYEES

FY 2017-18

No Standard Deduction was available

FY 2018-19

Employees  get a Standard Deduction of 40000 per annum, Hence,their Income will be reduced by 40000 while calculating tax

FY 2019-20

Now all Employees will get a Standard Deduction of 50000 per annum, Hence,their Income will be reduced by 50000 while calculating tax

Example

 PARTICULARS FY 2017-18 FY 2018-19 FY 2019-20 MONTHLY SALARY 30000 30000 30000 ANNUAL SALARY 360000 360000 360000 STANDARD DEDUCTION 0 40000 50000 INCOME FROM SALARY 360000 320000 310000

Slab Rate for F.Y  2019-20

 INCOME TAX UPTO 250000 Nil 250000-500000 5% of Income Greater than 250000 500000-1000000 20% of Income Greater than 500000+12500 >1000000 30% of Income Greater than 1000000+112500

There is Rebate of  12500 if Income between 250000-500000

Standard Deduction of 50000 p.a is available to salaried Person.

Lets study this step by step

Calcualtion of Tax

Calculation of Rebate

FY 2019-20

If Income between 250000-500000,Then 12500 Rebate is now available

Rebate cannot be more than tax

(Earlier,if income was between 25000-350000,there was 2500 Rebate)

Example 1

Suppose an Employee gets a Salary of 15000 per month.

What is Income Tax Payable by him?

Example 2

Suppose an Employee gets a Salary of 35000 per month.

What is Income Tax Payable by him?

Example 2 Continue

What is monthly TDS to be deducted in this case?

Example 3

Suppose an Employee gets a Salary of 75000 per month.

What is Income Tax Payable by him?

Example 3 Continued

What is monthly tax to be deducted in this case?

Assignment

Complete the following table in Excel

 Particular Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 Case 7 MONTHLY SALARY 10000 25000 30000 40000 50000 100000 22000 ANNUAL SALARY LESS STANDARD DEDUCTION NET ANNUAL SALARY TAX REBATE NET TAX CESS 4% TAX+ CESS MONTHLY TDS NET SALARY