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

Slab Rate 1.jpg

 

 

 

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?

Answer

Monthly Salary=15000

Annual Salary=180000

Since Salary is less than 250000,no income tax is payable

 

 

 

Example 2

Suppose an Employee gets a Salary of 35000 per month.

What is Income Tax Payable by him?

View Answer

Example 2 Continue

What is monthly TDS to be deducted in this case?

View Answer

 

Example 3

Suppose an Employee gets a Salary of 75000 per month.

What is Income Tax Payable by him?

View Answer

Example 3 Continued

What is monthly tax to be deducted in this case?

View Answer

 

 

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              

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View Answer
  1. Tax Practical
  2. Practical Payroll (TDS Salary,PF,ESI)

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 9 years. He also provides Accounts Tax GST Training in Delhi and Pune.