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Employees get certain tax benefit in form of Savings and Declarations

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 These are to be intimated to company and Company will deduct TDS after taking into account such savings.

However, if employee failed to submit proofs to company, then company will not take into account such Savings and will deduct higher TDS

Employee can in this case claim such savings at the time of filing ITR

Example 1

Suppose Employee has Annual Income from Salaries of 400000.He also has Interest Income on FD of 6000 He also has Investment in Mutual Fund of 40000 which is available for deduction in Section 80C

What is TDS to be deducted by company if

Case 1

He informs company about Interest Income and  Deduction in Section 80C

Case 2

He does not inform company about Interest Income and  Deduction in Section 80C

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Case 1 2
ANNUAL SALARY 400000 400000
Add    
OTHER INCOME 6000 0
GROSS TOTAL INCOME 406000 400000
Less    
DEDUCTIONS 40000 0
NET TOTAL INCOME 366000 400000
TAX 11600 15000
REBATE 5000 5000
NET TAX 6600 10000
CESS 198 300
TAX+ CESS 6798 10300
MONTHLY TDS 567 858
     

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Example 1 continued

What is Income Tax payable by him at the time of filing ITR in both cases?

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Income Tax Computation

Case 1 2
INCOME FROM SALARIES 400000 400000
INCOME FROM OTHER SOURCES 6000 6000
GROSS TOTAL INCOME 406000 406000
Less    
DEDUCTIONS 40000 40000
NET TOTAL INCOME 366000 366000
TAX 11600 11600
REBATE 5000 5000
NET TAX 6600 6600
CESS 198 198
TAX+ CESS 6798 6798
Less    
Annual TDS 6798 10296
Net Tax Payable 0 -3498

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  1. Practical Income Tax
  2. Income Tax for Salaried Employees
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 7 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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