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
View answer
| Case | 1 | 2 |
| MONTHLY SALARY | 35000 | 35000 |
| ANNUAL SALARY | 420000 | 420000 |
| LESS STANDARD DEDUCTION | 40000 | 40000 |
| NET ANNUAL SALARY | 380000 | 380000 |
| ADD: | ||
| OTHER INCOME | 6000 | 0 |
| GROSS TOTAL INCOME | 386000 | 380000 |
| LESS: DEDUCTION 80 C | 40000 | 0 |
| NET TOTAL INCOME | 346000 | 380000 |
| TAX | 4800 | 6500 |
| REBATE | 2500 | 0 |
| NET TAX | 2300 | 6500 |
| CESS | 92 | 260 |
| TAX+ CESS | 2392 | 6760 |
| TDS | 199 | 563 |
| NET SALARY | 34801 | 34437 |
What is Income Tax payable by him at the time of filing ITR in both cases?
Example 1 continued
View answer
Income Tax Computation
| Case | 1 | 2 |
| MONTHLY SALARY | 35000 | 35000 |
| ANNUAL SALARY | 400000 | 400000 |
| LESS STANDARD DEDUCTION | 40000 | 40000 |
| NET ANNUAL SALARY | 360000 | 360000 |
| ADD: | ||
| OTHER INCOME | 6000 | 6000 |
| GROSS TOTAL INCOME | 366000 | 366000 |
| LESS: DEDUCTION 80 C | 40000 | 40000 |
| NET TOTAL INCOME | 326000 | 326000 |
| TAX | 3800 | 3800 |
| REBATE | 2500 | 2500 |
| NET TAX | 1300 | 1300 |
| CESS | 52 | 52 |
| TAX+ CESS | 1352 | 1352 |
| LESS: ANNUAL TDS | 2388 | 6756 |
| NET TAX PAYABLE | -1036 | -5404 |