TDS - TAX DEDUCTED AT SOURCE By Employer- 2019-2020

TDS Calculation 2019-2020


In Salary Slip, there is a deduction of TDS. But when asked about it from HR or Finance team.
They replied, "It's the Tax which goes with Government." 

Questions which most of the Employees' have are as follows-
  1. Income Tax should deduct in March. Then, why it is deducted monthly?
  2. We are not in Taxable Income. Then, why there is a deduction? 
  3. How should we claim the tax?
To answer all above queries. We need to know following points-
  1. How Taxable Income is calculated?
  2. How much tax should be deducted every month and annually?
  3. How to reduce Tax deduction?

Taxable Income-

To calculate Taxable Income. We need to first know Gross Earning. Gross Earning includes Every Amount which is credited in your account in the form of Salary, Bonus, Incentive, etc. But not limited to reimbursement such as Travel-Reimbursement, Mobile Reimbursement, etc.
Taxable Income = Gross Earning - Deduction/ Exemption.

Deduction of Tax-

  • To understand it, Let's say Gross Salary is 50000/Month and Your Deduction is PF, which is 1800 monthly.
  • So Annual Gross Earning is 6 Lakhs & Annual Deduction is 21600. Your Gross Taxable Income is Rs. 578400. There is 50000 of Exemption as Standard Deduction. So Net Taxable Income is Rs. 528400.
  • So annual Tax will be Rs.(12500+ 5680)= Rs. 18180. [5% of 250,000 is 12500 & 20% of 28400 is 5680].
  • Monthly TDS will be Rs. 1515.
[Note-TDS is calculated as per Old Method. Just Investing 28400 in Life Insurance, Health Insurance, NPS, PPF, etc. Your Tax deduction will be ZERO in the above example.]

Reduce Tax Deduction-  

Following are the steps to reduce your TDS.

  1. Submit Income Declaration Form to Your Employer in the Month of April or 1st Day of Joining the Organization.
  2. Submit the Investment Proof by December or when asked by Employer.
Invest your Money on Life Insurance, Health/Medical Insurance, etc. Through this your Net Taxable Income get reduced upto 150,000.

Check your TDS amount/Dowload Form 26AS-

  • Register yourself http://www.incometaxindiaefiling.gov.in/home
  • Goto My Account Tab.
  • Select View Form 26AS and Confirm.
  • Click on View Tax Credit (Form 26AS)
  • Select Assesment Year 2020-2021
  • View As- HTML
  • Click on View/Download. 
  • Click on Export as PDF.
  • Click on Save.

Claim Your ITR-

  • If your Tax has been wrongly calculated.
  • Ask Form 16 from your Employer.
  • File ITR. 

For feedback or query. Kindly comment below.

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