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Method of Tax Calculation: Every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2018-19. To calculate ‘TDS for Salary’ – it is imperative to define which earnings come under salary. Salary is the type of payment received on specific intervals and by a specific amount for providing certain services as per a contract signed by two parties namely – the employer and the employee. There are different tax rates for individuals and senior citizens. TDS will be weighted average tax per month. Step 9: TDS on salary will be Income Tax as per step 8 divided by 12 months or number of months of employment in the financial year.

The rates of TDS on salaried professionals are calculated according to their income tax slab.
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TDS on salary falls under the purview of Section 192 of Income Tax Act. Under this tax provision, employers are entitled to deduct tax at source on the salary amount payable to an employee.

In case of tax exemption, the employer is required to obtain a declaration and proof from the employees to approve tax declaration. One … Multiply the number obtained from the above calculation by 12, as TDS is calculated on yearly income. This is your taxable income from salary If you have any other income (e.g. income from house rent or interest), then add this amount to the number obtained in step (4) 3 rows 2019-11-14 Calculating TDS on Salary.
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TDS Calculation on Salary: The Cost to Company (CTC) that the employer puts in front of you at the time of joining usually comprises different components, such as a travel allowance, medical allowance, house rent allowance, dearness allowance, special allowances, basic salary, and other additional allowances. The rates of TDS on salaried professionals are calculated according to their income tax slab. Mohan’s monthly income is Rs 70,000 as a gift.

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If you have any other income source such as income from house rent or have incurred losses from paying housing loan interests, add/subtract this amount from the figure in step (4). The employer deducts TDS on salary at the employee’s ‘average rate’ of income tax. It will be computed as follows: Average Income tax rate = Income tax payable (calculated through slab rates) divided by employee’s estimated income for the financial year. TDS on salary can be calculated by reducing the exemption from total annual earning as specified by the Income Tax department. In case of tax exemption, the employer is required to obtain a declaration and proof from the employees to approve tax declaration.