TDS, which stands for Tax Deduction at Source, is the amount deducted by employers from employees' salaries and remitted to the government on their behalf.
The Income Tax Act mandates that employers must deduct TDS from salaried income according to the relevant tax rates. This blog will delve into the concept of TDS on salary as defined in Section 192 of the Income Tax Act of 1961.
What is TDS U/S 192 on Salary?
Section 192 of the Income Tax Act, 1961 outlines that anyone responsible for disbursing income classified as 'salary' must deduct income tax from the estimated income of the taxpayer under the head salaries.
This tax is calculated based on the applicable tax brackets and is deducted at the time of actual payment.
The deducted TDS on Salary must be deposited into the government's account, and a certificate of tax deduction at source, also known as Form No.16, is provided to the employee. Additionally, the employer or deductor is obliged to prepare and submit quarterly statements in Form No.24Q to the Income-tax Department.
Who Is Authorized to Deduct TDS U/S of 192?
TDS under Section 192 is to be deducted by any person responsible for making salary payments at the prescribed average tax rate on the estimated total income of the taxpayer.
For different types of employers, the individuals responsible for making salary payments and tax deductions are as follows:
| No. | Details of Employer | Individuals liable for making payment |
| 1. | Central/State Government/P.S.U | The selected drawing and disbursing officers. |
| 2. | Private & Public Companies | The business itself is also the principal officer thereof. |
| 3. | Firm | The managing partner or partners of the company. |
| 4. | HUF | Karta of the Hindu Undivided Family (HUF) |
| 5. | Proprietorship concern | The owner of the said situation. |
| 6. | Trusts | Controlling trustees thereof. |
When Does TDS Deduct According to Section 192?
Section 192 outlines TDS for Salary and stipulates that tax must be deducted at the time when the actual payment of salary is made to the employee. Therefore, when paying advance salary or arrears of salary, the employer must take into account in these amounts when calculating the deductible tax.
Below is a table outlining TDS on salary slabs (applicable to the Old Tax Regime for FY 2023-24):
| Persons Below 60 years of age | Individuals between 60-80 years of age | Individuals more than 80 years of age | |||
| Income | Rate of Tax | Income | Rate of Tax | Income | Rate of Tax |
| 0-2.5 lacs | Nil | 0-3 lacs | Nil | 0-5 lacs | Nil |
| 2.5-5 lacs | 5% | 3-5 lacs | 5% | 5-10 lacs | 20% |
| 5-10 Lacs | 20% | 5-10 lacs | 20% | 10 Lacs and above | 30% |
| 10 lacs and above | 30% | 10 lacs and above | 30% | ||
The following table given below furnishes TDS on the salary slab (New Tax Regime for FY 2023-24) (Section 115 BAC):
| Income Tax Slab | Rate of Tax |
| 0- 3 lacs | Nil |
| 3 lacs – 6 lacs | 5% |
| 6 lacs – 9 lacs | 10% |
| 9 lacs – 12 lacs | 15% |
| 12 lacs – 15 lacs | 20% |
| 15 lacs and above | 30% |
TDS Deposition Time Limit
The table given below provides the TDS deposition time limit for each quarter:
| Month | Quarter | Tax deduction date | Tax deposit date | TDS return filing date |
| Apr-Jun | Q1 | The date of tax deduction should be the payment date | 7th of every next month in which payment made Note: - 30th April will be the due date of march month | 31st July |
| July-Sept | Q2 | 31st Oct | ||
| Oct-Dec | Q3 | 31st Jan | ||
| Jan-Mar | Q4 | 31st May |
Filing of TDS Returns by Employers
Form 24Q is a quarterly report that includes information about employee salaries and their TDS deductions as per section 192.
Form 24Q comprises two annexures.
Annexure I requires reporting only the actual figures for the relevant quarter.
Annexures II & III should contain estimated or actual information for the entire fiscal year. Notably, Annexures II & III are not obligatory for the first three quarters but become mandatory in the final quarter's quarterly statement, requiring actual figures for the whole financial year.
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Certificate for TDS
Individuals deducting tax at the source must provide a certificate to the recipient under Section 203. This certificate shows that the tax was deducted and includes specific details.
For employees who receive salary income, including pensions, a TDS certificate in the form of No.16 must be issued. Form 16 is divided into Part A and Part B. Part A of Form No. 16, relates to tax deposits, and Part B, details the salary breakdown and employee deductions.
It's important to note that there is no requirement to issue a TDS certificate if the tax at the source is not deducted/deductible or is exempt due to claims of deductions/exemptions.
Employers must furnish employees with Form 16, which includes salary details like the paid amount and deducted taxes. Additionally, this may be accompanied by Form 12BA, which presents information regarding benefits and profits in lieu of salary.
Charges and Consequences for Delayed Non-Filing of TDS U/S 192
According to Section 234E, a taxpayer must pay a daily late fee of INR 200 for non-filing of TDS Return under Section 192 on time. It's important to emphasize that this penalty should not surpass the TDS amount for which statement filing was required.
If TDS is not deducted when paying salaries, an interest of 1% per month will apply from the date when tax becomes deductible until the actual deduction date.
Furthermore, if the TDS is not timely deposited, specifically before the 7th of the following month when the TDS is deducted, an interest of 1.5% per month is imposed from the date of deduction until the deposit date.
