I am working a small software company. When I joined my salary was around Rs 12.5K per month. And after couple of months it was raised to Rs. 17.5K per month.
Now, from the time it has raised to Rs. 17.5K, every month, Rs. 500 is being deducted from my salary on the name of TDS. I wanted to know whether I am eligible for TDS and is that amount what company is deducting is correct? what is the procedure to estimate TDS on my salary?
Many of my friends say the No TDS should be deducted from my salary. I am confused and need urgent suggestions.
On gross salary the following deductions are applicable.
1) Professional Tax
2) House Rent in excess of 1/10th of salary subject to ceiling equivalent to HRA
3) Interest on Housing loan subject to ceiling Rs. 1,50,000.
4) Refund on Housing loan, savings, tution fee to 2 children etc. altogether subject to ceiling Rs.100,000.
5) In addition savings on infrastructure bonds upto Rs. 20,000.
5) Other than the above one lakh, 15000 to 20000 towards medi claim premium, 40000 to 60000 towards treatment on specified diseases like Motor Neuron disease, 75000 to 100,000 towards disabilty etc. are also admissible for deduction.
The details can be obtained from following web site. CENTRAL GOVERNMENT EMPLOYEES NEWS: New Income Tax Slab for FY 2010-11
Now taxable income can be calculated as follows.
Gross salary - total deductions = Taxable income
Tax payee can be categorised into 3.
1) Non Seniors - Male
2) Non Seniors - Female
3) Senior Citizens (65 years old & above)
If the taxable income is Rs. 2,40,000, a Senior Citizen is fully exempted from paying tax. Non Senior Female has to pay in excess of Rs.1,90,000 & Non Senior Male in excess of Rs.1,60,000.
Beyond the above income, one has to pay 10% upto Rs.5,00,000, 20% there after upto Rs.8,00,000 and 30% in excess of Rs.8,00,000. In addition, an education cess @ 3% will be charged on Total Tax.
I shall quote on example.
Gross income of a Non Senior Male - Rs. 12,00,000
Deductions (actual) : Professional Tax - 12000, Housing loan interest - 2,00,000, Total savings/deductions - 2,50,000, Savings on Infrastructure bond - 25,000, other deductions over 1,00,000 - 50,000.
Admissible total deductions (subject to ceiling limits) - 12000+150000+100000+20000+50000 = 332000
Taxable income, 1200000 - 332000 = 868000
For Non Senior Male :
Rs. 1,60,000 is exempted.
For next 340000 (500000-160000), 340000x10% = 34000 -(1)
For next 300000 (800000-500000), 300000x20% = 60000 -(2)
For next 68000 (868000-800000), 68000x30%= 20400 -(3)
Tax - (1)+(2)+(3) = 114400
Also For Non Senior Female Tax is, 114400-3000 = 110400
and Senior Citizens Tax is, 114400-8000 = 106400
Education Cess, 114400*3% = 3432.
Total Tax - Rs. 1,17,832
See Excel Sheet. Enter gross salary and deductions/savings applicable in green colour column. Results will be occured in yellow colour. The red colour is used for static datas.
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Ph. +91 9447 467 667
That was really a wonderful explanation.. Thanks for the file too. I calculated my tax and have saved it in the file while i have attached here. Kindly go through it and let me know whether it is correct or not.
I get 1195 as total Tax. So Rs. 1195 i have divide by 12 months right? And it comes to around 100 Rs per month. But I am still not understanding how and why these guys are deducting Rs. 500 per month on the name of TDS?
Is Income tax and TDS on my salary same?
@rajendra: yes i am a male candidate.
I have gone through your income details entered in excel sheet. The tax calculated using the excel sheet found correct.
Your total income is Rs. 2,10,000. If the deductions are not taking care of, you will be charged a tax of Rs. 5000 and cess Rs. 150. So check whether you have made noticed the details of deductions before the authorities. However you contact the concerned authorities in this regard.
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