You have posted the same query thrice on separate threads, which I have merged together now.
The reason you did not get ANY response was due to the lack of more information.
No one can comment anything on the matter of different amount of deductions in ITax; UNLESS they know how much salary was being paid every month to you.
You must be aware that total net or gross salary is not fixed; but it varies as per your ATTENDANCE; overtime or other payments like Incentives or some deductions. Right ??
If you have only taken more EFFORTS in writing your query with information; at least more than the EFFORTS that I taking in answering your query (which does not contain any worthwhile data); you would have got your answers by now.
Please remember that people like to help ONLY those who want to help themselves and are willing to make efforts.
Every month IT deductions are made on certain assumptions on what will be the total salary paid to you at the end of the year. Hence you see these variations, which indicate that your salary over the months must have been fluctuating.
In any case; you have to reconcile the Total at the end of the Financial year and calculate whether you have to pay more or seek refund through your returns. That is all you need to do.
15th January 2014 From India, Delhi
First, Thanks a lot to respond and as far as my efforts towards raising this thread is concerned,i was not aware that given data is not sufficient to clear my qaueries,as i have always worked in recruitment section so feel bit uncomfortable with payroll and income tax but presently trying to switchover in this zone.
now,i have attached the facts and figures,hope this will help you all to clarify my query.
i just wanted to know---------
1.why all taxes are deducted only in 10 months in place of 12 months.as in my all form-16 this is same.
2.how this monthly tax deduction figure is decided and what basis the amount is fixed as you have said that on monthly basis salary, the figure is decided.i have furnished all the information of my monthly salary for the 12 months.only i want to see the correlation between the monthly salary and monthly tax deduction figure.
hope this data is sufficient and if anything else is required pl let me know.
15th January 2014 From India, Mumbai
Income Tax need to be deducted in 12 installement. But your payroll team not deducted the same during April & May, (may be due to they would have not collected the income tax declaration from all employees till such time).
When ever your get additional payment your income tax will increase, because it will increase your tax liability and you need to pay additional tax for the additional income. As your income is less than 5lakhs, so you need to pay 10.3% on your income over and above 2lakhs. During June, Sep & Dec you got additional payment on which your payroll team would have recovered the One time tax amount. If your not receiving the same then your regular tax will be 800 permonth.
Usually payroll team will collect a declaration form from employee during April asking about your tax saving investments like LIC, Monthly Rent, Housing Loan etc., They will request you to submit the evidance (Proofs) during Jan to March. You tax deduction will differ due to this during these period.
Note: If you need Equal deduction every month then you need to give correct declaration during April itslef and for the same you need to submit the actual proofs during Jan. Also tax will defienetly change whenever you receive addtional payment.
Hope above clarifies your doubt.
16th January 2014 From India, Chennai
Ramesh G. has very nicely explained the reasons for the unequal monthly deductions of IT from your salary.
It is difficult for your Payroll team to manually compute every month's deductions and to estimate how much an employee will earn during the remaining months of the financial years; hence such unequal monthly deductions.
In fact, this is the usual scenario in all companies, even where payroll software are used.
Many companies have an Initial Fixed Deductions during the early months like April to September based on estimates; and then the remaining amount applicable is deducted during the months of Oct. to Feb.. During this period Bonus, incentives, increments etc. are paid; hence deductions are high.
In the month of Jan. and Feb. any remaining amount is taxed as per the assessment of Total income by the end of the Financial Year.
Thus, it is difficult to have direct co-relation with tax deducted every month and the salary paid every month.
Therefore, in these months the deductions can be heavy; if there is lot of tax remaining to be deducted. Also, there can be less deductions or even Refunds in cases where an employee has planned his taxes and declared (after taking) the allowed and exempted Tax-saving instruments.
What matters is, at the end of the Financial year; one has to tally the Income and the Tax-deducted_at_Source (TDS) in the Form-16 given by the Employer. If the Tax paid/deducted is more, then one can apply for Tax refunds; or if the Tax due is more. one has to pay the additional Tax through Challan; at the TIME OF FILING TAX RETURNS.
Hope the above information would be sufficient for you to happily go about understanding the implication and remedies of IT deductions through salary.
And, if you have understood the above, you can do your bit to help fellow employees by sharing these information and help educating them too.
16th January 2014 From India, Delhi
This has been the sore point between employees and the payroll processing team which generally includes the Finance department.
Employees on one hand are not fully aware of the provisions of the Income tax act, the Finance department on the other hand is unaware of the savings/ investments made by employees.
The only way this can be sorted out it, the Finance department has to send an excel sheet in April every year after considering the amendments made for the respective financial year. They can protect the cells that should not be modified by the employee.
They can shade the portions green, wherein the employee can fill up the house rent paid by him, mediclaim premium likely to be paid by him, housing principal payment notional, housing interest payment notional, school fee likely to be paid, proposed premium to be paid towards life insurance policies, proposed investments to be made in Public Provident Fund, proposed investments to be made in tax free bonds if announced in the financial year etc. Once they fill up these details (proposed/ notional) in the green shaded portions the tax liability for the employee during the financial year gets computed automatically. The finance department can arrive at the tax to be deducted in equated monthly instalments (EMI).
Thereafter in January they can collate evidence for the notional/ proposed investments to ascertain as to whether the investments have indeed been made. If it is available the EMI can continue, if evidences are not available then the amounts furnished by him in green shaded portion not supported by evidences can be deleted and the balance tax payable can be arrived. After deducting the EMI's already made the balance tax is computed and divided by 3 (January. February and March) and recovered from employees.
In many organisations the exercise picks up heat only in January and employees are left with no take home pay during these 3 months. Both the employees and Finance department are equally responsible for this exercise. The HR department can facilitate the process by advising and encouraging employees to submit information sought by Finance department.
17th January 2014 From India, Madras
I think we can work out a standardized procedure in the lines as SUGGESTED ABOVE.
The Circular can be issued along with the format.
This will help sort out many such similar problems and employes' grievances.
17th January 2014 From India, Delhi
Thank you for sharing the information with me,Got good concept on this topic,as far as i understood the topic, based on you people information is that, income tax is calculated, considering the total income of the employee, based on assumption that he would be regular on the job for whole year and the investment declaration shown by the emplyee;
and if i am wright, the the total tax is deducted in all the four quarters follwing a rule of deduction==
first quarter==deduction up to 15 % of total assumpted tax==means in the month of april,may,june
second quarter==deduction up to 45 % of total assumted tax==means in the month of july,aug,sep
third quarter==deduction up to 75%of total assumted tax==means in the month of oct,nov,dec
fouth quarter==dedcution up to 100% of total assumted tax==means in the month of jan,feb and march
and variation occurs, if proof against the declaration is not shown,than tax will increase and if income becomes low because of any reason than dedcuted more tax will be claimed.
but my query is still to those percentage of tax deduction from the monthly salary, if this percentage is variable than in my case i can get it deducted with different amounts also;in first three month,i got deduction of taxes from my salary as 0,0,1000 that i could have got duducted 200,200,600 respectively because it is not correlated with the salary components as advised by one member and totally decided by the payroll team,only following the thumb rule that in initial month of the financial year we have to deduct lesser tax and will increse it as the year progresses.
pl throw light on my understanding and if i am clear on this topic than my purpose for raising the thread will be fullfilled
18th January 2014 From India, Mumbai
I understand your logic and request for a logical deduction of IT.
As informed earlier; this is an area generally under the control of F& A Deptt.
While processing salary, generally the HR deptt. is basically concerned with ATTENDANCE and the nature of ABSENCE or LEAVES.
Rest is generally done by the F&A.
I suggest you write to the F&A deptt. of your Company or raise this issue in an appropriate meeting.
However, I must say that this is not an easy matter.
You say why no IT was deducted in the month of April and May.
My dear friend; even if a person gets Rs. 50,000 PM; in 2 months his salary will not reach the Taxable level.
Moreover, after deduction of Taxes; the COMPANY CAN NOT KEEP IT WITH ITSELF; BUT HAS TO REMIT IT TO IT DEPTT.
Now, if a person as per the Act, has no liability for paying tax, till he reaches the minimum of tax-slab; how can tax be deducted and remitted to IT deptt. ??
Moreover, ANOTHER EMPLOYEE may say that since he has NOT YET reached the taxable level in his salary; how can TAX be deducted from his salary ??
Now, do you understand the implications why no tax was deducted from your salaary in the month of APRIL and MAY ??
Suppose an employee had worked for only 2 months i.e. April & May; and his TAX Is deducted and paid to the IT Deptt; now if the employee while taking final settlement; may CLAIM that his tax deduction is illegal and should be returned; as he has NOT YET REACHED taxable level ???
This is the LOGIC that F&A puts forward.
So, its better to take up this issue with them.
Such practices has been going on for years in practically every company; coz there is no straight-forward solutions to it.
All things considered; its the duty of the Employee receiving salary to ensure that Tax isdeducted at source; that is the reason employees do not have to pay ADVANCE TAX like other professionals.
I can understand that of late, all these questions are coming up in your mind; however, be assured; that this issue has been thought of, discussed, debated by the IT, Company, Auditors, CA's; Tribunals and Courts, employees, employees union etc. several times earlier.
18th January 2014 From India, Delhi