I am working with asmall firm where I earn 1.8 per annum. The Manager deducts 2000/- per annum uder the name of tax or vat.We do not receive the pay slips too.Is it right? Please let me know at what amount the tax is deducted and is vat deducted from employee salary every month?

4th March 2008 From India, Hyderabad

Kamal Virani
Chartered Accountant
Accounts & Audit
+1 Other


Applicable TDS provision In case of Salary-

TDS is to be deducted by the employer by applying the average rate of Income Tax, if the total salary of the employee is more then the basic exemption limit.

basic exemption limit is the limit fixed by the income tax authority for that particular year.

for the current financial (2007-2008) the basic exemption fixed by the authority is -

women below the age of 65 year - 1,45,000

person of a age of 65 year or more - 1,95,000

any other person-1,10,000

suppose your total income is 3,40,000 for the year 01.04.2007 to 31.03.2008. then ur employer will deduct TDS by applying average rate of Tax. i.e. rate of applicable tax for that year-

In case of women below 65 years -

first 1,45,000- NIL



2,50, above - 30%

In case of other person the above 1,45,000 is replaced by 1,10,000

& in case of person65 year or above-

the tax computation as -

uo to 1,85,000- NIL


2,50,000 & above 30%

Now suppose ur salary is 3,40,000, &suppose you are a woment below the age of 65 year in that case you tax will be -

Up to 1,45,000 - NIL

1,45,000-1,50,000 @ 10% = 500

1,50,000-2,50,000 @ 20% = 20,000

2,50,000-3,40,000 @ 30% = 27,000

total will be 47,500

TDS deducted by your employer will be 27,500/12=2,290 P.m.

and at the end of the year the Employer will issue TDS certificate of Total deduction so that you can claim the benifit, but for that you have to file the Income Tax Return.

The TDS deduction can be avoided by Investment in Tax saving Schemes.

You can claim the refund by filing of Income Tax Return, if your TDS amount is more then the Tax Liability.


Deepak Singh

4th March 2008 From India, Mumbai
When you are paid salary and tax is dedcuted on the same? You have complete right to ask for TDS certificate in Form 16A In case of his failure to provide you the same you have many labour, tax laws to help you.
If he is giving you certificate, dont worry about the amount you can get the excess deducted back from income tax office.
in case it is deducted in the name of VAT.
There is no such provision in VAT LAW. You are not a seller.
in case of further information on the subject you can get in touch with me on my mail ID -
CA Kamal Virani
5th March 2008 From India, Mumbai
Thanks for the information,
But still I am little bit confused, as I am not able to understand that how much should we deduct the TDS on salary when we have divided the salary on basic, HRA, Medical, Conveyance and special. after making all the division on what we can calculate the tax?
Please help me out as i need to make salary of a person who is earning 2,50,000/PM.
6th October 2010 From India, Chandigarh
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