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.
4th March 2008 From India, Mumbai