TDS Deduction - Tds Deductions [Thread 126238]

Dear Seniors,

I have been appointed in a company on a fixed-term contract for 2 years, and my package is 2 lakhs per annum. Now, I want to know what would be the TDS deduction on my salary. Kindly let me know at the earliest.

Thanks,
Hema

Hi Hema,

You will not have any TDS. As per the new IT slab for the financial year 2008-2009, up to 1.8L per annum, there would not be any IT deductions for female employees. If you produce a receipt for HRA (House Rent Allowance), then it would be considered as reimbursement. So, you would fall below the 1.8L slab.

Hi Prathima,

Thanks for your suggestion. The IT slabs you mentioned are for female employees who are on a permanent role. What about me? I was directly appointed through the company but on a fixed contract tenure for 2 years. Will I also have the same slabs? Kindly clear my doubts. Please don't mistake me.

Thanks,
Hema

It is the same for everyone. Only those who are in consulting mode will have a tax deduction of 10.3% flat. But in your case, there would not be any tax deductions.

Hi Hema,

It does not matter whether it is for fixed-term employment or permanent employment. TDS liability depends on whether it is a consulting engagement (to qualify for 10% TDS) or in the nature of an employer-employee relationship. In your case, prima facie, it looks like it is an employer-employee relationship, so TDS shall be deducted under section 192 of the Income Tax Act.

Regarding HRA deduction suggested by another group member, that will be allowed only if your compensation and allowance break-up from the company has an HRA element in it. Besides, there are other exempt/FBT allowances as well which will lower your TDS burden. So, the final calculation will depend on the structure of compensation you are getting. If the structure is planned wisely, a 2 lakh CTC per annum should not attract a single penny in TDS.

Regards,
CA Rajat Mehta

Hi Hema,

Thank you for your message. I have another question: will I be receiving a payslip, or will my salary be credited directly to the corporate account, or will they pay me by cheque? Please clarify this for me.

Regards,
Hema

Hi, Thanks a lot,

I have a question. Will my salary be credited to the corporate account, or will I be paid by cheque? Also, will they provide me with a payslip? Kindly clarify this. The company is performing very well in Mumbai and has business all over India.

Regards,
Hema

Hi,

If it is an employer-employee relationship, they surely would give you a salary slip. And obviously, the choice is yours whether to get the cheque or have the amount directly credited to your bank account. However, if the company has a strict policy of crediting to your account, they would normally not entertain a request for a cheque unless there is a genuine reason, such as problems or delays in opening a bank account.

Hi,

Please also let me know about my attendance. Will I be getting the ID card and Bcard? My head office is in Mumbai. Before I ask them, I would like to know all these details. Other staff at the Blr office get their Attendance sheet from the Mumbai HR dept, where they mark the number of days present and absent. That's why I would like to first check with you and then contact my Mumbai office.

Thanks

Every organization has a procedure. I suggest if you have an HR department in your local branch, then contact them. They would be the right person to explain. In case you don't have any such department here, then you better contact your head office for the details of your ID, visiting, bank account, and stuff. If you had an induction program, then they would have explained to you in detail about the process.

Dear Hema,

From what I understand from your question, you will be treated as a professional for all purposes, and accordingly, TDS will be deducted from the monthly payments made to you as your annual earnings of Rs. 2.00 lacs are crossing the threshold limit of Rs. 1.80 lacs. Secondly, being a professional, you are eligible to claim various expenses. Don't forget to file your return of income before the due date to claim the TDS deducted from the payments made to you. Lastly, I think that the Company will issue you a monthly cheque instead of crediting it to your bank account. I hope I have answered all your queries.

Joshi