Struggling with Salary Slip Preparation for IT Engineer: Need Help with TDS and Deductions

Views but no replies. CiteHR members, please help.

I found some TDS calculators on taxmann.net where you need to provide your net income, and it computes TDS. But isn't it right that TDS is on net taxable income and not net income? Please share your expert views.

Hi friends,

Firstly, congratulations to the wonderful and helpful people who are making CiteHR a truly great community.

I am a recent HR under probation in a startup IT company and have been given many tasks, out of which I'm finding a major problem in "preparing a salary slip for an IT engineer." Before anyone says "search the forum," let me say that I've read most of the topics on the subject and downloaded a lot of Word and Excel samples, and indeed, they are useful but cause a lot of confusion, so please help.

The company wants me to prepare the salary package of a newly appointed person who would work as a software engineer. His gross is around 16k and net around 14k per month.

After reading various posts, I came to the conclusion that the basic could be fixed between 3.5k to 4k (lower is better), HRA 40 to 50% of basic, PF 12% of basic (strictly), professional tax 200 (strictly as per slabs).

I did a lot of searching for TDS but did not find anything useful. How do I calculate TDS? After fixing the basic, how do I divide the remaining amount? I have to divide it as HRA, grade, special, TA, among others. A specific sample salary slip would be highly appreciated.

Vikram Sharma.

Hi,

Try including components such as Medical Allowance, Leave Travel Allowance, phone bill reimbursement, etc. For senior levels, you can also consider adding fuel allowance, etc. All these benefits will help employees save on taxes. However, please note that these components may attract Fringe Benefit Tax (FBT) for the company.

I hope this information is helpful to some extent.

Regards,
Poorna

Hi Poorna,

Thanks for the inputs from your side. Any help is definitely appreciated. Though my doubt was resolved, I contacted a few tax/accounts seniors through various leads, and one of them helped me out. I'm posting this information as help/pointer to others as I could not find it on citehr. I knew about tax planning and that as per new rules, you can save up to Rs. 1 lakh. I wanted the tax slabs after that, particularly in my case, since the employee's gross salary does not exceed Rs. 2 lakh, he can get away by paying no tax if he decides to invest as per tax planning. This is because Rs. 1 lakh income is not taxable. Above that, Rs. 1 lakh can be saved by investing (read various posts on the same in citehr about tax benefits). Above that, Rs. 50,000 is taxable at 10% and above that, Rs. 50,000 (not sure) is taxable at 20%. Hence, in my case, the employee with gross pay less than Rs. 2 lakh need not pay income tax if he takes benefit of tax planning.

Vikram Sharma

Dear Vikram,

It is really surprising that you did not find details for such an easy topic on this forum. You must not be searching the right keywords.

Lately, Mr. NityaHR has posted a very nice tax_calc06, which not only includes all allowances but also considers the impact of NSS or House Loans. This tax_cal is freeware and can be easily searched for.

This shall solve most of your problems.

Best of luck!

Dear Vikram,

It is really surprising that you did not find details for such an easy topic on this forum. You must not be searching the right keywords. Lately, Mr. NityaHR has posted a very nice tax_calc06, which not only includes all allowances but also the impact of NSS or House Loans. This tax_cal is freeware and can be easily searched for. This shall solve most of your problems. Best of luck!

Hey thanks friend, I searched with words like TDS & tax deductions. It's true, CiteHR has a lot of very useful information. I used the Nitya tax tool with a friend of mine who is in the central govt., and believe me, we had to make a lot of adjustments in that, and computation by hand took much less time. But for private companies, it is indeed very useful. I found the Relyon tax utility very comprehensive, whereas the Taxmann tax tool was best for me to find TDS. You just take into account deductions, arrive at your net taxable income, type that, and you get your income tax. Hey, by the way, I saw you're from HP, a great place for tourism.

Thanks,
Vikram