Payroll Dilemma: Can Employees Choose How and When to Pay Their TDS?

In payroll, is it mandatory to deduct the TDS every month, or can we give options to employees to pay their taxes by consulting their own people? One of the GMs newly joined is opting for this. Can you please help me? If so, is any proof of document of tax paid to be retained in the HR Department?

Thanking You, M V Muthu Krishnan 99622 98084

Dear Muthu Krishnan,

Please check the attachment...

In the name of TDS, taxable amount is being taken in advance (installment-wise). Why is no interest being paid by the government for this advance payment? If a person pays late, won't they be penalized with interest?

Regards,
Santosh

TDS and Employee Payment Options

The question raised is whether there is an option for the employee to pay by themselves and avoid TDS.

Answer: NO. TDS means TAX DEDUCTED AT SOURCE. Hence, the person responsible for salary has to recover the tax as per the laid-down procedure and deposit it to the GOVT within 7 days of the next month. If the recovery amount is not deposited, interest will be levied.

It is the channel for raising revenue for the GOVT, and hence there is no question of interest on advance tax payment.

If people feel it is unnecessary, they should unite to raise their objections and force the Finance ministry to withdraw the ACT or act through a ballot.

Regards

Yes, the employer has to deduct tax at source (TDS). However, if an employee submits their investment proofs, the employer can deduct lesser TDS or no TDS deduction according to the package and investments. Such TDS calculations after investments are usually outsourced to tax consultants/CAs in the company. All salary package details, TDS, and employees' investments based on their proofs are to be mentioned in Form 16. The IT department will pay interest on excess TDS if the tax return is filed within the stipulated due date. June 30th of every year is the last day for filing for the salaried class. If anyone files after the due date, no interest will be paid. Similarly, for NIL returns, there is no penalty.

Krishnan,

Yes, it is mandatory to deduct TDS every month. Here, you cannot give individuals the option to pay on their own; it is the employer's responsibility to recover the tax and deposit it within 7 days.

Furthermore, regarding proofs of tax deducted, yes, it is either the HR or Finance department's duty to retain them.

Thanks,
Sylvi.

Sundar Krishnan,

Usually, companies ask for the tax exemption documents from all employees for the respective financial year. If tax has been deducted every month, why do the documents have to be submitted by the end of the year? How can they correlate the same?

Tax Deduction Process and Employee Responsibilities

The normal way is based on the April month's salary; tax will be worked out for the whole year. Normal exemptions, i.e., the ceiling is 1.00 lakh, will be passed on with a declaration from the employee or based on previous year investments (LIC, medical policy, etc.). The calculated tax will be deducted in equal monthly installments. Every quarter, a review will be conducted. At the end of December, all employees will be advised of their tax liability and given a cutoff time to submit proof or further information on their investments. Failing which, the company will proceed with their working, and tax will be deducted.

It is the responsibility of the Accounts department, and HR is only a negotiator between accounts and employees. If an employee feels that more TDS has been recovered, it is his responsibility to file a return to get a refund from the IT department. The company can issue only a tax recovery cum deposit proof (FORM 16).

Hope things are clear.

Regards

Good question to think of... Let me find out the answer by talking to the consultants and post the same...

At first glance, your question seems logical. Can you determine your savings beforehand? Many times, we intend to save towards a goal but end up utilizing those funds for other expenses. This is a common experience for most of us. Additionally, taxes are typically fixed two months before the fiscal year. Employees are aware of the set limits and their individual incomes. Therefore, it is the primary responsibility of the employer to deduct tax at the source, visibly reflecting the predetermined limit. Since the calculation is done annually, individuals are expected to submit their saving and expenditure documents at the year's end.

Hope this addresses your question.

It is not always true. TDS is deducted according to your earnings, i.e., at the end of the month, you receive your income based on your limits (the ceiling is already set by the Government), and if it exceeds, then the tax is deducted from your income with the expectation that your income remains unchanged for the whole year. Moreover, if you delay your tax payment, you will receive interest, but you will be charged a penalty for failing to meet your legal obligations. This penalty is a compensation charged for your irresponsibility in not contributing your taxable amounts to the nation.

Hi friends, I am so confused with income tax and TDS. Income tax is paid per year for the preceding financial year, isn't it? TDS is calculated by income taxable/12. This much only I know.

Understanding Income Tax and TDS

Please inform the details briefly from the basics with the due dates of paying income tax and TDS, and TDS on other payments, with Form No. 16, 16A, and 17.

Regards

Normally, TDS is prepared by dividing the taxable amount by 12 to determine the monthly TDS amount. If an employee has to pay TDS every month, does he also need to pay income tax even after TDS has been deducted?