Struggling with TDS Calculation Letters for Employee Savings? Need Advice on Format Choices

Dear Citehr's Followers,

I am working in an IT company as a Sr. HR. Here, we want to issue a formatted letter to employees for their savings plans, if they have already paid. We want to calculate their total TDS amount till now and determine how much more they should pay in the remaining two months (Feb. & March 2011).

I have the details of exemptions but I am unable to decide whether the letter should be an undertaking or undersigned. I am attaching the letter to this post. Please help me with further evaluations.

Looking forward to the kind replies.

Thanks,
Kitty

Dear Friend,

This is the Employee IT declaration form, and it will be issued at the beginning of the financial year to all employees to calculate their tax liability. Based on their declarations, tax has to be deducted from salary. Tax should be deducted monthly, which is the total tax liability divided by 12 months. The company should not keep employees' tax dues until the last month according to Income Tax norms.

In your case, you have to circulate this form to all employees who are in the tax purview, ask them to fill it out, and take their signatures on these forms. Then start calculating their total income and tax liability with consideration of savings mentioned in the declaration forms and deduct tax accordingly in the February and March payouts. The important thing is you need to collect all physical tax documents (LIC, PPF, Rent Receipts, Mutual Funds, Housing Loans documents, Mediclaim policy, etc.) duly signed by employees.

I wish you all the best.

Please find attached the Income Tax sheet for computing your employees' tax liability. I hope this will be sufficient for your needs.

I wish you all the best.

Regards

Hi all,

This is in regard to my TDS deduction. I joined a company in October 2010, so this is my fourth month with the company. I was appointed on a consolidated pay, and I have been receiving my salary as consolidated till now. My concern is that in the January salary, my TDS was deducted at 10% on my entire consolidated amount. When I inquired about the reason for this sudden deduction in the fourth month, I was informed that I am considered a consultant in the company. However, my appointment letter states my employment as an Executive HR with a specified amount of in-hand salary that would be consolidated for a few months (probation period of 3 months according to the appointment letter).

I am not even falling into the deduction slab. The IT calculation indicates that my professional tax should be deducted, which amounts to a small figure, yet the company is deducting 10% of my entire consolidated pay.

My concerns are as follows:

1. If I am classified as a consultant, am I still bound by the company's policies?
2. What is the purpose of issuing an appointment letter to me if it becomes ineffective for consultants?
3. Why provide Form 16 if I do not fall within the IT slab?
4. Can I request the Accounts department not to deduct the TDS amount? If so, how can they deduct it at their discretion?
5. If I was assured a certain amount of in-hand money at the start of my employment and now they are reducing it, suggesting I file an IT return at the end of the financial year to reclaim the amount based on savings, how should I proceed?

Please advise on how to proceed in this situation.

To pursue a career in HR within an IT company, there are certain aspects you should focus on. Currently, you are involved in HR activities in an FMCG company in Pune, such as handling joining formalities, inductions, and budgeting to some extent. Now, you are looking to transition into the IT industry. To make this shift successfully, it would be beneficial to enhance your knowledge and skills in IT-related HR practices.

Dear Seniors,

Please guide me as I aspire to transition into the IT sector. While I am currently managing HR tasks in an FMCG company in Pune, including activities like onboarding, inductions, and budgeting to a limited extent, I am keen to explore opportunities in the IT industry. I am seeking advice on what areas I should focus on learning and understanding to make a successful move into IT. I have no interest in pursuing a recruitment-focused role and am currently studying HR through distance learning at Symbiosis.

Thank you,
Neelanjana

Dear Friend,

I have read your post. I understand that you are still being treated as a consultant. As per the appointment letter, your extension period is 3 months from the date of appointment; however, they might have extended another 3 months for your probation period. Please thoroughly read your appointment order and check if there is any clause stating that if we are not satisfied, we may extend your probation period without prior information.

Regarding your IT deductions, according to income tax norms under the consultancy (194J) category, if the payment is Rs. 30,000 or above in a particular financial year, tax should be deducted at a rate of 10%. If payments were made previously, TDS should be deducted on the entire previous payments (meaning payments made in that financial year). In your case, they might have paid below Rs. 30k in the first three months. The moment you reach or exceed Rs. 30k, they have deducted 10% on the total payments, which is correct based on Income Tax norms.

Addressing your concerns, I am providing brief answers based on my view:

1) As a consultant, you should comply with your company's policies because you may have signed the appointment letter copy, indicating your agreement to follow the company's policies.

2) When a company selects a person for hiring, the company must issue an appointment letter. In your case, the company did so, so there is no question of null and void.

3) Form 16 is issued only for regular employees, not for consultants. In your case, you are entitled to Form 16A. I hope they will issue Form 16A (TDS certificate) since they have deducted tax from your consultancy services.

4) You cannot ask your accounts department people for non-deduction of TDS since they are complying with and deducting tax as per IT rules. Note that it is a statutory obligation.

5) They may have informed you that you will receive the total amount at the time of appointment. To my knowledge, in the appointment letter, they might have included the clause that taxes are applicable according to statutory norms, so read your appointment letter carefully. Generally, we are not aware of taxes at the time of joining, which is where we encounter difficulties, so we should be more careful in these situations.

To receive a refund, you must submit Income Tax Returns.

As a consultant, you can claim some of your expenses like conveyance, fuel, depreciation of the vehicle (if applicable), telephone charges, rent, etc. These expenses can be deducted from gross income, resulting in a reduction of your total income. Additionally, you can show your savings like LIC, Mutual funds, P.P.F., etc., under section 80C up to Rs. 1,00,000/-. I recommend consulting a tax consultant or practicing Chartered Accountant for the submission of Income Tax returns as they will guide you properly.

I hope this clarifies things for you.

I wish you all the best, and God bless you.

Dear Manya,

Please find attached the Income Tax Declaration format which we take from employees at the beginning of the financial year. So depending on this, we calculate the tax liability, verify, and collect the proofs for the same in the month of January every year for the current financial year.

After verification, we don't allow any fresh investments but consider their existing investments like insurance premiums, which fall in February and March.

I hope this will help you manage the tax working in your company.

Could anyone please provide the TDS calculation format that would be helpful for my HR career? Thank you.