How Should We Handle IT and TDS Deductions for Retired Employees on Contract?

Hi All, I need information urgently, please help!

Contractual Employment for Retired Employees

In our organization, there are a few employees who are over the age of 60, have retired from their respective jobs, and have been issued appointment letters in our organization on a contract basis for a period of 2-3 years. They are drawing consolidated salaries, and we deduct only P Tax from their salaries.

Tax Deduction Query

My question is whether to deduct IT from their salaries as per the rule and keeping in view their investments, or to deduct TDS at a rate of 10% from their monthly salaries.

Are they contract employees or consultants? If they are consultants, you should deduct a 10% TDS as a professional fee.

TDS Calculation Criteria

TDS calculation is considered based on many criteria. The factors include Gross Pay, which is calculated by subtracting taxes paid (such as PT or other taxes) from the Gross Pay amount. HRA should also be taken into account for exemption purposes. Deductions include the following:

- Rs. 1,00,000/- under 80C (for Insurance, Tuition Fee, PF, and other savings)
- Rs. 15,000/- under 80D (for Medical Insurance for self and family) or Rs. 25,000/- if parents are senior citizens
- Rs. 10,000/- under 80F (for Infrastructure Bonds)

The remaining balance is considered taxable income. Up to Rs. 1,80,000/- is exempted, and for the remaining pay, TDS has to be deducted.