New to Payroll? How Do I Accurately Calculate TDS for Employee Salaries?

Hi, I have a query on TDS calculation for employees. I just joined a new company as an HR professional handling Payroll. How do I determine the amount of tax I should deduct from each employee's salary per month?

Example of TDS Calculation

For example, I have an employee whose monthly salary is 1,00,000, and the previous HR deducted 5,000 as TDS per month. Is this calculation correct?

Hi, Nope, that's not correct. How can an employee earning 1,00,000 be applicable to a tax of just 5,000/- per month? It should be more. Before deducting tax, you should gather all their savings details, rental information, any housing loan, or education loan, etc. Based on all these calculations, only then can you calculate TDS. Your finance team can assist with TDS calculation.

Thank you.

Importance of TDS Knowledge for HR Professionals

Ideally, an HR person should know the TDS calculation systems. If not, perhaps they are not being fair to their job. Firstly, because if there is lesser TDS deduction, under the Income Tax law, the full expense to the company would not be allowed, resulting in additional tax liability on the employer.

Therefore, it is better to sit with a finance person or tax expert and devise a format that an HR department must obtain from every employee under the tax bracket to deduct proper TDS and also save the employer from any hidden tax liability.

TDS Calculation Essentials

For TDS calculation, the breakup of the salary and the investment details are necessary. Secondly, as Mr. Joseph has rightly said, the Income Tax Calculator is available on the site. I am attaching it for your kind perusal. Please do the calculation, and if any further help is required, please consult the forum again.

Regards,