Can I Deduct TDS from Salary After ESI and PF Deductions? Need Guidance on Procedure

Dear friends,

I have a small query. If a person is receiving a salary of 25000, and we are deducting ESI and PF for 8500, can I deduct TDS from the balance amount of 16500? If so, what is the procedure and format? Please kindly help me.

Regards,
Saleem.M

Provident Fund and ESI Deductions

We can't deduct PF for Rs. 8,500/- and can deduct PF wage limits up to Rs. 15,000/- at 12%. ESI can be deducted for Rs. 25,000/- at 1.75%.

Tax Deduction at Source (TDS) Calculation

As far as TDS is concerned, the gross taxable income for the year 2017-2018 is calculated as follows:

25,000 * 12 = 300,000 (if any payments other than Rs. 25,000 are also considered as gross taxable income).

Less: Section 80 deduction (Chapter VI A)

PF Recovery (15,000 * 12% = 1,800 * 12 months) = 21,600

Net taxable income = 278,400

Tax Computation

- Up to 250,000 no tax = 0
- From 250,001 to 500,000 - @10% (278,400 - 250,000 = 28,400 @10%) = 2,840
- Cess at 3% on total tax (2,840 * 3%) = 86
- Total tax including cess = 2,926

Total tax for the year Apr 2017 to Mar 2018 = 2,926

You can deduct tax on a monthly basis like 2,926/12 = 244.

Sorry, ESI deduction will be 0 since his wage is more than 21000.

Please let me know if you need any further assistance.

If the HRA component is considered (breakup is not provided by the post), then up to 1 lakh can get exempt under HRA without any hassle, and the person comes exempt from TDS.

Dear Saleem,

You can deduct PF @ 8500 if you have declared it Basic Salary. There is no problem. The recent development in the PF Act has increased the limit up to 15000 only. The limits are only increased, no guidelines about criteria to fix basic salary under the EPF Act.

However, ESI will not be applicable if the Gross Salary (Rs 25000) has crossed the current limit, which is Rs 21000/- PM.

For TDS deduction, the above suggestions are valuable and should be kept in mind.

Thank you so much for your guidelines. My doubt is if we show basic wages as 8500 or 9000, and the remaining balance amount (25000-9000=16000) as an allowance, how do we calculate this and is it possible to do it like this?