Hi friends, I would like to understand the income tax compliance a company HR needs to follow. As per my understanding, every year in April, an investment declaration is to be taken by the HR from the employees, and then accordingly, TDS is calculated and deducted from the salary every month from April onwards.
Employee Concerns on TDS Deduction Timing
However, some employees are objecting to this, saying "it's too early to deduct TDS. It sounds like the company is forcing us to make a declaration as early as April and not giving a chance to strategize on investments."
The employees have not given any declaration of investment and are suggesting that the declaration should be asked from September-October onwards. Until then, they believe tax should not be deducted or should be deducted as low as possible. Kindly advise on the exact process for salary TDS compliance for employees.
From India, Mumbai
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Employee Concerns on TDS Deduction Timing
However, some employees are objecting to this, saying "it's too early to deduct TDS. It sounds like the company is forcing us to make a declaration as early as April and not giving a chance to strategize on investments."
The employees have not given any declaration of investment and are suggesting that the declaration should be asked from September-October onwards. Until then, they believe tax should not be deducted or should be deducted as low as possible. Kindly advise on the exact process for salary TDS compliance for employees.
From India, Mumbai
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Understanding TDS Compliance for HR
As per the Income Tax Act, you need to start TDS from April itself, reckoning the present salary to continue till the end of the financial year. The TDS has to be tallied for every quarter, presuming the same income for the rest of the year. This helps in the uniform distribution of tax deduction throughout the year.
Actually, you have to multiply the salary for the month of April by 12 and calculate the income tax payable for it. Then, divide that amount by 12 to arrive at the TDS for April. Thereafter, depending on the increase or decrease in salary, the TDS is to be adjusted with every such payment. You are doing a great service to the employees by seeking the tax declaration and reckoning it in arriving at the deduction to be made. However, it is the personal responsibility of the salary drawing and disbursing officer to ensure due compliance with the IT Act provision.
Filing Tax Deducted at Source Returns
The Tax Deducted at Source must be deposited to the government by the 7th of the subsequent month. Filing Tax Deducted at Source returns is mandatory for all persons who have deducted TDS, and the TDS return is to be submitted quarterly: Q1 – 31st July, Q2 – 31st October, Q3 – 31st January, and Q4 – 31st May.
From India, Mumbai
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1593As per the Income Tax Act, you need to start TDS from April itself, reckoning the present salary to continue till the end of the financial year. The TDS has to be tallied for every quarter, presuming the same income for the rest of the year. This helps in the uniform distribution of tax deduction throughout the year.
Actually, you have to multiply the salary for the month of April by 12 and calculate the income tax payable for it. Then, divide that amount by 12 to arrive at the TDS for April. Thereafter, depending on the increase or decrease in salary, the TDS is to be adjusted with every such payment. You are doing a great service to the employees by seeking the tax declaration and reckoning it in arriving at the deduction to be made. However, it is the personal responsibility of the salary drawing and disbursing officer to ensure due compliance with the IT Act provision.
Filing Tax Deducted at Source Returns
The Tax Deducted at Source must be deposited to the government by the 7th of the subsequent month. Filing Tax Deducted at Source returns is mandatory for all persons who have deducted TDS, and the TDS return is to be submitted quarterly: Q1 – 31st July, Q2 – 31st October, Q3 – 31st January, and Q4 – 31st May.
From India, Mumbai
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Circular No 1-2018 Processing of income-tax returns under section 143(1) of the Income-tax Act .pdf
INCOME TAX DECLARATION 2008-09.xls