Section 192(2b) of the Income Tax Act: Understanding Tax Deduction at Source (TDS) on Salary
As an employee, you must be familiar with the concept of Tax Deduction at Source (TDS). TDS is a mechanism by which the government collects tax from your income at the source itself, i.e., from your employer. Section 192(2b) of the Income Tax Act governs the TDS on salary, and it is important to understand its provisions to ensure that you comply with the law.
What is Section 192(2b)?
Section 192(2b) of the Income Tax Act pertains to the TDS on salary. It states that TDS must be deducted from the salary payable to an employee at the time of payment or at the time of credit of such income to the employee’s account, whichever is earlier. The rate of TDS is based on the employee’s income tax slab rate and other applicable provisions of the Income Tax Act.
Who is liable to deduct TDS?
According to Section 192(2b), the employer is responsible for deducting TDS from the salary payable to the employee. The employer must deduct the TDS and deposit it with the government on behalf of the employee. If the employer fails to deduct TDS or fails to deposit it with the government, the employee may be held liable for the same.
How is TDS calculated?
TDS on salary is calculated based on the employee’s income tax slab rate. The employer must consider the employee’s total income, including salary, bonus, allowances, perquisites, and any other income. After deducting the exemptions and deductions allowed under the Income Tax Act, the employer must calculate the tax liability and deduct TDS at the appropriate rate.
What are the exemptions and deductions available?
Under the Income Tax Act, certain exemptions and deductions are available to reduce the tax liability of employees. These include exemptions for HRA (House Rent Allowance), LTA (Leave Travel Allowance), medical reimbursements, and standard deduction. Additionally, deductions are available under Section 80C for investments in certain instruments such as Provident Fund, Public Provident Fund, Life Insurance Premium, and Equity Linked Saving Scheme.
What are the consequences of non-compliance?
If an employer fails to deduct TDS or deposit it with the government, they may face penalties and interest charges. The employee may also be held liable for the TDS amount if it is found that they have not disclosed the salary income in their tax return. Therefore, it is crucial to ensure compliance with the provisions of Section 192(2b) of the Income Tax Act.
Conclusion
Section 192(2b) of the Income Tax Act governs the TDS on salary and mandates that TDS be deducted at the time of payment or credit of salary income, whichever is earlier. The employer is responsible for deducting and depositing the TDS with the government, and the rate of TDS is based on the employee’s income tax slab rate. Compliance with the provisions of Section 192(2b) is essential to avoid penalties and interest charges.
Other Related Blogs: Section 144B Income Tax Act
Frequently Asked Questions (FAQs)
Q. What is Section 192(2b) of the Income Tax Act?
Section 192(2b) pertains to the Tax Deduction at Source (TDS) on salary. It mandates that TDS must be deducted from the salary payable to an employee at the time of payment or credit, whichever is earlier.
Q. Who is liable to deduct TDS?
The employer is responsible for deducting TDS from the salary payable to the employee.
Q. What is the rate of TDS under Section 192(2b)?
The rate of TDS is based on the employee’s income tax slab rate and other applicable provisions of the Income Tax Act.
Q. What are the exemptions and deductions available under the Income Tax Act?
Exemptions and deductions available under the Income Tax Act include HRA (House Rent Allowance), LTA (Leave Travel Allowance), medical reimbursements, standard deduction, and deductions under Section 80C.
Q. What are the consequences of non-compliance with Section 192(2b)?
If an employer fails to deduct TDS or deposit it with the government, they may face penalties and interest charges. The employee may also be held liable for the TDS amount if it is found that they have not disclosed the salary income in their tax return.
Q.How can an employee check if TDS has been deducted from their salary?
An employee can check their salary slip or Form 16 to confirm if TDS has been deducted from their salary. They can also check the Form 26AS available on the income tax e-filing website to view details of TDS deducted by their employer.
Q. Is TDS applicable on all types of income?
No, TDS is not applicable on all types of income. It is applicable only on income specified under the Income Tax Act, such as salary, interest income, rent income, etc.
Q. Can an employee claim a refund of excess TDS deducted?
Yes, an employee can claim a refund of excess TDS deducted by filing their income tax return. If the TDS deducted is more than the tax liability, the excess amount will be refunded to the employee.
Q. Can an employee claim exemptions and deductions while filing their income tax return?
Yes, an employee can claim exemptions and deductions while filing their income tax return. They must provide details of the same in their tax return to reduce their tax liability.
Q. What is the due date for depositing TDS with the government?
TDS must be deposited with the government by the 7th of the following month in which it is deducted, except for the month of March, where it must be deposited by the 30th of April.
