Any person responsible for paying Salaries (i.e. employer) is required to deduct tax on the salaries payable by him. Tax is to be deducted at the prescribed rate applicable for 2018-19.
Section 192 of the I. T. Act, 1961 provides that every person responsible for paying any income which is chargeable under the head ‘salary’, shall deduct income tax on the estimated income of the assesse under the head salaries.
The tax once deducted is required to be deposited in government account and a
certificate of deduction of tax at source (also referred as Form No.16) is to be issued to the employee. This certificate is to be furnished by the employee with his income tax return after which he gets the credit of the TDS in his personal income tax assessment. Finally, the employer/ deductor is required to prepare and file quarterly statements in Form No.24Q with the Income-tax Department.
TDS on simultaneous employment with more than one employer or on change of employment :
Where a person is simultaneously employed with more than one employer, he may furnish the particulars of salary payments and TDS to the employer of his choice. Similarly, on change of employment the particulars of salary and TDS of earlier employment may be furnished to the subsequent employer. These particulars are to be furnished in Form 12 B in accordance with Rule 26A of the I. T. Rules. The employer on receipt of such information is required to take into account the particulars of salary and TDS and then deduct tax at source considering the aggregate salary from all sources.
When is tax to be deducted :
The responsibility is on the employer, of tax deduction at source, at the time of actual payment of salary to the employee. Unlike the provisions of TDS, pertaining to payments other than salary where the obligation to deduct tax arises at the time of credit or payment, which ever is earlier, the responsibility to deduct tax from salaries arises only at the time of payment. Thus, when advance salary and arrears of salary has been paid, the employer has to take the same into account while computing the tax deductible. As the financial year end and ETDS Q4 is near, it’s time for Income Tax Proof Verification. Income Tax Proof Verification process includes, verification of proofs related to sections of Income Tax act which provides exemption for salaried employees to get tax exemption from their salaries. It’s very important to validate the proof given by employees as per the Income Tax rules and regulations.
Rate of deduction of tax :
The employer is required to deduct tax at source on the amount payable at the average rate of income tax. This is to be computed on the basis of rates in force for the financial Year in which payment is made. The Finance Act of each financial year specifies the rates in force for deduction of tax at source.
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