How TDS Affects your Salary

According to section 80C of the Income Tax Act, 1961, the most frequently used and popular deductions are allowed. Section 80D, section 80EE, section 24(b), section G are a few other sections for tax benefits. TDS (Deducted at Source. Under) means a deductor is liable to do payment to another deductee will deduct tax at the source and transfer the balance to the deductee.

The total TDS amount deducted is remitted to our Central Government. You can get the latest TDS rate chart to know how it applies in your region by clicking here.

TDS Based Upon

The TDS deduction occurs after taking into account any declarations by the employee. These declarations are asked by employers or companies in the financial year beginning.

The liability of TDS is calculated on the estimated income for the entire year at the income tax average rate of (it means on the basis of pro-rata).

It is based on the rates in force for the financial year in which payment is made.

Each financial year’s Finance Act specifies the rates in force for deduction of tax at source which is basically the slab rate.

Check And Verify TDS

It’s necessary to check if the correct TDS has been submitted or deducted by the company or employer to the authority. To verify you can find many online websites that are based on the application of the Income-tax Department. It allows a PAN holder to view or register tax credit online that is updated on a near real-time basis.

Modalities TDS In The Case Of Employees

  • First, compute total salary (consisting of all estimated and fixed variable components) providing all exemptions/deductions based on Investment declaration for the entire year.
  • Add income of all other sources as described by the employee.
  • Decrease loss from House Property
  • This will be the number of the total income of the employee on which income tax is needed to be deducted.
  • Income tax is calculated on income based on slab rate including the cess and surcharge as applicable.
  • On monthly basis, 1/12th of the tax as arrived at should be deducted.
  • Any deficit arising out of earlier deduction can be adjusted by decreasing or increasing the number of following deductions through the same financial year.

Income In Addition To Salary 

Unless the worker notifies the company of any other income, say of interest on FD (fixed deposits), any rental revenue etc, the company is going to decrease TDS based only on the wage or salary income. Preferably than tending to pay tax on such additional income later, the worker may be informed.

In condition, the employer has other income besides salary benefits, he or she has the choice either to give advance tax if his tax debt is Rs. 10,000 or more than that or to notify his/her company about additional income which will deduct their TDS. In the cause of failure, she/he may be responsible for punitive interest for the delayed amount of tax to the authorities.


Hence to calculate the in-hand salary= Monthly Gross Payment – Income Tax – Employee PF – Other Reductions, if any. You can also choose a 100% accurate, automated and easy to use in-hand salary calculator here.

After offering the actual proof of expenses to the company, it’s necessary to keep them protected as the IT team may ask for them. 

Photo by Kelly Sikkema on Unsplash

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