TDS Section 192 of Income Tax Act

 

 


 

TDS (Tax Deducted at Source) under Section 192 of the Income Tax Act refers to the deduction of tax from salaries by employers before paying them to their employees. Here's a simple explanation with an example:

Let's say you work for a company and earn a monthly salary of ₹50,000. As per the income tax laws, your employer is required to deduct a certain amount of tax from your salary every month before paying it to you. This deducted amount is known as TDS.

Now, under Section 192, the employer calculates the TDS based on your salary income and the applicable tax rates. They deduct this TDS amount from your salary and deposit it with the government on your behalf.

For instance, if the applicable tax rate for your salary income is 10%, then your employer will deduct ₹5,000 (10% of ₹50,000) as TDS from your salary. So, instead of receiving ₹50,000 in your bank account, you will get ₹45,000 after the TDS deduction. The deducted ₹5,000 will be deposited by your employer to the government as your income tax.

This system ensures that taxes are collected in advance on your salary income and helps in the smooth functioning of the taxation process. Later, when you file your income tax return, you can claim credit for the TDS deducted and adjust it against your total tax liability for the year.


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