1) Calculate the annual salary for the given financial year approximately. From the gross salary one has to calculate the exact taxable income by subtracting the deductions. Deductions applied are Professional Tax, House Rent Allowance not exceeding 1/10 of the salary, interest on house loan, savings on bonds and medical claims. Gross subtracted by total deduction will give taxable income.
2) Add any other source of income declared by the employee.
3) Deduct the loss declared taxable income for whole of financial year. Only house properly loss is applicable under this.
4) All the given deduction under section 80C, 80D, 80G etc is applied.
5) Tax amount is calculated depending upon the bracket in which your net income falls after all the deduction has been made from the gross salary. The tax rate will depend upon the rates declared during the given financial year.
6) Deduct any rebate or relief applied.
7) Now apply Tax Deducted at source (TDA), as till last month needs to be deducted.
8) Now divide the net TDS by total number of months in the given financial year including the current month.
9) The result obtained is deducted from the salary of the employee ad TDS.
Therefore, TDS is deducted from the salary based on assumption by the deductors and consequently payment per month is made based on that.
May 15th, 2012 by Slab | Comments (2)