{"id":24391,"date":"2024-07-02T10:18:22","date_gmt":"2024-07-02T10:18:22","guid":{"rendered":"https:\/\/akriviahcm.com\/blog\/?p=24391"},"modified":"2025-05-15T07:02:02","modified_gmt":"2025-05-15T07:02:02","slug":"declare-income-tax-on-behalf-of-employees","status":"publish","type":"post","link":"https:\/\/akriviahcm.com\/blog\/declare-income-tax-on-behalf-of-employees","title":{"rendered":"How to Declare Income Tax on Behalf of Your Employees"},"content":{"rendered":"

Navigating taxes in India can be tricky for businesses and business owners, especially given the frequent changes and revisions that take place at the beginning of every financial year. In addition to the numerous compliances that come with running a business, employers also have to declare income tax on behalf of their employees. Known as \u2018Tax Deducted at Source\u2019 or TDS<\/a>, this tax amount is a part of income tax that every salaried individual has to pay.<\/p>\n

Besides this, companies also need to deposit the taxes timely to the government portal and issue Form 16 to employees so that they can file income tax returns on time.<\/p>\n

As of AY 2023-24 nearly 8.18 crore<\/a> ITRs were filed in India.<\/p>\n

What is Section 192?<\/h2>\n

Section 192 of the Income Tax Act outlines that every employer who pays their employees under the category of \u2018salaries,\u2019 must deduct an estimated amount of income tax from the salary amounts.<\/p>\n

Section 192 exhaustively lists details about TDS calculations and deductions. It specifies the tax rates under different slabs, exemptions, deductions, and the minimum taxable income. The provisions also address situations where an employee may have more than one employer or multiple sources of income.<\/p>\n

Understanding Tax Regimes: The Old vs. New Regime<\/h2>\n

India follows a progressive tax system and presently has two frameworks. The New Tax Regime was introduced in 2020, after which the primary pre-exiting tax regime came to be known as the Old Tax Regime. While the New Tax Regime was made the default tax regime since FY 2023-24, taxpayers still have the choice to choose between either of the two for their tax calculations.<\/p>\n

Understanding Exemptions and Deductions<\/h2>\n

Both regimes have their own set of parameters for exemptions and deductions. Under both regimes, there are several salary components that can help employees save on taxes<\/a>. The Old Tax Regime has steeper tax slabs but with more exemptions and deductions based on different salary components like House Rent Allowance (HRA) and Leave Travel Allowance (LTA).<\/p>\n

The New Regime on the other hand has more gradual increments in tax percentages but offers far fewer exemptions and deductions. Both regimes offer a standard deduction of INR 50,000 regardless of the salary amount.<\/p>\n

Steps to Declare Income Tax on Behalf of Employees<\/h2>\n

It\u2019s important for employers to educate themselves about tax-saving salary exemptions and deductions. It can help them create a salary breakup that helps employees minimize their tax liabilities.<\/p>\n

Here\u2019s how employers can declare income tax on behalf of their employees:<\/p>\n

1. Collect Employee Information<\/h3>\n

At the beginning of the financial year, employers ask employees for their tax declarations. This contains information about their investments or any others tax-saving expenditure. Employees must also disclose of any other sources of income for proper calculation of taxes. This is also the point where the tax regime is selected by the employees.<\/p>\n

2. Calculate Taxable Income<\/h3>\n

Once the employers receive the tax declaration and selected regime, they must calculate taxable income<\/a>. Firstly, gross salary needs to be calculated based on salary components. Then standard deductions, allowances, and other applicable deductions like those under Section 80 (under the Old Regime) need to be factored in to arrive at taxable income.<\/p>\n

3. Deducting TDS<\/h3>\n

After determining taxable income, employers need to calculate TDS based on the regime and the tax slab. Here\u2019s how the TDS amount is determined:<\/p>\n

\"Income<\/p>\n

4. Depositing TDS<\/h3>\n

Once the TDS amount has been calculated, employers need to deduct the monthly amount from an employee\u2019s salary. This TDS amount then needs to be deposited every month within a specific date. For non-government deductors, TDS needs to be deposited by the 7th of next month, from April to February. For the month of March, the TDS has to be deposited by 30th April.<\/p>\n

Depositing TDS Online<\/h4>\n

For depositing TDS online, employers need go to follow the following steps.<\/p>\n