The document explains the concept of Tax Deducted at Source (TDS) in India, which is a method of income tax collection that applies to various income types, including salaries and professional fees. It outlines how TDS is calculated, exemptions available under sections 80c and 80d of the Income Tax Act, and the importance of accurate tax returns to avoid penalties. The document also specifies eligible investments and expenses for tax deductions for the fiscal year 2022-23.

1. Section 80C
Income Tax on Salary
TDS Deduction
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2. In India, the Indian Income Tax Act of
1961 specifies TDS as a method of
income tax collection. TDS applies to
salaries, commissions, royalties,
brokerage fees, contract payments,
interest received on various financial
investments, lotteries, rental income,
professional fees, etc. A component of
the Department of Revenue, which is run
by the Indian Revenue Service, the TDS is
overseen by the Central Board for Direct
Taxes (CBDT) (I.R.S.). This sum is
collected to ensure the government’s
consistent annual income stream.
Because of this, tax evasion is prevented.
What Exactly is TDS?

3. If you’ve ever observed, the C.T.C. (cost to
the business) estimate given to you at the
time of joining includes items like the
base salary, travel expenses, medical
expenses, housing rent expenses, and
other allowances. Additionally, there are
two main categories for salary, namely
perquisites. Benefits include services that
the employer offers to the employee,
such as paying for their travel and fuel
costs.
Organizations now use the best TDS
software to calculate employee TDS and
do many other payroll-related tasks.
What Factors are Used for TDS Calculation?

4. Sections 80C and 80D of the Income Tax Act of 1961 permit
deductions for government taxes. This enables a person to
search for various investments for a specific fiscal year.
By deducting the exemption from the total annual earnings
stated by the Income Tax department, one can compute
TDS on salary rate. If an employee requests a tax
exemption, the employer must get a declaration and
supporting documentation before approving the request.
The following are some possible tax exemption categories.
House Rent Allowance: H.R.A. is a benefit that an
employee may claim from their employer if they pay rent
for housing.
Conveyance or Travel Payment: If your company gives you
this type of allowance, they can declare it for tax purposes.
Medical Allowance: If your employer offers you a medical
allowance, they may report it and furnish medical records
to qualify for a tax exemption.
How is TDS Determined?

5. A claim for a refund of the excess amount can
be made if a person has paid more in taxes
than required. Additionally, TDS deductions
for people in different income brackets are
computed based on various variables.
TDS Deduction Methods
Salary, lotteries, bank interest, rent,
commission payments, and payments to
independent contractors are examples of
income and expenses that fall under the
scope of TDS. As a result, the source deducts
a portion of the total payment whenever one
of these segments receives payment. The
“Deductor” is the source, which can be either
a person or an organization. The Deductee is
the person from whose payment the
deduction is made.
TDS Deduction

6. Income Tax Deductions List FY 2022-23 (AY 2023-24):
Section Eligible Investments/expenses
80C Contributions made towards- EPF/VPF, PPF, ELSS
mutual funds, Sukanya Samriddhi, senior citizens
savings scheme, NSC. A 5-year term deposit, life
insurance or ULIP premium, home loan principal
repayment, stamp duty paid towards house
purchase, children’s school tuition fee (maximum
two children).
80CCC Contributions made to any annuity or pension
plan of a life insurance company.
80CCD
(1)
Both salaried employees and self-employed can
claim this deduction on their contribution
towards NPS, not more than- 10% of Basic
Salary+DA (in case of an employee), 20% of total
gross income (for self-employed).

7. Why is Filing the Correct Tax Return Necessary?
When calculating your tax liability, you must
be truthful about your income and
outgoings. When transitioning to a new job,
you could overlook some aspects, such as
income from the prior position or
additional revenue from a contractual
opportunity. However, one should refrain
because doing so will subject one to severe
fines from the relevant tax authorities, who
will also take legal action. To prevent issues
with the taxman, you must guarantee that
your data is accurate and can withstand
future cross-verification.

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Address- DBI LLC, 584 Castro St #2136 San Francisco CA 94114-2512
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Email: enquiry@confluxhr.com
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