Tax Deduction on Employee Salary Arrears U/S 89 with Calculation

Method of tax calculation: 3.1 Anyone who is responsible to pay any income under the heading "Salaries" income tax return for salaried person , shall deduct income-tax from the estimated income of an assessee under "Salaries," for the financial years 2009-2010. The rates above must be used to calculate the income tax. It shall be deducted at each payment on an average basis. However, no tax will be required at source if the salary income, including perquisites, exceeds Rs.1,60,000// or Rs.1,90,000.//, depending on the employee's age and gender. Annexure-I provides some examples of how tax is calculated. Employer has the option to pay tax on non-monetary perquisites. itr file for salaried person Employer may pay the tax on these perquisites without deducting any TDS from employee's salary. This tax will be paid by the employer at the rate that such tax is otherwise exempted, i.e. At the time of the payment of income due under the head salaries to an employee. Calculation of Average Income Tax: 3. To make the tax payment mentioned in para.3.2 above, tax must be calculated at the average income tax on the income charged under the heading "salaries" and the perquisites that have been paid tax by the employer. ILLUSTRATION: Let's say that the income of a male employee aged below sixty-five is Rs.4,50,000/year. Of this, Rs.50,000/year is due to non-monetary perquisites. The employer decides to pay the tax as per para 3.2.