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How Is TDS Calculated?: Section 80C Section 80D of The Income Tax Act, 1961

You can calculate TDS on salary by reducing exemptions from total annual earnings as specified by the Income Tax department. Below are the steps to calculate TDS: calculate gross annual income and allowances, estimate exemptions under Section 10, reduce exemptions from gross income, subtract other income sources, deduct Chapter VI-A investments, and finally deduct maximum allowable income tax exemptions. In case of tax exemption, employers obtain declarations and proofs from employees to approve tax declarations.

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41 views1 page

How Is TDS Calculated?: Section 80C Section 80D of The Income Tax Act, 1961

You can calculate TDS on salary by reducing exemptions from total annual earnings as specified by the Income Tax department. Below are the steps to calculate TDS: calculate gross annual income and allowances, estimate exemptions under Section 10, reduce exemptions from gross income, subtract other income sources, deduct Chapter VI-A investments, and finally deduct maximum allowable income tax exemptions. In case of tax exemption, employers obtain declarations and proofs from employees to approve tax declarations.

Uploaded by

Ganesh Yadav
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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How is TDS Calculated?

As per the government, tax deductions are allowed under section 80C and section


80D of the Income Tax Act, 1961. This, in turn, will enable you to look for various
types of investments for a particular financial year.
You can calculate TDS on salary by reducing the exemption from total annual
earning as specified by the Income Tax department. In case of tax exemption, the
employer obtains a declaration and proof from the employees to approve a tax
declaration.
Below are a few steps to calculate TDS on your income:
1) First calculate your gross annual income, allowances and perquisites
2) Estimate The exemptions under Section 10 of the Income Tax Act on
allowances such as medical, house rent and travel.
3) Reduce the exemptions from the gross monthly income
4) If you have any other source of income such as from house rent, subtract this
amount from the figure calculated above
5) Now, calculate your investments for the year under Chapter VI-A of ITA and
deduct the amount from the above estimated gross income
6) Finally, deduct the maximum allowable income tax exemptions on your salary

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