Income Tax Deduction from Salaries in Financial Year 2024-25 Under Section 192 – A Complete Guide
Understanding income tax deductions from salaries is crucial for both employers and employees. The Income Tax Act, 1961, under Section 192, governs how tax is deducted at source (TDS) from salaried individuals. The Financial Year 2024-25 brings several amendments, including revised tax slabs, exemptions, and deductions introduced through various Finance Acts.
This guide will simplify the latest tax provisions and help taxpayers understand their TDS liability, available exemptions, and deductions under Section 192.
What is Section 192 of the Income Tax Act, 1961?
Section 192 of the Income Tax Act, 1961, mandates that employers deduct tax at source (TDS) from employees’ salaries before making payments. The deducted tax is deposited with the government. This section applies to all individuals earning a salary, including private and government employees.
Applicability: Employers deduct TDS if the employee’s income exceeds the basic exemption limit.
Calculation: TDS is calculated based on the prevailing income tax slabs after considering exemptions and deductions.
Deposit: The deducted amount is remitted to the government before the specified deadline.
Latest Income Tax Slabs for FY 2024-25
The Finance Act 2024 has introduced two tax regimes: the Old Tax Regime and the New Tax Regime. Employees can choose the regime that best suits their financial situation.
New Tax Regime (Default Option for FY 2024-25)
| Total Income (₹) | Tax Rate |
|---|---|
| Up to ₹3,00,000 | Nil |
| ₹3,00,001 – ₹7,00,000 | 5% |
| ₹7,00,001 – ₹10,00,000 | 10% |
| ₹10,00,001 – ₹12,00,000 | 15% |
| ₹12,00,001 – ₹15,00,000 | 20% |
| Above ₹15,00,000 | 30% |
Key Benefit: Individuals earning up to ₹7,00,000 do not pay tax due to the rebate under Section 87A.
Old Tax Regime (Optional with Deductions & Exemptions)
| Total Income (₹) | Tax Rate |
|---|---|
| Up to ₹2,50,000 | Nil |
| ₹2,50,001 – ₹5,00,000 | 5% |
| ₹5,00,001 – ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
Key Benefit: Allows deductions under Section 80C, 80D, HRA, LTA, etc.
Surcharge Rates Under the Old Tax Regime
| Total Income (₹) | Surcharge Rate |
|---|---|
| ₹50 lakh – ₹1 crore | 10% |
| ₹1 crore – ₹2 crore | 15% |
| ₹2 crore – ₹5 crore (excluding capital gains) | 25% |
| Above ₹5 crore (excluding capital gains) | 37% |
| ₹2 crore+ (including capital gains) | 15% |
TDS Calculation Under Section 192
TDS Deduction Process
- Determine the Taxable Salary (Gross salary – Exemptions – Deductions).
- Compute Tax Liability as per the chosen tax regime.
- Divide by 12 (equal monthly deduction).
- Deduct TDS every month before salary payment.
Deductions & Exemptions Available in the Old Tax Regime
| Exemption/Deduction | Max Limit (₹) |
|---|---|
| Standard Deduction | 50,000 |
| Section 80C (LIC, EPF, PPF, ELSS, NSC, etc.) | 1,50,000 |
| Section 80D (Medical Insurance) | 25,000 (50,000 for Sr. Citizens) |
| House Rent Allowance (HRA) | Based on salary & rent |
| Leave Travel Allowance (LTA) | As per actual expenses |
| Interest on Home Loan (Section 24b) | 2,00,000 |
Choosing the Old Tax Regime? Maximize your deductions!
How to Submit Investment Proofs for TDS Calculation?
Deadline for Proof Submission: Employers set deadlines (usually January-February).
Common Proofs Required:
- Insurance premium receipts
- Rent agreement & rental receipts
- PPF, EPF, and NSC receipts
- Education loan interest certificates
- Health insurance policy details
Tip: Keep your documents ready to avoid higher TDS deductions.
New Form 16 Format & TDS Reporting Changes
Form 16 now includes detailed salary breakup, exemptions, and deductions claimed.
New Form 24Q format mandates detailed salary disclosure by employers.
Auto-calculation of tax liability under the New Tax Regime.
FAQs on Salary TDS & Section 192
1. Can I switch between Old and New Tax Regimes?
Salaried individuals can choose yearly but need to inform their employer at the start of the FY.
2. If I don’t declare investments, will TDS be higher?
Yes, if no declarations are provided, TDS is calculated without deductions/exemptions.
3. Is it mandatory to file an ITR if my employer deducts TDS?
Yes, filing an Income Tax Return (ITR) is mandatory if income exceeds the exemption limit.
4. What if excess TDS is deducted?
You can claim a refund while filing ITR.
The Income Tax Deduction from Salaries under Section 192 is an important provision affecting salaried taxpayers. With the New Tax Regime becoming the default, it is essential to understand which tax regime benefits you the most. Proper tax planning and timely declaration of investments will help employees optimize their tax liability and maximize savings.
Tip: Consult a tax advisor Estabizz Fintech for clear guidance or use an income tax calculator to make the right decision for FY 2024-25!
FAQs on Salary TDS & Section 192
1. Can I switch between Old and New Tax Regimes?
Salaried individuals can choose yearly but need to inform their employer at the start of the FY.
2. If I don’t declare investments, will TDS be higher?
Yes, if no declarations are provided, TDS is calculated without deductions/exemptions.
3. Is it mandatory to file an ITR if my employer deducts TDS?
Yes, filing an Income Tax Return (ITR) is mandatory if income exceeds the exemption limit.
4. What if excess TDS is deducted?
You can claim a refund while filing ITR.
5. What happens if my employer does not deduct TDS from my salary?
The responsibility to deduct and deposit TDS lies with the employer. However, if TDS is not deducted, the employee must pay advance tax or self-assessment tax to avoid penalties.
6. Can I claim deductions under 80C and 80D in the New Tax Regime?
No, the New Tax Regime does not allow deductions under 80C, 80D, and other exemptions (except for NPS contributions and the standard deduction).
7. How can I calculate my TDS amount?
TDS is calculated based on gross salary, applicable deductions (for Old Tax Regime), tax slabs, and rebate eligibility. Employers usually provide a TDS computation sheet for employees.
8. Can I change my tax regime mid-year?
No, once declared to the employer at the beginning of the FY, the regime cannot be changed mid-year for TDS purposes. However, individuals can choose their regime while filing their ITR.
9. How can I reduce my TDS liability?
If opting for the Old Tax Regime, maximize deductions under 80C, 80D, HRA, LTA, home loan interest (Sec 24b), and NPS (Sec 80CCD(1B)).
Submit your investment declaration to your employer on time to ensure the correct TDS is deducted.
10. Does TDS apply to bonuses and incentives?
Yes, any bonus, commission, or incentive received by an employee is added to the salary income and taxed as per the applicable income tax slab rates.
11. What if I have multiple employers in a year?
If you switch jobs, inform your new employer about your previous salary and TDS deducted to ensure correct tax computation. If not, you may need to pay additional tax at the time of filing ITR.
12. What if my total income is below the taxable limit, but TDS is still deducted?
You can file an ITR and claim a full refund of the TDS deducted if your total income is below the basic exemption limit.
13. Can senior citizens opt for the New Tax Regime?
Yes, but they will lose benefits of 80C, 80D, and other deductions, which may not be beneficial unless they have limited taxable income.
14. How does tax treatment differ for expatriates working in India?
Expatriates earning in India are subject to TDS under Section 192. However, tax treaties (DTAA) between India and their home country may provide relief on double taxation.
15. Can I claim house rent allowance (HRA) under the New Tax Regime?
No, HRA exemption is only available under the Old Tax Regime. Employees choosing the New Tax Regime cannot claim HRA benefits.
16. What is the penalty for late TDS payment by the employer?
If the employer delays TDS deposit, they are liable to pay interest at 1.5% per month until the amount is deposited. They may also face penalties for non-compliance.
17. How do I know if my TDS has been deposited correctly?
You can check Form 26AS on the income tax portal, which shows all TDS deductions and tax payments made by your employer.
18. Is there any tax relief for COVID-19-related medical expenses?
As per recent amendments, any COVID-19-related medical reimbursement received from an employer is tax-free. Additionally, financial assistance received by a deceased employee’s family due to COVID-19 is exempt from tax.
19. Do freelancers and self-employed individuals fall under Section 192?
No, freelancers and self-employed professionals fall under Section 194J (Professional Fees TDS) or 194C (Contract Payments TDS), not Section 192, which is only for salaried employees.
20. Can an employer refund excess TDS deducted?
No, employers cannot refund excess TDS. Employees must file an ITR and claim a refund from the Income Tax Department.
Disclaimer – Estabizz Fintech
The content on this website is provided for informational and educational purposes only. While we strive to ensure accuracy and keep our information up-to-date, we do not claim that it represents exhaustive financial, tax, or legal advice. Tax laws, investment policies, and financial regulations are subject to frequent changes, and their interpretation may vary based on individual circumstances.
Estabizz Fintech Private Limited does not take responsibility for any decisions made based on the information provided here. We strongly recommend consulting with certified financial advisors, tax professionals, or legal experts before making any financial, investment, or taxation decisions.
By using this website, you acknowledge that Estabizz Fintech is not liable for any losses, damages, or legal consequences arising from your reliance on the information provided. Always verify with official regulatory sources before taking any action.
For personalized financial guidance, feel free to contact our team of experts at Estabizz Fintech Private Limited.
For inquiries, reach out to us today! 98256-00907 , Team of Estabizz Fintech Private Limited.
