Introduction
For salaried employees in India, Tax Deducted at Source (TDS) on salary is a crucial aspect of income tax compliance. However, many employees end up paying excess TDS due to incorrect tax calculations or failing to declare deductions on time.
If you are unsure how to check TDS deductions, verify tax credits, and avoid paying excess tax, this article will guide you through the step-by-step process to ensure you only pay the correct tax amount.
What is TDS on Salary?
TDS (Tax Deducted at Source) is an advance tax collection mechanism where employers deduct tax from employees’ salaries every month and deposit it with the Income Tax Department.
TDS on salary is calculated based on the applicable income tax slabs and deductions declared by the employee under Sections 80C, 80D, HRA, NPS, etc.
Key Facts About TDS on Salary:
Employers must deduct TDS before paying salaries.
TDS is deposited with the government and reflected in Form 26AS.
The final tax liability is adjusted when filing Income Tax Returns (ITR).
How to Check Your TDS on Salary?
To ensure that your employer has deducted and deposited the correct TDS amount, you should verify it using the following methods:
1. Check Your Monthly Payslip
Employers mention TDS deductions in the monthly salary slip under the “Deductions” section. Verify whether the amount deducted is consistent with your tax slab.
Tip: If TDS seems too high or low, check if you have declared all deductions correctly.
2. Verify TDS in Form 26AS (Income Tax Portal)
Form 26AS is a tax credit statement that shows all TDS deductions and deposits made by your employer.
Steps to Download Form 26AS:
- Go to www.incometax.gov.in.
- Log in using your PAN and password.
- Navigate to ‘e-File’ → ‘View Form 26AS’.
- Select the relevant financial year and download the PDF or HTML version.
What to Check in Form 26AS?
The TDS amount deducted by your employer.
Ensure that TDS is deposited on time (delays can cause tax notices).
Match the TDS amount with Form 16 issued by your employer.
Issue: If your Form 26AS does not reflect TDS, your employer might not have deposited it yet. In such cases, contact your HR or finance team immediately.
3. Cross-Check TDS in Form 16
What is Form 16?
Form 16 is an annual certificate issued by employers that details salary income, tax deducted, and tax deposited with the government.
How to Check Your Form 16?
Download Form 16 from the HR/payroll portal or request it from your employer.
Match the TDS amount with Form 26AS and your payslip.
Ensure that all deductions under 80C, 80D, HRA, and NPS are correctly included.
Mismatch? If your Form 16 and Form 26AS do not match, it could mean:
- Your employer failed to deposit TDS on time.
- There is a PAN mismatch issue with your payroll records.
Common Reasons for Excess TDS Deduction
Many salaried employees pay more TDS than necessary due to the following reasons:
1. Not Declaring Tax-Saving Investments on Time
If you fail to declare investments under 80C (PPF, ELSS, EPF, LIC), 80D (Health Insurance), or HRA, your employer will deduct higher TDS assuming no tax benefits.
Solution: Submit investment declarations before the deadline (usually by January-February).
2. Not Updating House Rent Details for HRA
HRA (House Rent Allowance) can significantly reduce tax liability, but many employees forget to:
Submit rent receipts to claim HRA exemption.
Declare landlord’s PAN (if annual rent exceeds ₹1 lakh).
Solution: Update your HR portal with HRA details on time to avoid extra TDS deduction.
3. Not Informing Employer About Other Income Sources
If you have multiple incomes (freelance work, part-time jobs, or rental income), your employer may deduct lower TDS, but you may have higher tax liability while filing ITR.
Solution: Declare all sources of income to avoid tax dues and penalties later.
4. Job Change Without Consolidating Previous Income
If you switch jobs in the middle of a financial year, both employers may deduct TDS separately, assuming you fall in the lower tax slab. This can lead to a huge tax due when filing ITR.
Solution: Inform the new employer about your previous salary and consolidate Form 16 from both employers.
How to Avoid Excess TDS Deduction?
Submit Form 12BB – This form allows you to declare all tax-saving investments to your employer.
Regularly check Form 26AS – Ensure TDS is correctly deposited with the IT department.
Declare HRA, home loan benefits, and deductions correctly to reduce taxable income.
Verify your Form 16 and cross-check with your payslips and Form 26AS.
How to Claim a Refund for Excess TDS Deduction?
If extra TDS has been deducted, you can claim a refund while filing your Income Tax Return (ITR).
Steps to Get TDS Refund:
File your ITR on time (before July 31).
Mention the excess TDS deducted in the refund section.
Once filed, the refund will be credited directly to your bank account after verification.
TDS Refund Processing Time: 2-6 months, depending on IT department processing.
Frequently Asked Questions (FAQs) on TDS on Salary
1. My employer deducted TDS, but it is not showing in Form 26AS. What should I do?
This could mean your employer has not deposited the TDS yet. Contact HR immediately and ask them to update it.
2. Can I get a refund if excess TDS is deducted?
Yes! If extra TDS is deducted, you can claim a refund when filing ITR.
3. I switched jobs. How do I consolidate my TDS records?
Collect Form 16 from both employers and ensure correct income is reported in your ITR.
4. What if my employer fails to deduct TDS?
If TDS is not deducted, you are still liable to pay tax while filing ITR. In such cases, pay advance tax to avoid penalties.
Conclusion
Understanding TDS on salary ensures that you do not overpay taxes and get the correct tax deductions.
Check TDS regularly using payslips, Form 16, and Form 26AS.
Declare all tax-saving investments and HRA details on time.
If excess TDS is deducted, claim a refund while filing ITR.
By following these steps, you can maximize your salary and minimize tax outflows!
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