Understanding Tax Deduction at Source (TDS) on a Monthly Salary of ?45,500

Tax Deduction at Source (TDS) is a method of collecting income tax through the withholding of a certain percentage from various sources of income, including salaries. In this article, we will explore how much TDS will be deducted from a monthly salary of ?45,500, considering both the old and new tax regimes for the fiscal year 2023-24. We'll also discuss the importance of eligible deductions and the impact on your TDS calculation.

Old Tax Regime (FY 2023-24)

The old tax regime offers a simpler structure for TDS calculation. Here are the tax slab rates for ?45,500 per month or ?546,000 per year:

Up to ?2,50,000: No tax ?2,50,001 to ?5,00,000: 5% of the income above ?2,50,000 ?5,00,001 to ?10,00,000: 20% of the income above ?5,00,000 Above ?10,00,000: 30% of the income above ?10,00,000

Calculation Steps:

Annual Salary: ?45,500 x 12 ?546,000 Determine Taxable Income: Subtract any eligible deductions, if applicable. Calculate TDS: Example with old tax regime:

Old Tax Regime Example:

Annual Salary: ?546,000 Eligible Deductions: Assume no additional deductions for this example. Tax Calculation: ?2,50,000 to ?5,00,000: 5% of ?250,000 ?12,500 ?5,00,001 to ?5,46,000: 20% of ?46,000 ?9,200 Total Tax ?12,500 ?9,200 ?21,700 Add Cess 4% on Tax: 4% of ?21,700 ?868 Total Tax Payable ?21,700 ?868 ?22,568 Monthly TDS ?22,568 / 12 ≈ ?1,881

New Tax Regime (FY 2023-24)

The new tax regime provides a more nuanced approach to TDS calculation. Let's see how it applies to a monthly salary of ?45,500 or ?546,000 per year:

Up to ?2,50,000: No tax ?2,50,001 to ?5,00,000: 5% of the income above ?2,50,000 ?5,00,001 to ?7,50,000: 10% of the income above ?5,00,000 ?7,50,001 to ?10,00,000: 15% of the income above ?7,50,000 ?10,00,001 to ?12,50,000: 20% of the income above ?10,00,000 ?12,50,001 to ?15,00,000: 25% of the income above ?12,50,000 Above ?15,00,000: 30% of the income above ?15,00,000

Calculation Steps:

Annual Salary: ?45,500 x 12 ?546,000 Determine Taxable Income: Subtract any eligible deductions, if applicable. Calculate TDS: Example with new tax regime:

New Tax Regime Example:

Annual Salary: ?546,000 Eligible Deductions: Assume no additional deductions for this example. Tax Calculation: ?2,50,000 to ?5,00,000: 5% of ?250,000 ?12,500 ?5,00,001 to ?7,50,000: 10% of ?46,000 ?4,600 Total Tax ?12,500 ?4,600 ?17,100 Add Cess 4% on Tax: 4% of ?17,100 ?684 Total Tax Payable ?17,100 ?684 ?17,784 Monthly TDS ?17,784 / 12 ≈ ?1,482

Conclusion and Impact of Eligible Deductions

Old Tax Regime Monthly TDS: ~ ?1,881 New Tax Regime Monthly TDS: ~ ?1,482

It’s crucial to verify any deductions you may be eligible for, such as those under sections 80C, 80D, and others. These deductions can lower your taxable income and TDS further. For example, if you’re eligible for ?1,50,000 in deductions under Section 80C, your annual income would be reduced to ?546,000 - ?1,50,000 ?3,96,000, lowering the tax to ?12,500 (5% of ?2,50,000) and ?4,600 (10% of ?46,000), resulting in a total tax of ?17,100 plus a 4% cess, which amounts to ?17,613. This would result in an approximately ?1,470 monthly TDS.

The new tax regime allows for more flexibility, with higher tax brackets and more deductions. It’s advisable to review your income and deductions to determine the best tax scenario for you.

Form 15G and Form 15H for Senior Citizens

Senior citizens who do not have any income or are below the tax slab can submit Form 15G or Form 15H to avoid TDS. Form 15G is used by non-senior citizens, while Form 15H is used by senior citizens. Submitting these forms can help you avoid unnecessary TDS on your salary. It's also important to check if you are eligible for NPS deductions under Section 80CCD, which can further reduce your taxable income.

In conclusion, understanding your TDS obligations is crucial for efficient financial planning. Always keep track of your income, deductions, and tax brackets to ensure accurate and compliant tax filings. If you need further assistance, consult with a tax professional to navigate the complexities of the tax system.