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CA Intermediate · Taxation · Tax Deduction or Collection at Source and Advance Tax

Ms. Tanvi joins Zenith Pvt. Ltd. on 1 July 2026 on a fixed monthly salary. The employer estimates her tax on salary income for the tax year 2026-27 (9 months of salary) at Rs 90,000, and she has no other income to report. What is the monthly TDS from salary the employer should deduct?

The employer should deduct Rs 10,000 each month. TDS on salary is spread over the months in which salary is actually paid, so the estimated tax of Rs 90,000 for the tax year is divided by the 9 months of employment, not by 12.

  1. ARs 7,500
  2. BRs 10,000Correct
  3. CRs 12,000
  4. DRs 15,000

Explanation

Tax on salary is deducted at the average rate of income-tax computed on the estimated income for the year. Since she works only 9 months, the estimated tax of Rs 90,000 is spread across the 9 months of payment: 90,000 / 9 = Rs 10,000. Dividing by 12 gives Rs 7,500, which is wrong because salary is paid for only 9 months.

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