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Microlesson · 5-min read

Section 192 — TDS on Salary

# Section 192 — TDS on Salary

## Key Rules

### 1. Set-off of Losses by Employer

While computing TDS on salary, the employer:

  • Shall NOT consider any losses, except
  • House Property Loss may be considered (Loss from house property is permitted to be set off against salary income for TDS computation purposes).

### 2. Salary Paid to Partner by Firm

Where a firm pays remuneration to its partner — TDS u/s 192 is NOT deductible (because the remuneration is not 'salary' in the strict employer–employee sense; it is taxed under PGBP for the partner).

### 3. Proof for Deductions / Investments

Where the employee claims any investment / deduction (Chapter VI-A or otherwise), the employer must obtain proof from the employee. If the employer does not obtain proof, the employer can be treated as assessee in default.

### 4. Multiple Employers (Concurrent or Sequential)

Where an employee is employed under more than one employer during the year (or moves to a new employer):

  • The subsequent employer should take into account the salary already received from the previous employer and the tax already deducted thereon
  • The new employer then deducts tax on the combined salary from both employers, net of TDS already done
  • Employee furnishes details to the new employer in Form 12B

### 5. Tax Paid on Non-Monetary Perquisites

Where the employer bears the tax on non-monetary perquisites (Section 192(1A)/10(10CC)), that tax paid by the employer is deducted from total tax while computing TDS on cash salary of employee.

Worked example

### Example 1

Q: Mr. S has salary ₹10,00,000 and house property loss of ₹1,80,000 (after capping). What does the employer consider for TDS u/s 192?

Solution: Employer considers House Property loss (up to ₹2,00,000 cap). Net salary for TDS = ₹10,00,000 − ₹1,80,000 = ₹8,20,000 is the figure on which tax is computed.

### Example 2

Q: Employee's total tax on salary = ₹89,000. Of this, tax on non-monetary perquisites of ₹12,500 is borne by the employer. How much TDS is to be deducted from the cash salary?

Solution: TDS to be deducted from salary = ₹89,000 − ₹12,500 = ₹76,500. (The ₹12,500 is deposited separately by the employer.)

### Example 3

Q: A partnership firm pays ₹20,00,000 as remuneration to its working partner. Is TDS u/s 192 required?

Solution: No, remuneration to partners is taxable under PGBP in the hands of the partner, not as salary. Section 192 does not apply.

⚠️ Common exam mistakes

  • Considering business losses or capital losses while computing TDS u/s 192 — only HP loss may be set off.
  • Deducting TDS u/s 192 from remuneration paid to partners (it does not apply).
  • Failing to obtain documentary proof of investments/deductions before granting them in TDS computation — risk of becoming assessee in default.
  • Forgetting to deduct the tax on non-monetary perquisites already borne by the employer when computing TDS on the cash component.
Reference: Section 192 — Income-tax Act, 1961
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