Akib Bin Rashid
Excel is the most widely used tool for dealing with massive datasets. We can perform myriads of tasks of multiple dimensions in Excel. In this article, I will explain how to perform a TDS deduction on salary calculation in Excel format.
Download Practice Workbook
Download this workbook and practice while going through the article.
6 Steps for Deduction of TDS on Salary Calculation in Excel
TDS, or Tax Deducted at Source, is an amount deducted when a specific payment is made, such as a wage, commission, lease, interest, professional fees, and so on. The person making the payment deducts tax at the source, whereas the individual receiving the payment/income must pay the tax. It reduces tax fraud because the taxes are collected at the moment of payment.
Here, I will explain the process of TDS deduction on salary calculation in Excel. For simplicity, I have divided the process into 6 easy steps.
Please note that the detailed breakdown of the allowances and deduced amounts are absent here because it varies from country to country.
Step 1: Calculate Yearly Salary
Let’s assume that the monthly salary of a person is Rs 70,000. Now, I will calculate the annual salary.
- To do so, first, go to C8 and write down the following formula
=C7*12
- Then, press ENTER to get the output.
Read More: How to Calculate Basic Salary in Excel (3 Common Cases)
Step 2: Measure Total Taxable Income from Salary
The next step is to calculate the total taxable income from the salary.
Let’s assume that, other taxable income is Rs 10,000, and the deduction is Rs. 2000.
- Now, go to C11 and write down the following formula
=C8+C9-C10
- Then, press ENTER to get the output.
Read More: How to Calculate Income Tax on Salary with Example in Excel
Step 3: Calculate Tax on Taxable Income
The next step is to calculate the tax on the taxable income. The tax is calculated based on different slabs.
To calculate it,
- Go to C12 and write down the following formula
=IF(C6<60,IF(C11>1000000,(((C11-1000000)*0.3)+112500),IF(C11>500000,(((C11-500000)*0.2)+12500),IF(C11>250000,(C11-250000)*0.05,0))),IF(C6>79,IF(C11>1000000,(((C11-1000000)*0.3)+110000),IF(C11>500000,(((C11-500000)*0.2)+0),0)),IF(C11>1000000,(((C11-1000000)*0.3)+110000),IF(C11>500000,(((C11-500000)*0.2)+10000),IF(C11>300000,(C11-300000)*0.05,0)))))
Formula Explanation
- The 1st logical test is C6<60 which is TRUE.
- So the corresponding output is IF(C11>1000000,(((C11-1000000)*0.3)+112500),IF(C11>500000,(((C11-500000)*0.2)+12500),IF(C11>250000,(C11-250000)*0.05,0)))
- The value of this output is 82100.
- Then, press ENTER to get the output.
Read More: How to Calculate Monthly Salary in Excel (with Easy Steps)
Similar Readings
- How to Calculate Average Salary in Excel (6 Effective Methods)
- Daily Wages Sheet Format in Excel (with Quick Steps)
- How to Calculate HRA on Basic Salary in Excel (3 Quick Methods)
- How to Calculate DA on Basic Salary in Excel (3 Easy Ways)
- Attendance Sheet with Salary in Excel Format (with Easy Steps)
Step 4: Measure Education Cess
The next step is to measure the education cess. The assumption is that the education cess is 2% of the tax on total taxable income.
To calculate it,
- Go to C13 and write down the following formula
=C12*2%
- Then, press ENTER to get the output.
Read More: How to Calculate Gross Salary in Excel (3 Useful Methods)
Step 5: Calculate Tax Liability for Year
The next step is to calculate the yearly tax liability. For this step, I will use the SUM function. To calculate it,
- Go to C14 and write down the formula
=SUM(C12:C13)
- Then, press ENTER to get the output.
Read More: How to Calculate Net Salary in Excel (With Easy Steps)
Step 6: Measure Monthly TDS
The final step is to calculate the monthly TDS. To calculate it,
- Go to C15 and write down the following formula
=C14/12
- Then, press ENTER to get the output.
Read More: How to Create a Monthly Salary Sheet Format in Excel (with Easy Steps)
Things to Remember
- The tax is calculated based on different slabs.
- The breakdown of the allowances and deductions varies according to the different sections.
Conclusion
In this article, I have explained how to perform a TDS deduction on salary calculation in Excel format. I hope it helps everyone. If you have any suggestions, ideas, or feedback, please feel free to comment below. Please visit Exceldemy for more useful articles like this.
Related Articles
- How to Calculate Midpoint of Salary Range in Excel (3 Easy Ways)
- How to Create a Salary Increase Matrix in Excel (With Easy Steps)
- Salary Deduction Formula in Excel for Late Coming (with Example)
- How to Model Salary Regression Analysis in Excel (2 Ways)
- How to Calculate Prorated Salary in Excel (3 Suitable Ways)
- Leave Salary Calculation in Excel (With Easy Steps)
