How does TDS Calculation work in Zoho Payroll?

TDS is calculated for each employee automatically based on the CTC of the employee. The total earnings, and deductions of an employee is projected for a financial year. Based on the tax slab that the projected taxable income falls into, the tax is calculated. When an employee declares their investments, it is factored into the projection and the tax for the subsequent months is adjusted. Similarly, if the employee earns a bonus/commission in the middle of the year, that too will be adjusted in the tax calculation.

In the TDS worksheet, you will find three columns: Actual, Projection, and Total.

Actual: The amount earned or deducted so far.

Projection: The amount to be earned or deducted till the end of the financial year.

Total: The amount for which the tax is calculated.

Any changes to the earnings or deductions mentioned here will be reflected in the tax calculation in the subsequent months.