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After retirement from a PSU, working with a private firm. How TDS is calculated?


I have retired from a PSU. Now I am working in a private company. My age is 64 years. My monthly salary is 35,000. Is TDS applicable to me. If so how much?

Whether tax will be deducted or not would depend on the nature of your assignment: Whether you are hired as consultant or as an employee. Please note that your tax liability is dependent on aggregate of your income from all the sources and not only on what you receive from your employer. Since you have retired from PSU the pension receivable from your past employer is also taxable which should be clubbed with your salary income from your present employer if you are hired as regular employee. If you are employed as an employee, you should ideally declare your pension and any other income like interest etc. to your existing employer so that proper tax is deducted on whole of the income. In case you do not declare your other income, your employer will deduct tax on the basis of your present taxable salary. With monthly 35,000/- your annual salary comes to Rs. 4,20,000/-. After deducting standard deduction of 50,000/- the taxable salary comes to 3,70,000/- on which tax payable comes to Rs. 3,500/-. Since the taxable salary does not exceed the threshold of five lakhs, your employer will consider rebate available under Section 87A and will not deduct any tax from your salary.

In case you are retained as consultant, the employer will deduct tax at source @ 10% as the annual amount will exceed Rs. 30,000, the amount on which tax is not required to be deducted. Please note that you will still have to pay advance tax taking into account your other incomes as the income as consultant would be taxable as business income and in that case you will have to pay advance tax even if you are a senior citizen.

Balwant Jain is a tax and investment expert and can be reached on and @jainbalwant on Twitter.

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