Thanks for the quick reply @akurungadam. I understand it does income tax deduction based on projected annual salary. My question when earnings are the same, the tax should be same for all the months (except the last month may be). Why does it vary between months? This would lead to lot of confusion among employees who won’t be able to understand how the tax is calculated and why every month the payout is different.
Based on the data I have given above, every month there should be a deduction of Rs. 3750. However, I see only April month deduction is Rs. 3750. After that it steadily decreases.
Without understanding how it calculates, the HR/finance won’t be able to answer employees queries. Your help would greatly help. Thank you!
For your reference, here are the income tax deductions for 5 months (earnings remain the same throughout).
April: Rs. 3750
May: Rs. 3258
Jun: Rs. 2917
Jul: Rs. 2500
Aug: Rs. 1979
I expect the income tax deduction to be Rs. 3750 for all the months. However, it is different. Would be grateful for your explanation.