How to make TDS flat deduction for contractual employees?

Consultants or contract-based employees are taxed differently from regular full-time employees.
Since there is no employer-employee relationship, their income is taxed under “Income from Business or Profession” and not “Income from Salary.”

Such employees must file ITR Form 3 or ITR Form 4, and TDS is deducted at a flat rate of 10% under sections like 194J, 194H, or 194D.

Here’s how to configure flat TDS deductions for contractual employees in Keka.

Steps to Set Up Flat TDS Deductions

1. Go to Payroll → Settings → Pay Groups.

2. If multiple pay groups exist, select the relevant one.

3. Under Actions, click the Configure icon.

   

4. Navigate to Salary Structures → Custom Salary.

5. Find the structure created for contractual employees and click the Edit icon.

   

6. In the configuration window, select the option “Deduct flat income tax based on the formula below.”

7. Click Add Formula.

8. In the formula window:

   • Enter the required formula  in the input field.

   • Use the list of available components to insert them directly into the formula.

   • Click Add to save the formula.

   

9. The formula will now appear under the flat income tax section.

10. Click Update  to save the new configuration.