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INCOME TAX DEDUCTION FROM SALARIES

INCOME TAX DEDUCTION FROM SALARIES U/S 192 OF INCOME TAX ACT, 1961 FOR FINANCIAL YEAR  2019-20

First let us take a look at the rates of Income tax as per the Finance Act, 2019: 

Tax to be deducted at normal rates:
 

Serial no

Total Income

Rate of tax

1

Where the total income does not exceed Rs. 2,50,000/-

Nil

2

Where the total income exceeds Rs. 2,50,000/- but does

not exceed Rs. 5,00,000/-

5 percent of the amount 

exceeding  Rs. 2,50,000/-

3

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-

Rs. 12,500/- plus 20 per cent of the amount  exceeding Rs. 5,00,000/-

4

Where the total income exceeds Rs. 10,00,000/-

Rs. 1,12,500/- plus 30 percent of the amount  exceeding Rs. 10,00,000/-


Rates of tax for every individual (being a resident in India) who is of the age of sixty years or more but less than eighty years at any time during the financial year:

 

Serial no

Total Income

Rate of tax

1

Where the total income does not exceed Rs. 3,00,000/-

Nil

2

Where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000/-

5 per cent of the amount 

exceeding  Rs. 3,00,000/-

3

Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-

Rs. 10,000/- plus 20 per cent of the amount  exceeding Rs. 5,00,000/-.

4

Where the total income exceeds Rs. 10,00,000/-

Rs. 1,10,000/- plus 30 per cent of the amount exceeding  Rs. 10,00,000/-


Rates of tax for every individual (being a resident in India) who is of the age of eighty years or more at any time during the financial year 

Serial no.

Total Income

Rate of tax

1

Where the total income does not exceed Rs. 5,00,000/-

Nil

2

Where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000/-

20 per cent of the amount 

exceeding  Rs. 5,00,000/-

3

20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-

Rs. 1,00,000/- plus 30 per cent of the amount  exceeding  Rs. 10,00,000/-

 

Surcharge on Income tax:

The amount of income-tax calculated shall be increased by a surcharge calculated, in the following cases:-

 

(1) Every individual or Hindu undivided family

(2) Artificial juridical person

(3) a body of individuals or an association of persons, whether incorporated or not

 

(a) who has  a total income (inclusive of the income under the provisions of section 111A and section 112A) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent.

However, the total amount payable as income tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees.

 

(b) who has  a total income  (inclusive of the income under the provisions of section 111A and section 112A) exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent. 

However,the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

 

(c) who has a total income (exclusive of the income under the provisions of section 111A and 112A exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent.  

However,  the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees.

 

(d) having a total income ( exclusive of the income under the provisions of section 111A and 112 A) exceeding five crore rupees, at the rate of thirty-seven per cent.

However, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees.

 

(e) who has a total income (inclusive of  income under the provisions of section 111A and 112 A) exceeding two crores rupees,but is not covered under clauses (c) and (d), shall be applicable at the rate of fifteen percent.

Provided that in case where total income includes any income chargeable under section 111A and 112 A of the Income Tax Act, the rate of surcharge on the amount of income tax computed in respect of that part of income shall not exceed fifteen percent.

 

Health and Education Cess shall be levied at a rate of four percent of income tax including surcharge if applicable. No marginal relief shall be available in respect of such cess.

 

PAYMENT OF TAX ON PERQUISITES BY EMPLOYER:

The employer has been given an option to pay the tax on non-monetary perquisites given to an employee. The employer may make payment of the tax on such perquisites without deducting any TDS from the salary of the employee. However, the employer will have to pay the tax at the time of payment of income chargeable under the head salaries to the employee.

 

For  making the payment of tax, tax is to be determined at the average of income tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "salaries", which will be inclusive of the value of perquisites for which tax has been paid by the employer himself.

 

Illustration:

Let the income chargeable under the head salaries of an employee below sixty years of age for the year inclusive of all perquisites is Rs. 7,00,000/-, out of which Rs. 40,000/- is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites.

 

STEPS:

Income chargeable under the head Salaries inclusive of all perquisites-  Rs. 7,00,000/-

Tax on Total Salary (including Cess)-  Rs. 54600/-

Average Rate of Tax- [(54600/7,00,000) x 100]-  7.8 %

Tax payable on Rs.40,000/= (7.8% of 40,000) -  Rs. 3,120/-

Amount required to be deposited each month-  Rs. 260 = 3120/12

 

WHEN SALARY IS PAID IN ARREAR OR ADVANCE:

Under section 192(2A) where the assessee is a Government servant or an employee in a company, co-operative society, local authority, association or body, he will be entitled to the relief under Section 89.  He will be required to furnish to the person responsible for making the payment, such particulars in Form No.10E duly verified by him, and  hence the person responsible, shall compute the relief and take the same into account in making the deduction.

 

The assessee will be required to upload the aforesaid Form 10E electronically in the e-Filing portal along with the return of income.

 

With effect from 1/04/2010, no relief shall be granted for any amount received or receivable by an assessee on termination of his service or his voluntary retirement , in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in section 10(10C)(i),  a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under section 10(10C) in respect of such, or any other, assessment year.

 

WHEN SALARY IS RECEIVED FROM MORE THAN ONE EMPLOYER:

It provides for deduction of tax at source by an employer chosen by the taxpayer, from the aggregate salary of the employee, who has/ had received salary from more than one employer. The employee is required to provide details to the present/chosen employer of the income under the head "Salaries" due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer. The present/chosen employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer).

 

DEDUCTION OF TAX AT A LOWER RATE:

If the jurisdictional TDS officer of the employer issues a Certificate of No Deduction or Lower Deduction of Tax under section 197 of the Act, in response to the application filed before him in Form No 13 by the employee; then the DDO should take this certificate into consideration and deduct tax on the salary payable at the rates mentioned therein. The Unique Identification Number of the certificate is required to be reported in the Quarterly Statement of TDS (Form 24Q).

 

SALARY PAYABLE IN ANY FOREIGN CURRENCY:

The value in rupees of such salary shall be calculated at the “Telegraphic transfer buying rate” of such currency on the date on which tax is required to be deducted at source for the purposes of deduction of tax on salary payable in foreign currency.

 

PERSONS RESPONSIBLE FOR DEDUCTING TAX:

The "person responsible for paying" for the purpose of Section 192 refers to the employer himself or if the employer is a Company, the Company itself including the Principal Officer thereof. Further, as per Section 204(iv), in case the credit, or as the case may be, the payment is made by or on behalf of Central Government or State Government, the DDO or any other person by whatever name called, responsible for crediting, or as the case may be, paying such sum is the "person responsible for paying" for the purpose of Section 192.


DUE DATES FOR PAYMENT OF TDS:

a) Other than an office of Government

1

Tax deducted in March

30th APRIL OF THE NEXT FINANCIAL YEAR

2

Tax deducted in any other month 

7th DAY OF THE NEXT MONTH

3

Tax on perquisites opted to be deposited by the employer 

7th DAY OF THE NEXT MONTH 

b) An Office of Government:

1

Tax deposited without Challan via Book Entry

ON THE SAME DAY

2

Tax deposited with Challan 

7 TH DAY OF THE  NEXT MONTH

3

Tax on perquisites opted to be deposited by the employer 

7 TH DAY OF THE NEXT MONTH 

 

If a DDO applies before the jurisdictional Additional/Joint Commissioner of Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allows for payments on quarterly basis and as per time given in Table below:
 

 

QUARTER ENDED ON

DUE FOR QUARTERLY PAYMENT

1

30th June

7th July

2

30th September

7th October

3

31st December 

7th January

4

31st March

30th April


MODES OF PAYMENT OF TDS:

1) In the case of an office of the Government, where tax has been paid to the credit of the Central Government through book entry, the person who is responsible for crediting such sum to the credit of the Central Government, shall‐

 

(a) submit a statement in Form No. 24G under section 200 (2A) on or before the 30th day of April where statement relates to the month of March and in any other case, on or before 15 days from the end of relevant month to the agency authorized by the Director General of Income‐tax (Systems) in respect of tax deducted by the deductors and reported to him for that month, and

 

(b) intimate the Book Identification Number or BIN generated by the agency to each of the deductors in respect of whom the sum deducted has been credited. 

 

If the concerned person fails to deliver the statement as required u/s 200(2A), he will be liable to pay, by way of penalty, under section 272A(2)(m), a sum which shall be Rs.100/- for every day during which the failure continues. However, the amount of such penalty shall not exceed the amount of tax which is deductible at source.

 

2) In case the payment is made by an income-tax challan, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it, within the time specified in Tables above, into any office of the Reserve Bank of India or State Bank of India or of any authorized bank;

 

In case of a company and a person (other than a company), to whom provisions of section 44AB are applicable, the amount deducted shall be electronically remitted into the Reserve Bank of India or the State Bank of India or any authorised bank accompanied by an electronic income-tax challan.

 

PENALTY, INTEREST & PROSECUTION FOR FAILURE TO DEPOSIT TAX DEDUCTED:

If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to pay simple interest:-

 

(i) at the rate of 1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at the rate of 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing the quarterly statement of TDS for each quarter.

 

Please Note: Section 271C lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax under the second proviso to section 194B, shall be liable to pay, a sum equal to the amount of tax not deducted or paid by him.

 

Also, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, the tax deducted at source by him or tax payable by him under the second proviso to Section 194B, he shall be punishable with  imprisonment for a term between 3 months and 7 years along with a fine.

 

CERTIFICATE FOR TAX DEDUCTED (SECTION 203):

Section 203 requires the DDO to provide to the employee a certificate in Form 16 containing the details of  the amount of TDS and other particulars. Form 16 should be furnished to the employee by 15th June after the end of the financial year in which the income was paid and tax was deducted. The banks deducting tax at the time of payment of pension are also required to issue such certificates. 

 

The certificate in Form 16 shall specify:-

(1) Valid permanent account number (PAN) or Aadhaar number, of the deductee

(2) Valid tax deduction and collection account number (TAN) of the deductor

(3) (i) Book identification number or numbers (BIN) 

(ii) Challan identification number or numbers (CIN*) in case of payment through the bank.

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