FULL CIRCULAR IS HERE
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Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, dated the 31st August, 2009.
Subject :- Clarification regarding deduction of tax at source from payments of
second installment of arrears to Government employees on account of
implementation of Sixth Central Pay Commission’s recommendations
Under the provisions of Section 192 of the Income-tax Act, an employer is
required to deduct tax at source from any payments in the nature of salary, which inter
alia also includes any arrear payments. The Implementation Cell of the Department of
Expenditure, Govt of India, vide its Office Order dated 30th Aug’08 had stated that
40% of the aggregate arrear (first installment of arrears) would be payable during FY
2008-09. In Circular No. 09/2008 dated 29th Sept.2008 issued from this office it was
stated that during 2008-09 the tax has to be deducted at source on this 40% of
aggregate arrear during FY 2008-09.The OM,F.No-1//1/2008-IC, of the
Implementation Cell of the Department of Expenditure, Govt of India, vide its order
dated 25th August,2009 has stated that the remaining 60% of the aggregate arrear (
second installment of arrears) would be paid to the concerned Government servants
during FY 2009-10. Such arrangements could be followed by State Governments also.
In this regard, all the DDOs and PAOs as the case may be, in the Central/State
Government and various organizations under them are advised to compute the correct
tax liability of every employee on second installment of arrears drawn by him and
immediately recover the full tax liability along with education cess thereon at the rates
in force. The deduction of tax at source on such arrear payment should not be deferred
in any circumstance. They should further ensure that the tax so recovered is paid to
the account of Central Government account immediately as per the Income Tax Rules,
1962. The DDOs/PAOs are further advised that they should ensure that the PAN
details of the deductees (recipient of arrears) are correctly quoted in the relevant
quarterly e-TDS returns filed by them so that the Government Servants get proper
credit of their tax deducted in their respective income tax returns.
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DDOs/PAOs who fail to comply with the provisions of Section 192 of the
Income-tax Act, 1961 would be liable to pay interest under section 201(1)/(1A) of
Income Tax Act along with other penal consequences.
Hindi version will follow.
( Ansuman Pattnaik )
Director ( Budget )
Copy forwarded to:-
All Ministries/Departments of the Government of India.
All State Governments and Union Territory Administrators.
New Delhi Municipal Committee/Municipal Corporation of Delhi.
Delhi Development authority.
All Chief Commissioner, with a request to circulate it to all Officers in their charge.
Principal Chief Controller of Accounts of all Ministries/Departments, with a request
to circulate it to all officers in there charge.
All Director Generals/ Directors of Income-Tax.
Director General, National Academy of Direct Taxes, Nagpur .
Comptroller & Auditor General of India (40 Copies).
Secretary, Settlement Commission, New Delhi /Chennai /Kolkata/Mumbai.
All Officers up to level of Under Secretary in CBDT.
DIT (RSP & PR) for according wide publication of this Circular.
Competent authority Delhi/Chennai/Kolkata/Mumbai,
All the Directorates attached to CBDT