Computation of Average Income Tax:
For the purpose of making the payment of tax mentioned in para 3.2 above, 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", including the value of perquisites for which tax has been paid by the employer himself.
Suppose that the income chargeable under the head "salaries" of an employee below sixty years of age for the year inclusive of all perquisites is Rs. 4,50,000/-, out of which, Rs. 50,000/- is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites as per the provisions discussed in para 3.2 above.
Income Chargeable under the head "Salaries" inclusive of all perquisites
Tax on Total Salaries(including Cess)
Average Rate of Tax [(25,750/4,50,000) × 100]
Tax payable on Rs.50,000/= (5.72% of 50,000)
Amount required to be deposited each month
Rs. 240 (Rs. 238.4) (=2061/12)
The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee.