Every person who is responsible for paying any income chargeable under the head "Salaries" shall deduct income-tax on the estimated income of the assessee under the head "Salaries" for the financial year 2015-16. The income-tax is required to be calculated on the basis of the rates given above, subject to the provisions related to requirement to furnish PAN as per sec 206AA of the Act, and shall be deducted at the time of each payment. No tax, however, will be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds Rs. 2,50,000/- or Rs.3,00,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of the employee.(Some typical illustrations of computation of tax are given at Annexure-I).
Payment of Tax on Perquisites by Employer:
An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at its option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. However, the employer will have to pay the tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head “salaries” to the employee.
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.
Illustration:
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.
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Income Chargeable under the head “Salaries” inclusive of all
perquisites
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Rs. 4,50,000/-
|
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Tax on Total Salary (including Cess)
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Rs. 20,600/-
|
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Average Rate of Tax [(20,600/4,50,000) X 100]
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4.75%
|
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Tax payable on Rs.50,000/= (4.57% of 50,000)
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Rs. 2285/-
|
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Amount required to be deposited each month
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Rs. 190 ((Rs. 190.40) =2285/12)
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The tax so paid by the employer shall be deemed to be TDS made from the salary of the
employee.
Salary From More Than One Employer:
Section 192(2) deals with situations where an individual is working under more than one
employer or has changed from one employer to another. It provides for deduction of tax at
source by such employer (as the tax payer may choose) from the aggregate salary of the
employee, who is or has been in receipt of salary from more than one employer. The
employee is now required to furnish to the present/chosen employer details 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).
3.4 Relief When Salary Paid in Arrear or Advance:
Under section 192(2A) where the assessee, being a Government servant or an
employee in a company, co-operative society, local authority, university, institution,
association or body is entitled to the relief under Section 89(1) he may furnish to the
person responsible for making the payment referred to in Para (3.1), such particulars in
Form No. 10E duly verified by him, and thereupon the person responsible, as aforesaid,
shall compute the relief on the basis of such particulars and take the same into account in
making the deduction under Para(3.1) above.
Here “university” means a university established or incorporated by or under a Central, State
or Provincial Act, and includes an institution declared under Section 3 of the University
Grants Commission Act, 1956 to be a university for the purpose of that Act.
With effect from 1/04/2010 (AY 2010-11), no such relief shall be granted in respect
of any amount received or receivable by an assessee on his voluntary retirement or
termination of his service, 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) (read
with Rule 2BA), 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.
Information regarding Income under any other head:
(i) Section 192(2B) enables a taxpayer to furnish particulars of income under any head
other than "Salaries" ( not being a loss under any such head other than the loss under the
head “ Income from house property”) received by the taxpayer for the same financial year
and of any tax deducted at source thereon. The particulars may now be furnished in a simple
statement, which is properly signed and verified by the taxpayer in the manner as
prescribed under Rule 26B(2) of the Rules and shall be annexed to the simple statement. The
form of verification is reproduced as under:
I, …………………. (name of the assessee), do declare that what is stated
above is true to the best of my information and belief.
It is reiterated that the DDO can take into account any loss only under the head “Income
from house property”. Loss under any other head cannot be considered by the DDO for
calculating the amount of tax to be deducted.
Computation of income under the head “ Income from house property”:
While taking into account the loss from House Property, the DDO shall ensure that the
employee files the declaration referred to above and encloses therewith a computation of
such loss from house property. Following details shall be obtained and kept by the employer
in respect of loss claimed under the head “ Income from house property” separately for each
house property:
a) Gross annual rent/value
b) Municipal Taxes paid, if any
c) Deduction claimed for interest paid, if any
d) Other deductions claimed
e) Address of the property
f) Amount of loan, if any; and
g) Name and address of the lender (loan provider)
Conditions for Claim of Deduction of Interest on Borrowed Capital for
Computation of Income From House Property [Section 24(b)]:
Section 24(b) of the Act allows deduction from income from houses property on interest on
borrowed capital as under:-
(i) the deduction is allowed only in case of house property which is owned and is in
the occupation of the employee for his own residence. However, if it is actually not
occupied by the employee in view of his place of the employment being at other
place, his residence in that other place should not be in a building belonging to him.
(ii) the quantum of deduction allowed as per table below:
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Purpose of borrowing capital
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Date of borrowing capital
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Maximum Deduction allowable
|
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Repair or renewal or reconstruction of the house
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Anytime
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Rs. 30,000/-
|
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Acquisition or construction of the house
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Before 01.04.1999
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Rs. 30,000/-
|
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Acquisition or construction of the house
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On or after 01.04.1999
|
Rs. 1,50,000/- (upto AY 2014-15)
Rs. 2,00,000/- (w. e. f. AY 2015-16)
|
In case of Serial No. 3 above
(a) The acquisition or construction of the house should be completed within3 years
from the end of the FY in which the capital was borrowed. Hence, it is necessary
for the DDO to have the completion certificate of the house property against
which deduction is claimed either from the builder or through self-declaration
from the employee.
(b) Further any prior period interest for the FYs upto the FY in which the property
was acquired or constructed (as reduced by any part of interest allowed as
deduction under any other section of the Act) shall be deducted in equal
installments for the FY in question and subsequent four FYs.
6
(c) The employee has to furnish before the DDO a certificate from the person to
whom any interest is payable on the borrowed capital specifying the amount of
interest payable. In case a new loan is taken to repay the earlier loan, then the
certificate should also show the details of Principal and Interest of the loan so
repaid.
Ajustment for Excess or Shortfall of Deduction:
The provisions of Section 192(3) allow the deductor to make adjustments for any excess or
shortfall in the deduction of tax already made during the financial year, in subsequent
deductions for that employee within that financial year itself.
Salary Paid in Foreign Currency:
For the purposes of deduction of tax on salary payable in foreign currency, the value in
rupees of such salary shall be calculated at the “Telegraphic transfer buying rate” of
such currency as on the date on which tax is required to be deducted at source
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