F.No. 275/192/2013-IT(B)
Reference
is invited to Circular No.08/2012 dated 05.10.2012 whereby the rates of
deduction of income-tax from the payment of income under the head
"Salaries" under Section 192 of the Income-tax Act, 1961(hereinafter
‘the Act’), during the financial year 2012-2013, were intimated. The
present Circular contains the rates of deduction of income-tax from the
payment of income chargeable under the head "Salaries" during the
financial year 2013-2014 and explains certain related provisions of the
Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant
Acts, Rules, Forms and Notifications are available at the website of the
Income Tax Department- www.incometaxindia.gov.in.
Para 2. Rates of Income-Tax as per Finance Act, 2013
Para 3: Method of Tax Calculation - Broad Scheme of Tax Deduction at Source from Salaries
Para 4: TDS Return - Person Responsible Tax Deduction and their Duties: Income Tax on Salaries
Para 5: Computation of Income under the Head Salaries - Income Chargeable, Exemptions, Deductions u/s 16 & Chapter VI-A
6.
REBATE OF RS 2000 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO RS 5 LAKH [SECTION 87A]
Finance Act 2013 has provided relief in the form of rebate to
individual taxpayers, resident in India, who are in lower income
bracket, i. e. having total income not exceeding Rs 5,00,000/-. The
amount of rebate is Rs 2000/- or the amount of tax payable, whichever is
lower.
7 TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED SUPERANNUATION FUND:
7.1 The
trustees of a Recognized Provident Fund, or any person authorized by
the regulations of the Fund to make payment of accumulated balances due
to employees, shall in cases where sub-rule(1) of Rule 9 of Part A of
the Fourth Schedule to the Act applies, at the time when the accumulated
balance due to an employee is paid, make therefrom the deduction
specified in Rule 10 of Part A of the Fourth Schedule to the Act.
The accumulated balance is treated as income chargeable under the head “Salaries”
7.2 Where
any contribution made by an employer, including interest on such
contributions, if any, in an approved Superannuation Fund is paid to the
employee, tax on the amount so paid shall be deducted by the trustees
of the Fund to the extent provided in Rule 6 of Part B of the Fourth
Schedule to the Act. TDS should be at the average rate of tax at which,
the employee was liable to be taxed during the preceding three years or
during the period, if that period is less than three years, when he was
member of the fund.
The deductor shall remain liable to deduct
tax on any sum paid on account of returned contributions (including
interest, if any) even if a fund or part of a fund ceases to be an
approved Superannuation fund.
8. DDOS TO SATISFY THEMSELVES ABOUT THE GENUINENESS OF CLAIM:
The Drawing and Disbursing Officers should satisfy themselves about the
actual deposits/ subscriptions / payments made by the employees, by
calling for such particulars/ information as they deem necessary before
allowing the aforesaid deductions. In case the DDO is not satisfied
about the genuineness of the employee's claim regarding any deposit/
subscription/ payment made by the employee, he should not allow the
same, and the employee would be free to claim the deduction/ rebate on
such amount by filing his return of income and furnishing the necessary
proof etc., therewith, to the satisfaction of the Assessing Officer.
9. CALCULATION OF INCOME-TAX TO BE DEDUCTED: 9.1 Salary income for the purpose of section 192 shall be computed as follow:-
(a) First compute the gross salary as mentioned in para 5.1 including
all the incomes mentioned in para 5.2 and excluding the income mentioned
in para 5.3.
(b) Allow deductions mentioned in para 5.4 from
the figure arrived at (a) above and compute the amount to arrive at Net
salary of the employee
(c) Add income from all other heads-
House property, Profits & gains of Business or Profession, capital
gains and Income from other Sources to arrive at the Gross Total Income
as shown in the form of simple statement mentioned para 3.5. However it
may be remembered that no loss under any such head is allowable by DDO
other than loss under the Head “Income from House property”.
(d) Allow deductions mentioned in para 5.5 from the figure arrived at
(c) above ensuring that the relevant conditions are satisfied. The
aggregate of the deductions subject to the threshold limits mentioned in
para 5.5 shall not exceed the amount at (b) above and if it exceeds, it
should be restricted to that amount.
This will be the amount
of Total income of the employee on which income tax would be required to
be deducted. This income should be rounded off to the nearest multiple
of ten rupees.
9.2 Income-tax on such income shall be
calculated at the rates given in para 2.1 of this Circular keeping in
view the age of the employee and subject to the provisions of sec.
206AA, as discussed in para 4.8. Rebate as per Section 87A upto Rs
2000/- to eligible persons (see para 6) may be given. Surcharge shall be
calculated in cases where applicable (see para 2.2).
9.3 The
amount of tax payable so arrived at shall be increased by educational
cess as applicable (2% for primary and 1% for secondary education) to
arrive at the total tax payable.
9.4 The amount of tax as
arrived at para 9.3 should be deducted every month in equal
installments. Any excess or deficit arising out of any previous
deduction can be adjusted by increasing or decreasing the amount of
subsequent deductions during the same financial year.
10. MISCELLANEOUS:
10.1 These instructions are not exhaustive and are issued only with a
view to guide the employers to understand the various provisions
relating to deduction of tax from salaries. Wherever there is any doubt,
reference may be made to the provisions of the Income-tax Act, 1961,
the Income-tax Rules, 1962, the Finance Act 2013, the relevant circulars
/ notifications, etc.
10.2 In case any assistance is
required, the Assessing Officer/the Local Public Relation Officer of the
Income-tax Department may be contacted.
10.3 These
instructions may be brought to the notice of all Disbursing Officers and
Undertakings including those under the control of the Central/ State
Governments.
10.4 Copies of this Circular are available with
the Director of Income-tax (Research, Statistics & Publications and
Public Relations), 6th Floor, Mayur Bhavan, Connaught Place, New
Delhi-110 001 and at the following websites:
www.finmin.nic.in &
www.incometaxindia.gov.in
Hindi version will follow.
(Anshu Prakash)
Director(Budget)
Central Board of Direct Taxes
