Sub-section (1) requires any person responsible for paying income chargeable under the head "Salaries" to deduct income-tax on the amount payable, at the time of payment, at the average rate of income-tax computed on the basis of the rates in force for the tax year in which the payment is made, on the estimated income of the assessee under that head for the year.
Sub-section (2) gives the payer an option for non-monetary perquisites chargeable to tax under section 17(1): clause (a) lets him pay the tax on the whole or part of that income himself, without deduction, at the time the tax was deductible under sub-section (1); clause (b) requires that tax to be determined at the average rate under sub-section (1) on the salary income including that perquisite, and treats it as if it were tax deductible at source from salary, subject to the provisions of the Chapter.
Sub-section (3) applies to an eligible start-up referred to in section 140 paying income of the nature specified in section 17(1)(d): it must deduct or pay tax on that income on the basis of rates in force for the tax year in which the specified security or sweat equity share is allotted or transferred, within the time specified for the payee in section 289(3).
Sub-section (4)(a) requires the payer to take into account particulars the assessee furnishes at his option, in the prescribed form and verified in the prescribed manner, which may increase or decrease the tax to be deducted: salary due or received from any other employer during the tax year; relief allowable under section 157 where the assessee is a Government servant or an employee of a company, co-operative society, local authority, university, institution, association or body; loss under the head "Income from house property" for the same tax year; income under any other head, not being a loss under any such head other than that house property loss, for the same tax year; and tax deducted or collected at source under the Chapter for the same tax year. Clause (b) then bars any reduction of the tax deductible from salary except on account of loss under the head "Income from house property" and tax deducted and collected under other provisions of the Chapter.
Sub-section (5) requires the payer to furnish a statement in the prescribed form and manner with correct and complete particulars of perquisites or profits in lieu of salary paid and their value; to obtain from the assessee evidence, proof or particulars of prescribed claims, including a claim for set off of loss, in the prescribed form and manner; and permits him to increase or reduce the amount deducted to adjust any excess or deficiency from a previous deduction or failure to deduct during the tax year.
Sub-section (6)(a) requires the trustees of a recognised provident fund, or any person authorised by the fund's regulations to pay accumulated balances, to make the deduction provided in paragraph 10 of Part A of Schedule XI at the time of payment, in cases where paragraph 9 of Part A of Schedule XI applies; clause (b) requires the trustees to deduct tax to the extent provided in paragraph 7 of Part B of Schedule XI where an employer's contribution in an approved superannuation fund, including interest on it, is paid to the employee.
Sub-section (7) requires the trustees of the Employees' Provident Funds Scheme, 1952, or any person authorised under that scheme to pay accumulated balances, irrespective of anything in the Act, to deduct income-tax at 10% at the time of payment of the accumulated balance due to an employee participating in a recognised provident fund, where the aggregate amount of the payment is Rs. 50000 or more and the accumulated balance is includible in his total income because paragraph 8 of Part A of Schedule XI does not apply. Sub-section (8) requires salary payable in foreign currency to be valued in rupees at such rate of exchange as may be prescribed for the purpose of deduction.
Why it is there
Salary is the one payment stream where the payer knows the whole year's income in advance, so tax on it is collected as it is paid rather than at the end of the year, spread evenly through an average rate. The rest of the section handles the complications that follow from that: a perquisite has no cash from which to deduct, so sub-section (2) lets the employer bear the tax; a start-up's share-based payment is not liquid, so sub-section (3) shifts the timing; an employee may have other income, other employment or a house property loss, so sub-section (4) lets him disclose it but stops him from using it to reduce the deduction except in the two permitted ways.
Who it applies to
Any person responsible for paying income chargeable under the head "Salaries"
A person paying a non-monetary perquisite chargeable under section 17(1), who may bear the tax himself
An eligible start-up referred to in section 140 paying income of the nature specified in section 17(1)(d)
An employee furnishing particulars of other income, other salary, relief under section 157, house property loss or tax already deducted
The trustees of a recognised provident fund and persons authorised by its regulations to pay accumulated balances
The trustees of an approved superannuation fund paying an employer's contribution with interest to the employee
The trustees of the Employees' Provident Funds Scheme, 1952 and persons authorised under that scheme
An employee receiving salary payable in foreign currency
The figures, and what each one turns on
Read the condition in the same row. A figure quoted without it is a wrong answer with a citation attached.
What
Figure
The condition on it
Where
Rate of deduction on salary
The average rate of income-tax
Computed on the basis of the rates in force for the tax year in which the payment is made, on the estimated income of the assessee under the head "Salaries" for that year
Sub-section (1)
Rate of deduction on payment of accumulated provident fund balance
10%
Only where the aggregate amount of the payment is Rs. 50000 or more and the accumulated balance is includible in total income because paragraph 8 of Part A of Schedule XI does not apply
Sub-section (7)
Threshold for the deduction on accumulated provident fund balance
Rs. 50000 or more
Measured on the aggregate amount of such payment
Sub-section (7)
Timing of tax on an eligible start-up's section 17(1)(d) income
Rates in force for the tax year in which the specified security or sweat equity share is allotted or transferred, and within the time specified for the payee in section 289(3)
Applies only to a person being an eligible start-up referred to in section 140
Sub-section (3)
What this means in practice
Deduction is at an average rate on estimated annual salary, not at slab rates on the month's payment, so the estimate has to be revisited during the year — which is what sub-section (5)(c) permits, allowing the employer to increase or reduce later deductions to adjust an earlier excess, deficiency or failure to deduct. Sub-section (4) is where employees most often go wrong: an employee may report other income and it will increase the deduction, but clause (4)(b) allows the tax deductible from salary to be reduced only for a loss under the head "Income from house property" and for tax deducted or collected under other provisions of the Chapter, so a loss under any other head cannot bring the salary deduction down. Where the employer opts under sub-section (2) to bear the tax on a non-monetary perquisite, that payment is not a private arrangement — clause (b) treats it as tax deductible at source from salary and subjects it to the Chapter. The provident fund limb in sub-section (7) has two cumulative conditions: the aggregate payment must be Rs. 50000 or more, and the balance must be includible in total income because paragraph 8 of Part A of Schedule XI does not apply; a balance that is exempt under that paragraph is outside the sub-section however large.
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
An employer estimates an employee's salary income for the tax year at eighteen lakh rupees and computes the average rate of income-tax on that estimate, deducting at that rate from each month's payment rather than at slab rates. In November the employee furnishes particulars in the prescribed form showing a house property loss of two lakh rupees and business income of four lakh rupees; the business income increases the deduction, but the house property loss is one of only two permitted reductions under clause (4)(b), so it reduces it. Separately, the employee withdraws an accumulated provident fund balance of three lakh rupees that is includible in his total income because paragraph 8 of Part A of Schedule XI does not apply; since the payment exceeds Rs. 50000, sub-section (7) requires tax at 10%, that is thirty thousand rupees, to be deducted by the trustees.
Where you meet this section
This is the section behind the tax deducted from every salary payment, behind the particulars form an employee files with the employer to have other income or a house property loss taken into account, and behind the statement of perquisites and profits in lieu of salary the employer must furnish. You meet sub-section (7) as the 10% deduction on a provident fund withdrawal made by the fund trustees, and sub-section (3) as the deferred deduction on shares allotted by an eligible start-up.
The words themselves
this deduction shall be made at the time of such payment at the average rate of income-tax computed on the basis of the rates in force for the tax year in which the payment is made, on the estimated income of the assessee under this head for such year
Section 392(1), Income-tax Act, 2025.
the tax deductible from income under the head "Salaries" shall not be reduced in any case, except on account of—
Section 392(4)(b), Income-tax Act, 2025.
deduct income-tax thereon at the rate of 10%, where the aggregate amount of such payment is Rs. 50000 or more
Section 392(7), Income-tax Act, 2025.
may, increase or reduce the amount to be deducted under this section for adjusting any excess or deficiency arising out of any previous deduction or failure to deduct during the tax year
Section 392(5)(c), Income-tax Act, 2025.
What people get wrong
Deducting at slab rates on each month's payment. Sub-section (1) requires deduction at the average rate of income-tax on the estimated annual income under the head "Salaries".
Reducing the salary deduction for a loss under some other head. Clause (4)(b) permits reduction only for a loss under the head "Income from house property" and for tax deducted and collected under other provisions of the Chapter.
Treating employer-borne tax on a non-monetary perquisite as outside the deduction machinery. Clause (2)(b) construes it as tax deductible at source from salary and subjects it to the Chapter.
Applying the 10% deduction to every provident fund withdrawal. Sub-section (7) applies only where the aggregate payment is Rs. 50000 or more and the accumulated balance is includible in total income because paragraph 8 of Part A of Schedule XI does not apply.
Treating the Rs. 50000 figure as an amount that must be exceeded. Sub-section (7) applies where the aggregate amount is Rs. 50000 or more.
Assuming an under-deduction earlier in the year cannot be corrected. Clause (5)(c) allows the amount deducted to be increased or reduced to adjust an excess, deficiency or failure to deduct during the tax year.
Using the exchange rate of the payment date for salary in foreign currency. Sub-section (8) requires the value in rupees to be calculated at such rate of exchange as may be prescribed.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
192 - Salary
192A - Payment of accumulated balance due to an employee
Rules of the Income-tax Rules, 2026 that work section 392. Where the rule’s own heading names the section we say so; the rest are marked on reading the rule, which is our derivation and not the department’s. A rule that serves the section silently and that we have missed will not appear here.
Rule 73 — Relief under section 157(1), when salary is paid in arrears or in advance, gratuity, etc. — on reading the rule
Rule 204 — Furnishing of particulars for deduction of tax at source from income under head “Salaries” — on reading the rule
Rule 205 — Furnishing of evidence of claims by employee under section 392(5)(b) for deduction of tax from income under head “Salaries”
Rule 215 — Certificate of tax deducted or collected at source to be furnished under section 395(4) — on reading the rule
Rule 218 — Time and mode of payment to Government account of tax deducted or collected at source or tax paid under section 392(2)(a)
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 4/2023 — Clarification regarding deduction of TDS under section 192 read with sub-section (1A) of section 115BAC of the Income-tax Act, 196 2023-04-05
Circular No. 11/2021 — Circular regarding use of functionality under Section 206AB and 206CCA of the Income-tax Act, 1961 2021-06-21
Circular No. 20/2020 — Income tax deduction from salaries during the financial year 2020 21 under section 192 of the income tax act 1961 2020-12-03
Corrigendum to Circular No. 4/2020 — Income tax deduction from salaries during the financial year 2019 2020 under section 192 of the income tax act 1961 regarding. 2020-03-05
Circular 8/2013 — Income tax deduction from salaries during the financial year 2013 14 under section 192 of the income tax act 1961 2013-10-10
Circular 4/2013 — Issuance of certificate for tax deducted at source in form no. 16 in accordance with the provisions of section 203 of the income t 2013-04-17
Circular No. 08/2012 — Section 192 of the Income-tax Act, 1961 - Deduction of tax at source - Salary - Income-tax deduction from salaries under section 1 2012-10-05
Circular No. 2/2011 — Section 200A of the Income-tax Act, 1961 - Deduction of tax at source - Processing of statement of tax deducted at source - Proced 2011-04-27
Circular No. 1/2010 — Section 192 of the Income-tax Act, 1961 - Deduction of tax at source - Salary - Income-tax deduction from salaries during the fina 2010-01-11
Circular No. 6/2009 — Clarification Regarding Deduction of TAX at Source from Payments of Second Installment of Arrears to Government Employees on Accou 2009-08-31
Circular No. 9/2003 — Section 192 of the Income-tax Act, 1961 - Deduction of tax at source - Salaries - Income-tax deduction from salaries during the fi 2003-11-18
Circular No. 13/2002 — Instructions for Deduction of Tax at Source From Salary 2002-12-23
Circular No. 1/2002 — 960. Instruction for deduction of tax at source from salaries during the Financial year 2001-2002 under section 192 2002-02-04
Circular No. 774 — 1174. Whether certificate issued under section 197(1) will be applicable only in respect of credit or payments, as the case may be 1999-03-17
Circular No. 761 — 1184. Clarifications regarding use of Form No. 16 for pensioners where pensioners are drawing their pensions through banks 1998-01-13
Circular No. 758 — 959. Clarification regarding deduction of tax from payments of additional pay, allowances and arrears to Central Government emplo 1997-11-07
Circular No. 756 — 958. Clarification regarding deduction of tax from payments of additional pay, allowances and arrears to Central Government emplo 1997-10-10
Circular No. 719 — Clarification regarding filing of returns in respect of tax deducted at source from salary of employees of company working at its 1995-08-22
Circular No. 696 — Section 201 l Consequence of Failure to Deduct or PAY 1994-12-16
Circular No. 504 — 955. Effect of insertion of sub-sections (2), (2A) and (2B) in section 192 by the Finance Act, 1987 - Relevant rules amended to en 1988-02-08
Circular No. 503 — Instructions to subordinate authorities - Authorisation regarding condonation of delay in filing refund claim 1988-02-06
Circular No. 501 — 954. Deduction admissible for deposits made in National Savings Scheme to be allowed while computing income of employees for purpo 1988-01-20
Circular No. 498 — 499. Repayment of loans, etc., taken for purchase/construction of house - Whether deduction admissible under sub-clause (ii) of cl 1987-11-04
Circular No. 476 — Instructions for deduction of tax at source from salary during the financial year 1986-87 at the rates specified in Part III of Fi 1986-12-11
Circular No. 285 — 951. Procedure for regulating refund of amounts paid in excess of tax deducted and/or deductible 1980-10-21
Circular No. 185 — 1696. Exemption limit of income raised from Rs. 6,000 to Rs. 8,000 by Finance (Amendment) Act, 1975 - Employers permitted to make 1975-12-18
Circular No. 150 — 190. Rule 3(a)(i) of Income-tax Rules - Valuation of perquisite represented by rent-free residential accommodation in the case of 1974-11-19
Circular No. 44 — Deductions under clause (i) as it stood prior to its substitution, and under clauses (iii) to (v) as they stood prior to their omi 1970-08-04
Circular No. 43 — 1159. Whether non-deduction of tax is only in respect of interest credited to Non-resident (External) Account and not to all types 1970-06-20
Circular No. 15 — Deductions under clause (i) as it stood prior to its substitution, and under clauses (iii) to (v) as they stood prior to their omi 1969-05-08
Circular No. 10 — Deductions under clause (i) as it stood prior to its substitution, and under clauses (iii) to (v) as they stood prior to their omi 1969-03-26
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Notification No. 02 /2023 — Procedure format and standards for filling an application for grant of certificate under sub rule 4 and its proviso of rule 28AA o 2023-09-27
Notification No. 09/2019 — Procedure format and standards for issuance of certificate for tax deducted at source in part b of form no. 16 in accordance with 2019-05-06
Notification No. 31 — Income-tax (Eighth Amendment) Rules, 2009 - Amendments in Forms 24Q, 26Q, 27Q, 27EQ; Substitution of Rules 30, 31, 31A, 31AA, 37CA 2009-03-25
Notification No. 123 — Amendment of the Income-tax Rules under section 192 of the Income-tax Act, 1961 2005-03-30
Notification No. 184 — Amendment of the Income-tax Rules under section 192 of the Income-tax Act, 1961 2003-07-31
Notification No. 49 — Amendment of the Income-tax Rules under section 17 of the Income-tax Act, 1961 2003-03-11
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 392. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
CIT v Eli Lilly & Co (India) P LtdSupreme CourtCuts both waystagged s.192 The TDS officer says I under-deducted under s.192. If my estimate was made honestly, does that answer the demand, the interest and the penalty?
State Bank of India v CITSupreme CourtHelps departmenttagged s.192(1) We reimbursed ltc where staff also flew abroad. Are we in default for not deducting TDS?
CIT v Dr Balabhai Nanavati HospitalHigh CourtCuts both waystagged s.192 After a survey the TDS officer says my consultant doctors are employees and wants 192 instead of 194J. Is he right?
Gwalior Rayon Silk v CITHigh CourtHelps taxpayertagged s.192 The TDS officer says I under-deducted on perquisites and wants the short tax under section 201(1) plus interest under section 201(1A). My estimate…
Hosmat Hospital P Ltd v ACITHigh CourtCuts both waystagged s.192 I engage salaried doctors, in-house consultants and visiting consultants. Can the officer treat them all alike?
Manjeet Singh Chawla v Dy CIT (TDS)High CourtHelps taxpayertagged s.192 If the payment for the fall in option value is not salary, is it capital gains?
Nishithkumar Mukeshkumar Mehta v Dy CITHigh CourtHelps departmenttagged s.192 Is compensation for the fall in value of stock options taxable as salary if I keep the options?
Sanjay Baweja v Dy CITHigh CourtHelps taxpayertagged s.192 My employer paid me for the fall in value of options I never exercised. Is that a perquisite?
Sanjay Sudan v ACITHigh CourtHelps taxpayertagged s.192 My employer deducted TDS but never deposited it. The department has raised a demand on me and set my later refund off against it. Can it do that?
State Bank of India v ACIT (TDS)High CourtHelps departmenttagged s.192 Staff booked a consolidated package tour with a foreign leg. Can we exempt the Indian part as ltc?
ACIT v SDV International Logistics LtdITATHelps taxpayertagged s.192 My employees claim hra and home loan interest together. Must I treat that as a double benefit?
Pramod Kumar Jain v DCITITATHelps taxpayertagged s.192 The company bought back my vested options before I exercised them. Salary or capital gains?
Free calculators on VittSphere ONE for the very provision this page is about. They open in the same window.
Salary and CTC calculator— what a cost-to-company figure becomes in the hand after the standard deduction and the two regimes.
TDS calculator— the rate, the threshold and the deduction on a given payment.
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.
