Circular No. 55

I am directed to invite a reference to this Ministry's letters F

What this is

Circular No. 55 was issued by the Central Board of Direct Taxes on 16 March 1971. Its subject is I am directed to invite a reference to this Ministry's letters F.

What it does

Directs that, until further instructions, tax be deducted from salaries during the financial year 1971-72 at the same rates as were in force during the financial year 1970-71, because the Finance Bill for 1971-72 had not yet been introduced in Parliament and passed into law. It follows the Ministry's letters of 25th March, 1970, 28th May, 1970 and 4th August, 1970 on deduction from salaries paid in 1970-71, and asks that it be brought to the notice of all disbursing officers and State undertakings under the control of the State Government.

Why it was issued

The Finance Bill for 1971-72 was expected to take some time to be introduced and passed, and deduction from salary could not wait for it.

Who it reaches

Disbursing officers in Government offices
State undertakings paying salaries
Salaried employees whose deduction continued at the earlier year's rates

The instrument, as the Board published it

The department publishes this one only as a PDF, so the words below were read out of that PDF by machine. That reading can carry its own mistakes — a misread number, a broken line. Check the signed document before you rely on a figure in it.

Circular No. 55, dated 16-3-1971
I am directed to invite a reference to this Ministry's letters F. No. 275/42/70-ITJ dt. 25th March, 1970, 28th May, 1970 and 4th August, 1970 on the subject of deduction of income-tax from salaries paid during the year 1970-71.
2. As it may take some time before the Finance Bill for 1971-72 is introduced in Parliament and passed into law, it is desired that, till further instructions, deduction of tax from "salaries" may be made during the financial year 1971-72 at the same rates as were in force during the financial year 1970-71.
3. This may please be brought to the notice of all Disbursing Officers and State undertakings under the control of the State Government.

What to watch

It is an interim measure, expressly running only until further instructions; the rates finally applicable for 1971-72 came from the Finance Act when passed.
It carries no rates of its own; the figures are those communicated for the financial year 1970-71 by the three letters it names.
Any shortfall against the eventual rates had to be made good in later deductions of the same year.

Where you meet it

In a short-deduction question on salary paid in the early months of the financial year 1971-72.

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A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.