Circular No. 499 — Financial Year 1987-88

What this is

Circular No. 499 was issued by the Central Board of Direct Taxes on 1 December 1987. Its subject is Financial Year 1987-88.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Adds a surcharge to salary deduction part way through the year. Circular No. 489 dated 25 June 1987 had given employers the rates for deduction under section 192 during 1987-88. By Ordinance No. 6 of 1987, promulgated on 19 September 1987, Part III of the First Schedule to the Finance Act, 1987 was amended so that where a person's income chargeable under the head 'Salaries' exceeds Rs. 50,000, the income-tax computed for deduction at source is to be increased by a surcharge for the purposes of the Union at 5 per cent of that tax. An illustration is annexed, and the instruction is to be brought to the notice of all drawing and disbursing officers and State undertakings under the State Governments.

Why it was issued

The Ordinance of 19 September 1987 imposed the surcharge mid-year, and employers deducting on the June circular's rates had to be told to add it.

Who it reaches

Employers and drawing and disbursing officers deducting from salary in 1987-88
State undertakings under State Government control
Employees whose salary income exceeds Rs. 50,000

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.192	s.392, s.402

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

FINANCIAL YEAR 1987-88
Instructions for deduction of tax at source from salary during financial year 1987-88 at the rates specified in Part III of First Schedule to Finance Act, 1987
1. I am directed to refer to this Ministry’s Circular No. 489 [F.No. 275/51/87-IT(B)], dated 25-6-1987 [Clarification 1] wherein the rates of income-tax deduction during the year 1987-88 from the payment of income chargeable under the head ‘Salaries’ under section 192 were intimated.
2. The Central Government has promulgated an Ordinance (No. 6 of 1987) on 19-9-1987. By this Ordinance, Part III of the First Schedule to the Finance Act, 1987 has been amended. Accordingly, where the income of a person chargeable to tax under the head "Salaries" exceeds Rs. 50,000, the amount of income-tax computed for the purpose of deduction of tax at source shall be increased by a surcharge for the purpose of the Union calculated at the rate of 5 per cent on the amount of income-tax so computed. An illustration is given in Annex I. These instructions may be brought to the notice of all Drawing and Disbursing Officers and State Undertakings under the control of the State Governments.
Circular: No. 499 [F.No. 275/51/87-IT(B)], dated 1-12-1987.

What to watch

The surcharge is 5 per cent of the tax computed, not of the salary.
It bites where salary income exceeds Rs. 50,000, and the circular is to be read with Circular No. 489, which carries the rates themselves.
It came in by an Ordinance during the year, so deductions made earlier in 1987-88 had to be made good over the remaining months.
The figure belongs to the financial year 1987-88.

Where you meet it

In a short-deduction demand on an employer for 1987-88 where the mid-year surcharge was not built into the monthly deduction.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Notification No. 02 /2023 — Procedure format and standards for filling an application for grant of certificate under sub rule 4 and its proviso of r 27 September 2023
Circular No. 4/2023 — Clarification regarding deduction of TDS under section 192 read with sub-section (1A) of section 115BAC of the Income-ta 5 April 2023
Circular No. 24/2022 — Government of INDIA 7 December 2022
Circular No. 10/2022 — Circular regarding use of functionality under section 206AB and 206CCA of the income tax act 1961 17 May 2022
Circular No. 4/2022 — Government of INDiA 15 March 2022
Circular No. 11/2021 — Circular regarding use of functionality under Section 206AB and 206CCA of the Income-tax Act, 1961 21 June 2021

← Circular No. 500 · Circular No. 498 →

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.