Income tax deduction from salaries during the financial year 2013 14 under section 192 of the income tax act 1961
Circular 8/2013 was issued by the Central Board of Direct Taxes on 10 October 2013. Its subject is Income tax deduction from salaries during the financial year 2013 14 under section 192 of the income tax act 1961.
This is the Board’s annual salary-TDS circular. It restates the law on deduction from salary for one financial year, with the year’s rates and the year’s forms. Use the circular for the year in question, never a later one.
The annual circular on deduction of tax from salaries under section 192 for financial year 2013-14, on the Finance Act, 2013 rates, taking over from Circular No. 8/2012 dated 5 October 2012. For an ordinary individual the rates are nil up to Rs. 2,00,000, 10 per cent of the excess over Rs. 2,00,000 up to Rs. 5,00,000, Rs. 30,000 plus 20 per cent of the excess over Rs. 5,00,000 up to Rs. 10,00,000, and Rs. 1,30,000 plus 30 per cent of the excess over Rs. 10,00,000. A resident aged sixty or more but under eighty starts at Rs. 2,50,000, paying Rs. 25,000 plus 20 per cent above Rs. 5,00,000 and Rs. 1,25,000 plus 30 per cent above Rs. 10,00,000; a resident aged eighty or more pays nothing up to Rs. 5,00,000, then 20 per cent up to Rs. 10,00,000 and Rs. 1,00,000 plus 30 per cent beyond. Surcharge is 10 per cent of the income-tax where an individual's total income exceeds Rs. 1 crore, capped at the amount by which total income exceeds Rs. 1 crore. Education cess is 2 per cent of the tax and surcharge, and a further cess of 1 per cent is charged on the tax and surcharge but not on the education cess. The employer deducts on the estimated salary for the year at each payment, subject to section 206AA, and no deduction arises unless estimated salary including perquisites crosses the exemption threshold for that employee.
The Board's yearly intimation of the salary deduction rates and its explanation of the related provisions of the Act and the Income-tax Rules, 1962.
1
CIRCULAR NO : 08 /2013
F.No. 275/192/2013-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
.....
New Delhi, dated the 10th October, 2013
SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE
FINANCIAL YEAR 2013-14 UNDER SECTION 192 OF THE INCOME-TAX ACT,
1961.
……………
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.
2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2013:As per the Finance Act, 2013, income-tax is required to be deducted under Section 192 of the
Act from income chargeable under the head "Salaries" for the financial year 2013-14 (i.e.
Assessment Year 2014-15) at the following rates:
2.1 Rates of tax
A. Normal Rates of tax:Sl
No
Total Income Rate of tax
1 Where the total income does not exceed Rs.
2,00,000/-.
Nil
2 Where the total income exceeds Rs.
2,00,000 but does not exceed Rs. 5,00,000/-
.
10 per cent of the amount by which the
total income exceeds Rs. 2,00,000/-
3 Where the total income exceeds Rs.
5,00,000/- but does not exceed Rs.
10,00,000/-.
Rs. 30,000/- plus 20 per cent of the
amount by which the total income
exceeds Rs. 5,00,000/-.
4 Where the total income exceeds Rs.
10,00,000/-.
Rs. 1,30,000/- plus 30 Per cent of the
amount by which the total income
exceeds Rs. 10,00,000/-
B. Rates of tax for every individual, resident in India, who is of the age of sixty years or
more but less than eighty years at any time during the financial year:
2Sl
No
Total Income Rate of tax
1 Where the total income does not exceed Rs.
2,50,000/-
Nil
2 Where the total income exceeds Rs. 2,50,000
but does not exceed Rs. 5,00,000/-
10 per cent of the amount by which the
total income exceeds Rs. 2,50,000/-
3 Where the total income exceeds Rs.
5,00,000/- but does not exceed Rs.
10,00,000/-
Rs. 25,000/- plus 20 per cent of the
amount by which the total income
exceeds Rs. 5,00,000/-.
4 Where the total income exceeds Rs.
10,00,000/-
Rs. 1,25,000/- plus 30 per cent of the
amount by which the total income
exceeds Rs. 10,00,000/-C. In case of every individual being a resident in India, who is of the age of eighty years or
more at any time during the financial year:Sl
No
Total Income Rate of tax
1 Where the total income does not exceed Rs.
5,00,000/-
Nil
2 Where the total income exceeds Rs.
5,00,000 but does not exceed Rs.
10,00,000/-
20 per cent of the amount by which the
total income exceeds Rs. 5,00,000/-
4 Where the total income exceeds Rs.
10,00,000/-
Rs. 1,00,000/- plus 30 per cent of the
amount by which the total income
exceeds Rs. 10,00,000/-
2.2 Surcharge on Income tax:
The amount of income-tax shall be increased by a surcharge @10% of the Income-tax on
payments to an individual taxpayer, if the total income of the individual exceeds Rs 1 crore
during FY 2013-14 (AY 2014-15). However the amount of Surcharge shall not exceed the
amount by which the individual's total income exceeds Rs 1 crore and if surcharge so arrived
at, exceeds such amount (assessee's total income minus one crore) then it will be restricted to
the amount of total income minus Rupees one crore.
2.3.1 Education Cess on Income tax:
The amount of income-tax including the surcharge if any, shall be increased by Education Cess
on Income Tax at the rate of two percent of the income-tax.
2.3.2 Secondary and Higher Education Cess on Income-tax:
An additional cess is chargeable at the rate of one percent of income-tax including the
surcharge if any, but not including the Education Cess on income tax as in 2.3.1.
3. SECTION 192 OF THE INCOME-TAX ACT, 1961: BROAD SCHEME OF TAX
DEDUCTION AT SOURCE FROM "SALARIES":3.1 Method of Tax Calculation:
3
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 2013-14. 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. 2,00,000/- or
Rs.2,50,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of the
employee.(Some typical examples of computation of tax are given at Annexure-I).
3.2 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.3.2.1 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.
3.2.2 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.
STEPS:
Income Chargeable under the head "Salaries"
inclusive of all perquisites
Rs. 4,50,000/-
Tax on Total Salary (including Cess) Rs. 25,750/-
Average Rate of Tax [(25,750/4,50,000) X 100] 5.72%
Tax payable on Rs.50,000/= (5.72% of 50,000) Rs. 2,861/-
Amount required to be deposited each month Rs. 240 (Rs. 238.4) =2881/12)
The tax so paid by the employer shall be deemed to be TDS made from the salary of the
employee.
3.3 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:
3.4.1 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 purposes of that Act.
3.4.2 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.
3.5 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.
3.6 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)
3.6.1 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:
Sl
No
Purpose of borrowing capital Date of borrowing
capital
Maximum Deduction
allowable
1 Repair or renewal or reconstruction of the
house
Any time Rs. 30,000/-
2 Acquisition or construction of the house Before 01.04.1999 Rs. 30,000/-
3 Acquisition or construction of the house On or after 01.04.1999 Rs. 1,50,000/-
In case of Serial No. 3 above
(a) The acquisition or constructing 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 and constructed shall be deducted in equal installments for the FY in
question and subsequent four FYs.
(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.
3.7 Adjustment 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.
3.8 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 ( see Rule 26).
4. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES:4.1. As per section 204(i) of the Act, the "persons responsible for paying" for the purpose of
Section 192 means the employer himself or if the employer is a Company, the Company
itself including the Principal Officer thereof. Further, as per Section 204(iv), in the case of
credit, or as the case may be, if the payment is by or on behalf of Central Government or State
Government, the DDO or any other person by whatever name called, responsible for crediting,
or as the case may be, paying such sum is the "persons responsible for paying".
4.2. The tax determined as per para 9 should be deducted from the salary u/s 192 of the Act.
4.3. Deduction of Tax at Lower Rate:
If the jurisdictional TDS officer of the Taxpayer issues a certificate of No Deduction or Lower
Deduction of Tax under section 197 of the Act, in response to the application filed before him
in Form No 13 by the Taxpayer; then the DDO should take into account such certificate and
deduct tax on the salary payable at the rates mentioned therein.(see Rule 28AA).
4.4. Deposit of Tax Deducted:
Rule 30 prescribes time and mode of payment of tax deducted at source to the account of
Central Government.
4.4.1. Due dates for payment of TDS
Prescribed time of payment/deposit of TDS to the credit of Central Government account is as
under:
a) In case of an Office of Government:
Sl No. Description Time up to which to be deposited.
1 Tax deposited without Challan [Book Entry] SAME DAY
2 Tax deposited with Challan 7TH DAY NEXT MONTH
3 Tax on perquisites opt to be deposited by the employer. 7TH DAY NEXT MONTH
b) In any case other than an Office of Government
Sl No. Description Time up to which to be deposited.
1 Tax deducted in March 30th APRIL NEXT FINANCIAL YEAR
2 Tax deducted in any other month 7TH DAY NEXT MONTH
3 Tax on perquisites opted to be deposited by the employer 7TH DAY NEXT MONTH
However, if a DDO applies before the jurisdictional Additional/Joint Commissioner of
Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allows for
payments on quarterly basis and as per time given in Table below:
Sl. No. Quarter of the financial year ended on Date for quarterly payment
1 30th June 7th July
2 30th September 7th October
3 31st December 7th January
4 31st March 30th April next Financial Year
4.4.2 Mode of Payment of TDS
4.4.2.1 Compulsory filing of Statement by PAO, Treasury Officer, etc in case of payment
of TDS by Book Entry:7
In the case of an office of the Government, where tax has been paid to the credit of the Central
Government without the production of a challan [Book Entry], the Pay and Accounts Officer
or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by
whatever name called to whom the deductor reports about the tax deducted and who is
responsible for crediting such sum to the credit of the Central Government, shall‐
(a) submit a statement in Form No. 24G within ten days from the end of the month to
the agency authorized by the Director General of Income‐tax (Systems) [TIN
Facilitation Centres currently managed by M/s National Securities Depository Ltd] in
respect of tax deducted by the deductors and reported to him for that month; and
(b) intimate the number (hereinafter referred to as the Book Identification Number or
BIN) generated by the agency to each of the deductors in respect of whom the sum
deducted has been credited. BIN consist of receipt number of Form 24G, DDO
sequence number in Form No. 24G and date on which tax is deposited.
The procedure of furnishing Form 24G is detailed in Annexure III. PAOs/DDOs should go
through the FAQs in Annexure IV to understand the correct process to be followed. The ZAO /
PAO of Central Government Ministries is responsible for filing of Form No. 24G on monthly
basis. The person responsible for filing Form No. 24G in case of State Govt. Departments is
shown at Annexure V.
The procedure of furnishing Form 24G is detailed in Annexure IV. PAOs/DDOs should go
through the FAQs therein to understand the correct process to be followed.
4.4.2.2 Payment by an Income Tax Challan:
(i) In case the payment is made by an Income Tax Challan, the amount of tax so deducted
shall be deposited to the credit of the Central Government by remitting it, within the time
specified in Table in para 4.4.1 above, into any office of the Reserve Bank of India or branches
of the State Bank of India or of any authorized bank;
(ii) In case of a company and a person (other than a company), to whom provisions of section
44AB are applicable, the amount deducted shall be electronically remitted into the Reserve
Bank of India or the State Bank of India or any authorised bank accompanied by an electronic
income-tax challan (Rule125).
The amount shall be construed as electronically remitted to the Reserve Bank of India or to the
State Bank of India or to any authorized bank, if the amount is remitted by way of:
(a) internet banking facility of the Reserve Bank of India or of the State
Bank of India or of any authorized bank; or
(b) debit card. {Notification No.41/2010 dated 31st May 2010}
4.5 Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted:
4.5.1 If a person fails to deduct the whole or any part of the tax at source, or, after deducting,
fails to pay the whole or any part of the tax to the credit of the Central Government within
the prescribed time, he shall be liable to action in accordance with the provisions of section
201 and shall be deemed to be an assessee-in-default in respect of such tax and liable for penal
action u/s 221 of the Act. Further Section 201(1A) lays down that such person shall be liable
to pay simple interest
(i) at 1% for every month or part of the month on the amount of such tax from the date
on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one-half percent for every month or part of a month on the amount of
such tax from the date on which such tax was deducted to the date on which such tax is
actually paid.
Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of
quarterly statement of TDS for respective quarter.
4.5.2 Section 271C inter alia lays down that if any person fails to deduct whole or any part
of tax at source or fails to pay the whole or part of tax under second proviso to section 194B,
he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted
or paid by him.
4.5.3 Further, section 276B lays down that if a person fails to pay to the credit of the
Central Government within the prescribed time, as above, the tax deducted at source by
him, he shall be punishable with rigorous imprisonment for a term which shall be
between 3 months and 7 years, along with fine.
4.6 Furnishing of Certificate for Tax Deducted (Section 203):
4.6.1 Section 203 requires the DDO to furnish to the employee a certificate in Form 16
detailing the amount of TDS and certain other particulars. The Act stipulates that Form 16
should be furnished to the employee by 31st May after the end of the financial year in which the
income was paid and tax deducted. Even the banks deducting tax at the time of payment of
pension are required to issue such certificates. Revised Form 16 annexed to Notification No
11 dated 19-02-2013 is enclosed. The certificate in Form 16 shall specify
(a) Valid permanent account number (PAN) of the deductee;
(b) Valid tax deduction and collection account number (TAN) of the deductor;
(c) (i) Book identification number or numbers (BIN) where deposit of tax
deducted is without production of challan in case of an office of the
Government;
(ii) Challan identification number or numbers (CIN*) in case of payment
through bank.
(*Challan identification number (CIN) means the number comprising the Basic Statistical
Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which
the tax has been deposited and challan serial number given by the bank.)
(d) Receipt numbers of all the relevant quarterly statements in case the statement
referred to in clause (i) is for tax deducted at source from income chargeable
under the head "Salaries". The receipt number of the quarterly statement is of 8
digit.
Further as per Circular 04/2013 dated 17-04-2013 all deductors (including Government
deductors who deposit TDS in the Central Government Account through book entry) shall issue
the Part A of Form No. 16, by generating and subsequently downloading it through TRACES
Portal and after duly authenticating and verifying it, in respect of all sums deducted on or after
the 1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of
Form No 16 shall have a unique TDS certificate number. 'Part B (Annexure)' of Form No. 16
shall be prepared by the deductor manually and issued to the deductee after due authentication
and verification alongwith the Part A of the Form No. 16.
It may be noted that under the new TDS procedure, the accuracy and availability of TAN, PAN
and receipt number of TDS statement filed by the deductor will be unique identifier for
granting online credit for TDS. Hence due care should be taken in filling these particulars. Due
care should also be taken in indicating correct CIN/ BIN in TDS certificate.
If the DDO fails to issue these certificates to the person concerned, as required by section 203,
he will be liable to pay, by way of penalty, under section 272A(2)(g), a sum which shall be
Rs.100/- for every day during which the failure continues.
It is, however, clarified that there is no obligation to issue the TDS certificate in case tax at
source is not deductible/deducted by virtue of claims of exemptions and deductions.
[Note: TRACES is a web-based application of the Income - tax Department that provides
an interface to all stakeholders associated with TDS administration. It enables viewing of
challan status, downloading of NSDL Conso File, Justification Report and Form 16 / 16A
as well as viewing of annual tax credit statements (Form 26AS). Each deductor is required
to Register in the Traces portal. Form 16/16A issued to deductees should mandatorily be
generated and downloaded from the TRACES portal]
4.6.2. If an assessee is employed by more than one employer during the year, each of the
employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which
such assessee was employed with each of the employers and Part B may be issued by each of
the employers or the last employer at the option of the assessee.
4.6.3. Authentication by Digital Signatures:
(i) Where a certificate is to be furnished in Form No. 16, the deductor may, at his
option, use digital signatures to authenticate such certificates.
(ii) In case of certificates issued under clause (i), the deductor shall ensure that
(a) the conditions prescribed in para 4.6.1 above are complied with;
(b) once the certificate is digitally signed, the contents of the certificates are not
amenable to change; and
(c) the certificates have a control number and a log of such certificates is
maintained by the deductor.
The digital signature is being used to authenticate most of the e-transactions on the
internet as transmission of information using digital signature is failsafe. It saves time
specially in organisations having large number of employees where issuance of
certificate of deduction of tax with manual signature is time consuming (Circular no 2
of 2007 dated 21.05.2007)
4.6.4. Furnishing of particulars pertaining to perquisites, etc (Section 192(2C):
4.6.4.1 As per section 192(2C), the responsibility of providing correct and complete particulars
of perquisites or profits in lieu of salary given to an employee is placed on the person
responsible for paying such income i.e., the person responsible for deducting tax at source. The
form and manner of such particulars are prescribed in Rule 26A, Form 12BA (Annexure II)
and Form 16 of the Rules. Information relating to the nature and value of perquisites is to be
provided by the employer in Form 12BA in case salary paid or payable is above Rs.1,50,000/-.
In other cases, the information would have to be provided by the employer in Form 16 itself.4.6.4.2 An employer, who has paid the tax on perquisites on behalf of the employee as per the
provisions discussed in para 3.2 of this circular, shall furnish to the employee concerned, a
certificate to the effect that tax has been paid to the Central Government and specify the
amount so paid, the rate at which tax has been paid and certain other particulars in the
amended Form 16.
4.6.4.3 The obligation cast on the employer under Section 192(2C) for furnishing a statement
showing the value of perquisites provided to the employee is a crucial responsibility of the
employer, which is expected to be discharged in accordance with law and rules of valuation
framed there under. Any false information, fabricated documentation or suppression of
requisite information will entail consequences thereof provided under the law. The certificates
in Forms 16 and/or Form 12BA specified above, shall be furnished to the employee by 31st
May of the financial year immediately following the financial year in which the income was
paid and tax deducted. If he fails to issue these certificates to the person concerned, as required
by section 192(2C), he will be liable to pay, by way of penalty, under section 272A(2)(i), a
sum which shall be Rs.100/- for every day during which the failure continues.
As per Section 139C of the Act, the Assessing Officer can require the taxpayer to produce
Form 12BA alongwith Form 16, as issued by the employer.
4.7 Mandatory Quoting of PAN and TAN:
4.7.1 Section 203A of the Act makes it obligatory for all persons responsible for deducting
tax at source to obtain and quote the Tax deduction and collection Account No (TAN) in the
challans, TDS-certificates, statements and other documents. Detailed instructions in this
regard are available in this Department's Circular No.497 [F.No.275/118/ 87-IT(B) dated
9.10.1987]. If a person fails to comply with the provisions of section 203A, he will be liable
to pay, by way of penalty, under section 272BB, a sum of ten thousand rupees. Similarly, as
per Section 139A(5B), it is obligatory for persons deducting tax at source to quote PAN of the
persons from whose income tax has been deducted in the statement furnished u/s 192(2C),
certificates furnished u/s 203 and all statements prepared and delivered as per the provisions
of section 200(3) of the Act.
4.7.2 All tax deductors are required to file the TDS statements in Form No.24Q (for tax
deducted from salaries). As the requirement of filing TDS certificates alongwith the return of
income has been done away with, the lack of PAN of deductees is creating difficulties in giving
credit for the tax deducted. Tax deductors are, therefore, advised to procure and quote correct
PAN details of all deductees in the TDS statements for salaries in Form 24Q. Taxpayers are
also liable to furnish their correct PAN to their deductors. Non-furnishing of PAN by the
deductee (employee) to the deductor (employer) will result in deduction of TDS at higher rates
u/s 206AA of the Act mentioned in para 4.8 below.
4.8 Compulsory Requirement to furnish PAN by employee (Section 206AA):
4.8.1 Section 206AA in the Act makes furnishing of PAN by the employee compulsory in
case of receipt of any sum or income or amount, on which tax is deductible. If employee
(deductee) fails to furnish his/her PAN to the deductor , the deductor has been made
responsible to make TDS at higher of the following rates:
i) at the rate specified in the relevant provision of this Act; or
ii) at the rate or rates in force; or
iii) at the rate of twenty per cent.
The deductor has to determine the tax amount in all the three conditions and apply the higher
rate of TDS. However, where the income of the employee computed for TDS u/s 192 is below
taxable limit, no tax will be deducted. But where the income of the employee computed for
TDS u/s 192 is above taxable limit, the deductor will calculate the average rate of income-tax
based on rates in force as provided in sec 192. If the tax so calculated is below 20%,
deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax
is to deducted at the average rate. Education cess @ 2% and Secondary and Higher
Education Cess @ 1% is not to be deducted, in case the tax is deducted at 20% u/s 206AA
of the Act.
4.9 Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS]:
4.9.1 The person deducting the tax (employer in case of salary income), is required to file
duly verified Quarterly Statements of TDS in Form 24Q for the periods [details in Table
below] of each financial year, to the TIN/facilitation Centres authorized by DGIT (System's)
which is currently managed by M/s National Securities Depository Ltd (NSDL). Particulars of
e-TDS Intermediary at any of the TIN Facilitation Centres are available at
http://www.incometaxindia.gov.in and http://tin-nsdl.com portals. The requirement of filing an
annual return of TDS has been done away with w.e.f. 1.4.2006. The quarterly statement for
the last quarter filed in Form 24Q (as amended by Notification No. S.O.704(E) dated
12.5.2006) shall be treated as the annual return of TDS. Due dates of filing this statement
quarterwise is as in the Table below.
TABLE: Dates of filing Quarterly Statements E-TDS Return 24Q
Sl No Return for Quarter ending Due date for Government
Offices
Due date for Other
Deductors
1 30th June 31st July 15th July
2 30th September 31st October 15th October
3 31st December 31st January 15th January
4 31st March 15th May 15th May
4.9.2 The statements referred above may be furnished in paper form or electronically under
digital signature or alongwith verification of the statement in Form 27A of verified through an
electronic process in accordance with the procedures, formats and standards specified by the
Director General of Income‐tax (Systems). The procedure for furnishing the e-TDS/TCS
statement is detailed at Annexure VI.
4.9.3 All Returns in Form 24Q are required to be furnished in electronically except in case
where the number of deductee records is less than 20 and deductor is not an office of
Government, or a company or a person who is required to get his accounts audited under
section 44AB of the Act. [Notification No. 11 dated 19.02.2013].
4.9.4 Fee for default in furnishing statements (Section 234E):
If a person fails to deliver or caused to be delivered a statement within the time prescribed in
section 200(3) in respect of tax deducted at source on or after 1.07.2012 he shall be liable to
pay, by way of fee a sum of Rs. 200 for every day during which the failure continues.
However, the amount of such fee shall not exceed the amount of tax which was deductible at
source. This fee is mandatory in nature and to be paid before furnishing of such statement.
4.9.5 Penalty for failure in furnishing statements or furnishing incorrect information
(section 271H):
If a person fails to deliver or caused to be delivered a statement within the time prescribed in
section 200(3) or furnishes an incorrect statement, in respect of tax deducted at source on or
after 1.07.2012, he shall be liable to pay, by way of penalty a sum which shall not be less than
Rs. 10,000/- but which may extend to Rs 1,00,000/-. However, the penalty shall not be levied
if the person proves that after paying TDS with the fee and interest, if any, to the credit of
Central Government, he had delivered such statement before the expiry of one year from the
time prescribed for delivering the statement.
4.9.6 At the time of preparing statements of tax deducted, the deductor is required to
mandatorily quote:
(i) his tax deduction and collection account number (TAN) in the statement;
(ii) his permanent account number (PAN) in the statement except in the case where
the deductor is an office of the Government( including State Government). In
case of Government deductors "PANNOTREQD" to be quoted in the e-TDS
statement;
(iii) the permanent account number PAN of all deductees;
(iv) furnish particulars of the tax paid to the Central Government including book
identification number or challan identification number, as the case may be.
(v) furnish particular of amounts paid or credited on which tax was not deducted in
view of the issue of certificate of no deduction of tax u/s 197 by the assessing
officer of the payee.
4.10 TDS on Income from Pension:
In the case of pensioners who receive their pension from a nationalized bank, the
instructions contained in this circular shall apply in the same manner as they apply to salary-income. The deductions from the amount of pension under section 80C on account of
contribution to Life Insurance, Provident Fund, NSC etc., if the pensioner furnishes the relevant
details to the banks, may be allowed. Necessary instructions in this regard were issued by
the Reserve Bank of India to the State Bank of India and other nationalized Banks vide
RBI's Pension Circular(Central Series) No.7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS)
No.60/GA.64 (11CVL)-/92) dated the 27th April 1992, and, these instructions should be
followed by all the branches of the Banks, which have been entrusted with the task of
payment of pensions. Further all branches of the banks are bound u/s 203 to issue certificate
of tax deducted in Form 16 to the pensioners also vide CBDT circular no. 761 dated 13.1.98.
4.11. Matters pertaining to the TDS made in case of Non Resident:
4.11.1 Where Non-Residents are deputed to work in India and taxes are borne by the
employer, if any refund becomes due to the employee after he has already left India and has no
bank account in India by the time the assessment orders are passed, the refund can be issued to
the employer as the tax has been borne by it [Circular No. 707 dated 11.07.1995].4.11.2 In respect of non-residents, the salary paid for services rendered in India shall be
regarded as income earned in India. It has been specifically provided in the Act that any
salary payable for rest period or leave period which is both preceded or succeeded by service
in India and forms part of the service contract of employment will also be regarded as
income earned in India.
5. COMPUTATION OF INCOME UNDER THE HEAD "SALARIES"Section 80CCD(1) allows an employee, being an individual employed by the Central Government or any other employer, on or after the 01.01.2004, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F. N. 5/7/2003- ECB&PR dated 22.12.2003 or as may be notifed by the Central Government. However, the deduction shall not exceed an amount equal to 10% of his salary(includes Dearness Allowance but excludes all other allowance and perquisites).
As per Section 80CCD(2), where an employee receives any contribution in the said pension scheme from the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the pr
In a section 201 proceeding on short deduction from salary for financial year 2013-14, and when reconciling an employee's Form No. 16 with the return for assessment year 2014-15.
Forms it names. Form No. 10E, Form No. 13, Form No. 16, Form No. 24G, Form No. 24Q
Rules it names. Rule 26, 26A, 26B, 28AA, 2BA, 30 of the Income-tax Rules, 1962. The 1962 Rules were replaced by the Income-tax Rules, 2026, which renumbered nearly everything: a rule number quoted here almost never means the same rule today.
It mentions. Circular No. 08/2012, Circular No. 2/2007
Source: the Income Tax Department’s own published text — its page for this instrument.