Income tax deduction from salaries during the financial year 2015 16 under section 192 of the income tax act 1961
Circular No. 20/2015 was issued by the Central Board of Direct Taxes on 2 December 2015. Its subject is Income tax deduction from salaries during the financial year 2015 16 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 2015-16, on the Finance Act, 2015 rates, taking over from Circular No. 17/2014 dated 10 December 2014. For an ordinary individual the rates are nil up to Rs. 2,50,000, 10 per cent of the excess over Rs. 2,50,000 up to Rs. 5,00,000, Rs. 25,000 plus 20 per cent of the excess over Rs. 5,00,000 up to Rs. 10,00,000, and Rs. 1,25,000 plus 30 per cent of the excess over Rs. 10,00,000. A resident aged sixty or more but under eighty starts at Rs. 3,00,000, paying Rs. 20,000 plus 20 per cent above Rs. 5,00,000 and Rs. 1,20,000 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 for this year is 12 per cent of the income-tax, including tax under section 111A or section 112, for an individual, Hindu undivided family, association of persons, body of individuals or artificial juridical person with total income exceeding Rs. 1 crore, subject to marginal relief: tax and surcharge together cannot exceed the tax on a total income of Rs. 1 crore by more than the income above Rs. 1 crore. Education cess is 2 per cent of the tax and surcharge, and a further secondary and higher education cess of 1 per cent is charged on the tax and surcharge but not on the education cess.
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.
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CIRCULAR NO : 20/2015
F.No. 275/192/2015-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
******
North Block, New Delhi
Dated the 2nd December, 2015
SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE
FINANCIAL YEAR 2015-16 UNDER SECTION 192 OF THE
INCOME-TAX ACT, 1961.
*****
Reference is invited to Circular No.17/2014 dated 10.12.2014 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
2014-15, 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 2015-16 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, 2015:As per the Finance Act, 2015, income-tax is required to be deducted under Section 192 of
the Act from income chargeable under the head "Salaries" for the financial year 2015-16
(i.e. Assessment Year 2016-17) at the following rates:
2.1 Rates of tax
A. Normal Rates of tax:Sl
N
o
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/-
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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:Sl
No
Total Income Rate of tax
1 Where the total income does not
exceed Rs. 3,00,000/-
Nil
2 Where the total income exceeds
Rs. 3,00,000 but does not exceed
Rs. 5,00,000/-
10 per cent of the amount by which the total
income exceeds Rs. 3,00,000/-
3 Where the total income exceeds
Rs. 5,00,000/- but does not exceed
Rs. 10,00,000/-
Rs. 20,000/- 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. 1,20,000/- 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 computed in accordance with the preceding provisions of this
Paragraph, or the provisions of section 111A or section 112 of the Income-tax Act, shall, in
the case of every individual or Hindu undivided family or association of persons or body of
individuals, whether incorporated or not, or every artificial juridical person referred to in
sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, having a total income
exceeding one crore rupees, be increased by a surcharge for the purpose of the Union
calculated at the rate of twelve per cent of such income-tax:
Provided that in the case of persons mentioned above having total income exceeding one
crore rupees, the total amount payable as income-tax and surcharge on such income shall not
exceed the total amount payable as income-tax on a total income of one crore rupees by
more than the amount of income that exceeds one crore rupees.
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 education 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:
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 2015-16. 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.
2,50,000/- or Rs.3,00,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of
the employee.(Some typical illustrations 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. 20,600/-
Average Rate of Tax [(20,600/4,50,000) X 100] 4.57%
Tax payable on Rs.50,000/= (4.57% of 50,000) Rs. 2285/-
Amount required to be deposited each month Rs. 190 ((Rs. 190.40) =2285/12)
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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 purpose 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.
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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/-
(upto AY 2014-15)
Rs. 2,00,000/-
(w. e. f. AY 2015-16)
In case of Serial No. 3 above
(a) The acquisition or construction 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 or constructed (as reduced by any part of interest allowed as
deduction under any other section of the Act) 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, in the context of payments other than payments by the
Central Government of the State Government 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
case the credit, or as the case may be, the payment is made 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" for the purpose of Section 192.
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). The Unique Identification Number of the certificate is required to be reported in
Quarterly Statement of TDS (Form 24Q).
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
In a section 201 proceeding on short deduction from salary for financial year 2015-16, and when reconciling an employee's Form No. 16 with the return for assessment year 2016-17.
An employee with total income of Rs. 1,02,00,000 would bear surcharge of 12 per cent of his tax, a figure far above Rs. 2,00,000. Marginal relief caps the whole: tax plus surcharge cannot exceed the tax on Rs. 1 crore plus Rs. 2,00,000, and the two cesses are then computed on that capped amount.
Forms it names. Form No. 10E, Form No. 13
Rules it names. Rule 26, 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. 17/2014
Source: the Income Tax Department’s own published text — its page for this instrument.