Corrigendum to Circular No. 4/2020 — Income tax deduction from salaries during the financial year 2019 2020 under section 192 o

What this is

Corrigendum to Circular No. 4/2020 was issued by the Central Board of Direct Taxes on 5 March 2020. Its subject is Income tax deduction from salaries during the financial year 2019 2020 under section 192 of the income tax act 1961 regarding.

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.

What it does

Corrects the salary TDS circular for financial year 2019-20. In paragraph 3.1 under 'Method of Tax Collection' of Circular No. 4/2020 dated 16 January 2020, the third sentence, which said no tax need be deducted unless the estimated salary income including perquisites exceeds two lakh fifty thousand rupees, three lakh rupees or five lakh rupees depending on the employee's age, is replaced. It now reads that no tax need be deducted unless the estimated salary income including perquisites is taxable after giving effect to the exemptions, deductions and relief as applicable.

Why it was issued

The original sentence stated the no-deduction test by reference to the basic exemption slabs alone, and the Board modified it so the test is whether salary is taxable after the exemptions, deductions and relief that apply.

Who it reaches

Employers estimating salary TDS for financial year 2019-20 under section 192
Payroll teams applying paragraph 3.1 of Circular No. 4/2020
Salaried employees whose gross salary crosses a slab but whose taxable income after deductions and rebate does not

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 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.

F.No.275/192/20 19-IT(B)
Goverrunent ofIndia
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
•
North Block,
New Delhi the 5th March, 2020
CORRIGENDUM TO CIRCULAR NO.4 OF 2020 DATED 16.01.2020
Subject: Income-Tax Deduction from Salaries during the Financial Year 2019-
2020 under Section 192 of the Income-Tax Act, 1961 - regarding.
In Circular No.04/2020 dated 16th January, 2020 on the above mentioned
subject, it is to state that Para 3.1 under heading "Method of Tax Collection" is
modified as below:
For sentence 3 of Pa ra 3.1:
No tax, however, will be required to be deducted at source in a case unless
the estimated salary income including the value of perquisites, for the
Financial Year exceeds Rs 2,50,0001- or Rs 3,00,0001- or Rs 5,00,0001-, as
the case may be, depending upon the age of the employee.
May be read as:
No tax, however, will be required to be deducted at source in a case unless
the estimated salary income including the value of perquisites is taxable after
giving effect to the exemptions, deductions and relief as applicable.
2. In view of the above, Circular No.04/2020 may accordingly be treated as
modified to this extent.
aveen Kapoor)
Under Secretary to the Govt. of India
TelelFax: Oll-23094182
E-mail: naveen.kapoor65@nic.in

What to watch

Only the third sentence of paragraph 3.1 changes; the rest of Circular No. 4/2020 stands.
The corrected test is taxability after exemptions, deductions and relief, not gross salary against the age-based slab.
It relates to financial year 2019-20, so it now matters mainly for old TDS defaults and rectifications for that year.

Where you meet it

You meet it in a short-deduction proceeding against an employer for financial year 2019-20, where the department says tax should have been deducted because gross salary crossed the slab while the employee's taxable income after deductions and rebate was nil.

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

An employee under sixty has estimated salary of five lakh twenty thousand rupees for financial year 2019-20, with a deduction of one lakh fifty thousand rupees under Chapter VI-A leaving taxable income below the rebate threshold. On the original wording the employer would look only at the five lakh rupees figure; on the corrected wording the employer looks at taxability after the deduction and relief, and no tax is deducted.

What it names

It mentions. Circular No. 04/2020, Circular No. 4/2020

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. 8/2020 · Circular No. 7/2020 →

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.