Give the new employer the Form No. 12B particulars of the salary and tax deducted by the old employer, under Rule 26A, so that one estimate covers the whole year. Other income and losses go to the employer under s.192(2B), and evidence of the claims you want set off - house rent allowance, leave travel concession, interest on borrowed capital and Chapter VI-A deductions - goes in Form No. 12BB under Rule 26C. The employer may not use any of this to deduct less tax than the salary itself warrants.
Section 192(1) makes the employer estimate. Where there are two employers in a year, or two at once, the estimate breaks unless one of them is told about the other. Rule 26A(1) is how that is done: 'The assessee may furnish to the person responsible for making the payment referred to in sub-section (1) of section 192, the details of the income under the head Salaries due or received by him from the other employer or employers referred to in sub-section (2) of that section and of any tax deducted at source from such income in Form No. 12B.' Note the word 'may'. The employee is not compelled, but an employee who says nothing gets two full sets of exemptions and thresholds applied twice and finds the shortfall in his own assessment, with interest.
Rule 26A also carries the employer's side of the paperwork: the person paying salary furnishes a statement of the particulars of perquisites and profits in lieu of salary, in Form No. 12BA where the salary exceeds the prescribed figure, with Form No. 16 in other cases.
Other income goes in under s.192(2B). The employee may send the employer particulars of income under any other head and of any tax deducted on it, and the employer takes them into account in the estimate. The proviso is the limit, and the circular reproduces it: 'Provided that this sub-section shall not in any case have the effect of reducing the tax deductible from income under the head "Salaries", except where the loss under the head "Income from house property" and the tax deducted in accordance with other provisions of Part B and tax collected in accordance with the provisions of Part BB of this Chapter, has been taken into account.' In short, the only thing that may bring the salary deduction down is a loss from house property. Interest income can only push the deduction up.
Evidence of claims is Rule 26C. The employee furnishes evidence or particulars in Form No. 12BB, and the rule sets out what is needed for each claim: for house rent allowance the name, address and permanent account number of the landlord where the rent exceeds one lakh rupees in the year; for leave travel concession, evidence of the expenditure; for deduction of interest on borrowed capital, the name, address and permanent account number of the lender; and for Chapter VI-A deductions, evidence of the investment or expenditure. Form No. 12BB is the document a TDS officer asks for first in a s.201 proceeding, because it is the record of what the employer was told.
The annual circular under s.192 pulls this together for the year. For financial year 2024-25 it is Circular No. 3/2025, F. No. 275/107/2024-IT(B), dated 20 February 2025, which incorporates the amendments made by the Finance Acts of 2023 and 2024 and provides that where no amendment has been made the earlier circular for financial year 2022-23 continues to apply. The circular for the year under examination, not the current one, is the document to work from.
The regime choice sits on top of all of this: what the employer deducts depends on which regime the employee is in, and the library's concept concessional-regimes-115bac-115baa covers the s.115BAC position and the return-filing consequences. Where the employee's declarations turn out to have been wrong, the question becomes whether the employer's estimate was an honest one, which is the subject of bona-fide-estimate-of-salary-under-s192.
Almost every s.201 demand on a payroll starts with a document that was never collected: no Form No. 12B from the joiner, no Form No. 12BB for the rent, no landlord PAN. The forms are cheap to collect and they are the employer's defence. For the employee, the practical point is the proviso to s.192(2B) - declaring a fixed deposit does not reduce the salary deduction, and only a house property loss can.
The TDS officer says I under-deducted under s.192. If my estimate was made honestly, does that answer the demand, the interest and the penalty?
My employees exercised stock options but the shares are locked in and non-transferable. Was I supposed to deduct tax on the market value less what they paid?
As an employer, must I collect bills and tickets from employees before treating leave travel concession or conveyance allowance as exempt while deducting tax under section 192?
I am the employer. I treated the uniform allowance as exempt on my employees' self-certification and did not call for bills. The TDS officer has made me an assessee in default under s.201. Was I obliged to verify that each employee actually spent the money?
After a survey the TDS officer says my consultant doctors are employees and wants 192 instead of 194J. Is he right?
The TDS officer says I under-deducted on perquisites and wants the short tax under section 201(1) plus interest under section 201(1A). My estimate was honest. Does that answer the demand or only the penalty?
I engage salaried doctors, in-house consultants and visiting consultants. Can the officer treat them all alike?
If the payment for the fall in option value is not salary, is it capital gains?
Every page in this library links to what it was written from, so you can check it rather than take our word for it.