DEDUCTION OF TAX AT SOURCE- INCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 DURING THE FINANCIAL YEAR 2017-18 CIRCULAR NO 29 /2017

DEDUCTION OF TAX AT SOURCE- INCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961  DURING THE FINANCIAL YEAR 2017-18      CIRCULAR NO 29 /2017

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 2017-18. 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.

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