Deduction of tax at source-Income-tax deduction from salaries during the financial year 1984-85 under section 192 of the Income-tax Act, 1961-Regarding - Income Tax - 408/1985

Deduction of tax at source-Income-tax deduction from salaries during the financial year 1984-85 under section 192 of the Income-tax Act, 1961-Regarding. Circular No. 408 Dated 8/2/1985 From Shri B. Nagarajan, Secretary, C.B.D.T. To All State Governments (including Admn. of Union Territories). Subject: Deduction of tax at source-Income-tax deduction from salaries during the financial year 1984-85 under section 192 of the Income-tax Act, 1961-Regarding. Sir, I am directed to refer to this Ministry's Circular No. 388 (F. No. 275/13/84-ITB) dated 16th July, 1984 [printed at [1984] 148 ITR (St.) 15] and Circular No. 407 (F. No. 275/13/84-ITB) dated 1-2-1985 [printed at [1985] 151 ITR (St.) 49] on the above subject and to say that in para. 4 of the latter circular, the insertion of a new sub-clause (vi) under clause (2) of section 17 of the Income-tax Act with effect from 1-4-1985 by the Taxation Laws (Amendment) Act, 1984, has been communicated to you. The Government of India has by its notification No. 92E (F. No. 133/162/84-TPL) dated 4th February, 1985*, has specified that the rate of interest for purposes of the said sub-clause shall be simple interest at the rate of 10% per annum. By another notification No. 91E (F. No. 133/162/84-TPL) dated 4th February, 1985*, a new rule, namely, rule 3A, has been inserted in the Income-tax Rules, 1962, laying down the manner in which the interest in respect of the loan referred to in section 17(2)(vi) of the Income-tax Act, 1961, shall be calculated. The said rule 3A, provides that interest for the purposes of the said section shall be calculated at the rate specified by the Central Government on the amount of loan remaining outstanding as on the last date of each month falling in the previous year. For the purpose of determining the amount of loan remaining outstanding as on the last day of the month, the sums, if any, paid in any month by the employee to the employer towards the repayment of the loan or the payment of the interest due on the loan shall be deducted from the amount of the loan as outstanding on the first day of that month or, when the loan is advanced during that month, from the amount so advanced, as the case may be, and interest shall be calculated on such resultant amount. 2. These instructions may please be brought to the notice of all drawing and disbursing officers and State undertakings, etc., under the control of the State Government urgently. Yours faithfully, (Sd.) B. Nagarajan, Secretary, Central Board of Direct Taxes. * See p. 191 supra.