Deduction of tax at source-Income-tax deduction from salaries during the financial year 1986-87 under section 192 of the Income-tax Act, 1961 - Income Tax - 465/1986

Deduction of tax at source-Income-tax deduction from salaries during the financial year 1986-87 under section 192 of the Income-tax Act, 1961 Circular No.465 Dated 4/8/1986 From Shri B. Nagarajan, Secretary, Central Board of Direct Taxes. To All State Governments including Administration of Union Territories. Sir, Subject: Deduction of tax at source-Income-tax deduction from salaries during the financial year 1986-87 under section 192 of the Income-tax Act, 1961. I am directed to refer to this Ministry's Circular No. 459 [F. No. 275/64/86-IT(B)], dated 16-6-86,* on the subject and to say that rule 2A of the Income-tax Rules, 1962, which sets out the limit up to which the special allowance granted to meet expenditure actually incurred on payment of rent will not be included in computing the total income of an employee, has now been amended by the Income-tax (Fourth Amendment) Rules, 1986. The amendment has been notified in the Gazette of India by Notification No. S.O. 412(E) dated 9th July, 1986.** 2. As a result of this amendment, the quantum of exemption allowable on account of the grant of special allowance to meet expenditure on payment of rent shall be:- (a) The actual amount of such allowance received by an employee in respect of the relevant period; or (b) The actual expenditure incurred in payment of rent in excess of 1/10th of the salary due for the relevant period; or (c) Where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or (d) Where such accommodation is situated in any other place, 40% of the salary due to the employee for the relevant period, whichever is the least. For definition of salary, please refer to the Rule. 3. The contents of the Circular may please be brought to the notice of all disbursing officers and State Undertakings under the control of the State Governments. Yours faithfully, (Sd.) B. Nagarajan, Secretary, Central Board of Direct Taxes. * See [1986] 160 ITR (St.) 44. ** Supra page 48.