Section 192 - TDS on Salaries - Income Tax - Ready Reckoner - Income Tax

Section 192 : TDS ON SALARIES Deductor Any person Deductee Resident or Non-resident Time of Deduction At the time of payment Rate of TDS Slab Rate applicable to the estimated income of the employee. Any person responsible for paying any income chargeable under the head Salaries shall, at the time of payment, deduct income-tax on the estimated income of the employee under the head 'salaries' for that financial year. The tax is to be deducted at the average of income tax computed on the basis of rates in force for that financial year in which the payment is made. [ Section 192(1) ] An employer shall have the option to pay tax on behalf of an employee, without making any deduction from his income, on the income in the nature of perquisites, which are not provided by way of monetary payment. However the employer shall also continue to have the option to deduct the tax on whole or part of such income. [ Section 192(1A) ] For the purpose of paying tax by the employer u/s 192(1A), tax shall be determined at the average of income tax computed on the basis of the rates in force for the financial year, on the income chargeable under the head Salaries including the income referred to in u/s 192(1A), and the tax so payable shall be construed as if it were, a tax deductible at source, from the income under the head Salaries as per the provisions of u/s 192(1), and shall be subject to the provisions of this Chapter. [ Section 192(1B) ] Deferring TDS in respect of Income pertaining to employee stock option plan (ESOP) of start-up For the purposes of deducting or paying tax u/s 192(1) or (1A), as the case may be, a person, being an eligible start-up referred to in section 80-IAC, responsible for paying any income to the assessee being perquisite of the nature specified in section 17(2)(vi) in any previous year relevant to the assessment year, beginning on or after the 1st day of April, 2021, shall deduct or pay, as the case may be, tax on such income within 14 days (i) after the expiry of 48 months from the end of the relevant assessment year; or (ii) from the date of the sale of such specified security or sweat equity share by the assessee; or (iii) from the date of the assessee ceasing to be the employee of the person, whichever is the earliest, on the basis of rates in force for the financial year in which the said specified security or sweat equity share is allotted or transferred. [ Section 192(1C) ] Salary from more than one employer Where during the financial year, an assessee is employed simultaneously under more than one employer or has changed the employment during the previous year, then he may furnish to the employer of his choice or the subsequent employer such details of salaries due or received by him from other employers as may be prescribed, in Form No. 12B . In this case the employer so chosen shall take into account these details while making deduction of tax at source. [ Section 192(2) ] For the purposes of deduction of tax out of salaries payable in a foreign currency, the value of salaries in terms of rupees should be calculated at the prescribed rate of exchange as specified in Rule 26 of the Income tax Rules, 1962. [ Section 192(6) ] Relief under section 89 In respect of salary payment to employees of government or to employees of companies, co operative societies, local authorities, universities, institutions, associates or bodies, deduction of tax at source should be made after allowing relief [ Sub-section(1) of omitted vide Finance (No. 2) Act, 2024 ] Section 89 , where eligible. The concerned employee should furnish information in Form No. 10E to the employer. [ Section 192(2A) ] [ Section 192(2B) substituted vide Finance (No. 2) Act, 2024 w.e.f. 01.10.2024 Where an assessee who receives any income chargeable under the head Salaries has, in addition, (i) any income chargeable under any other head of income (not being a loss under any such head other than the loss under the head Income from house property ); or (ii) any tax deducted or collected under the provisions of Part B or Part BB of this Chapter, as the case may be, for the same financial year, he may send to the person responsible for making the payment referred to in section 192(1), the particulars of (a) such other income; (b) any tax deducted or collected under any other provision of Part B or Part BB of this Chapter, as the case may be; and (c) the loss, if any, under the head Income from house property , in such form and verified in such manner as may be prescribed, and thereupon the person responsible as aforesaid shall take into account the particulars referred to in clauses (a), (b) and (c) for the purposes of making the deduction under section 192(1): It is also provided that except 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. A tax payer having salary income in addition to other income chargeable to tax for that financial year, may send to the employer, the following particulars of (a) such other income and particulars of any tax deducted under any other provision (b) Loss, if any, under the head Income from House property, If assessee intimated to the employer his intent to exercise the option of shifting out of the default tax regime provided u/s 115BAC(1A) ; The employer shall take the above particulars into account while calculating tax deductible at source. It is also provided that except in case where loss from house property has been adjusted against salary, the tax deductible from salary should not be reduced as a consequence of making the above adjustment. Loss from house property would be adjust against salary where assessee intimated to the employer this intent to exercise the option of shifting out the default tax regime provided u/s 115BAC(1A) . However, loss under the head Income from house property shall be allowed to be set off against salary and income under any other head subject to maximum of ₹ 2,00,000/- . ] CBDT Notifies Amendments in Income-tax Rules for Ease in Claiming Credit for TDS Deducted for Salaried Employees Section 192(2B) of the Income-tax Act, 1961 was amended vide the Finance (No. 2) Act, 2024 to include any tax deducted at source under the provisions of Chapter XVII-B for the purpose of making tax deductions in the case of salaried employees. Vide CBDT Notification No. 112/2024 dated 15.10.2024, the Income-tax Rules, 1962 have been amended, introducing Form No. 12BAA as the prescribed statement of particulars required under section 192(2B). Employees must provide these particulars to their employers, who are responsible for making payments under section 192(1). The employer, in turn, shall deduct TDS on salary after taking into account the furnished particulars. [ Press Release ] As per Rule 26B Statement of particulars of income under heads of income other than Salaries or details of tax deducted at source or tax collected at source The assessee may submit to the person responsible for making payment under section 192(1), the details of (a) any income chargeable under any head of income other than Salaries received in the same financial year; or (b) any tax deducted at source or tax collected at source under the provisions of Part B or Part BB of Chapter XVII, for the same financial year; or (c) loss, if any, under the head Income from house property in the same financial year, in Form No. 12BAA, for the purpose of computing the tax deduction at source under section 192(1). Furnishing of statement of particulars of perquisites or profit in lieu of salary by employer to employee A person responsible for paying any income chargeable under the head Salaries shall furnish to the person to whom such payment is made a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof in Form No. 12BA and manner as may be prescribed. The statement shall be in the prescribed form and manner. This requirement is applicable only where the salary paid/payable to an employee exceeds ₹1,50,000/-. for the employee, the particulars of perquisites/profit in lieu of salary shall be given in Form 16 itself. [ Section 192(2C) read with Circular no. 20/2015 date 02.12.2015 ] Requirement to obtain evidence/proof/particulars of claims from the employee by the employer The person responsible for making the payment referred to in section 192(1) shall, for the purposes of estimating income of the assessee or computing tax deductible under section 192(1), obtain from the assessee the evidence or proof or particulars of prescribed claims (including claim for set-off of loss) under the provisions of the Act in form No. 12BB and manner as may be prescribed in the Rule 26C has been inserted w.e.f. 06.06.2016. Note: Income from previous employer may be considered. Relief u/s 89(1) shall also be considered while deducting TDS. Income from all sources may be considered. And any TDS thereon shall also be considered. Only loss under the head house property shall be taken into account for the purpose of TDS and not any other loss. The employer may deposit from his own pocket tax on the non-monetary perquisites to employees. Such tax is exempt income in hands of employee and is disallowable expenditure to employer. The liability to deduct tax at source in case of salary is on all persons, whether individual, HUF, Firm or a company irrespective of the fact whether the person is carrying on business or not. If the employee does not have Permanent Account Number, TDS shall be deducted @ 20% without including education cess, if the normal tax rate in this case is less than 20%. Important Notification, Circular or Instruction 3.8 Salary Paid in Foreign Currency. For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the Telegraphic transfer buying rate of such currency as on the date on which tax is required to be deducted at source ( see Rule 26 ). [ Circular No. 20/2015 dated 02.12.2015 ] ​​​​​​​