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TMI BlogDeduction of tax at source-Income-tax deduction from salaries during the financial year 1982-83 under section 192 of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ying any income chargeable under the head "Salaries" shall, at the time of making payment, deduct income-tax on the amount payable at the average rate of income-tax, computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee for that financial year. The provisions of sub-section (3) are intended for making adjustments of excesses or shortfalls of inadvertent nature and/or due to unforeseen circumstances. Thus, the aggregate tax calculated on the estimated income divided by twelve and rounded off to the nearest rupee is required to be deducted from the monthly salary. 3. In the Finance Bill, 1982, some modifications have been made. An extract of Sub-paragraph 1 of Paragraph A of Part III of the First Schedule is at Annex. I. 4. The substance of the main provisions of law in so far as they relate to income chargeable under the head "Salaries", on which tax is to be deducted at source during the financial year 1982-83 is given hereunder:- (i) No tax will be deductible at source in any case unless the estimated salary income for the financial year exceeds Rs. 15,000. Some typical examples of calculation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ousand rupees, as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years: Provided also that the Central Government may, having regard to the maximum amount which may for the time being be exempt under sub-clause (i), increase by notification in the Official Gazette, the limit of thirty thousand rupees, for all the three purposes for which it has been mentioned in the foregoing provisions of this sub-clause, up to such maximum amount: Provided also that in relation to an employee retiring on superannuation or otherwise before the 1st day of January, 1982, the proviso immediately preceding this proviso shall not apply and the remaining provisions of this sub-clause shall have effect as if for the words 'thirty thousand rupees', at the three places where they occur, the words 'twenty-five thousand five hundred rupees' had been substituted. Explanation:- For the purposes of sub-clause (ii), (i) the entitlement to earned leave of an employee shall not exceed thirty days for every year of actual service rendered by him as an employee of the employer from whose service he has retired, (ii) 'salary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otor cycle, scooter or other moped by his employer (for use otherwise than wholly and exclusively in the performance of his duties), or where he is allowed the use any one or more motor cars (otherwise than wholly and exclusively in the performance of his duties) out of a pool of motor cars owned or hired by the employer at any time during the financial year. In this connection it may be noted that the use of a motor car by the employee for the purposes of going from his residence to the place where the duties of his employment are to be performed, or from such place back to his residence, will not be regarded as use of the motor car in the performance of his duties. (vii) (a) Under section 80C of the Act, while computing the taxable income, the disbursing officers should allow a deduction of the whole of the first Rs. 6,000; 50 per cent. of the next Rs. 6,000 and 40 per cent. of the balance of the qualifying amount of payments towards life insurance premia, contributions to provident fund (including contribution to Public Provident Fund constituted under the Public Provident Fund Act, 1968), contributions for participation in the Unit-linked Insurance Plan, 1971, made under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Rs. 400 p.m.) as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. Rule 2A of the Income-tax Rules, 1962, prescribes the limits in respect of the amount which is not to be included in the total income of the assessee for the purpose of section 10(13A) of the Act. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee, subject to the limits laid down in rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy them selves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance from the taxable income of the employee. However, the hon'ble Punjab and Haryana High Court has held in the case of Commissioner of Income-tax v. Justice S.C. Mittal [1980] 121 ITR 503 that even in the case of an assessee occupying his own house, the house rent allowance received from the employer is not liable to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 10 per cent of his total income, subject to a ceiling of 15 per cent thereof, or Rs. 400 per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG; (c) the assessee does not own any house property himself anywhere nor does his spouse, minor child, or the Hindu undivided family of which he is member, own any house property anywhere; and (d) the accommodation occupied by him for the purpose of his own residence is situated in any of the following places, namely: (i) Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Calcutta, Coimbatore, Delhi, Faridabad, Gwalior (Lashkar), Hyderabad, Indore, Jabalbur, Jaipur, Kanpur, Lucknow, Ludhiana City, Madurai, Nagpur, Patna, Pune (Poona), Srinagar, Surat, Vadodara (Baroda) or Varanasi (Banaras) or the urban agglomeration of each of such places; and (ii) Bombay, Calicut, Cochin, Ghaziabad, Hubli-Dharwar, Madras, Sholapur, Trivandrum or Vishakapatnam. Explanation: "Urban agglomeration", in relation to a place, means the area for the time being included in the urban agglomeration of such place for the purpose of grant of house rent allowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been actually incurred, and if so, the extent to which it has been incurred to meet the expenses wholly, necessarily and exclusively in the performance of duties of an office or employment of profit. (xii) Section 80RRA provides that where the gross total income of an individual, who is a citizen of India, includes any remuneration received by him in foreign currency from any employer (i.e., a foreign employer of an Indian concern) for any services rendered by him outside India, 50 per cent. of such remuneration will be deducted in computing the taxable income. It also provides that where the assessee renders continuous service abroad for more than 36 months, the remuneration received by him for any period of service after the expiry of the said 36 months will not qualify for any deduction. In the case of employees of the Central Government or any State Government or a person who was, immediately before taking up the service outside India, in the employment of the Central Government or any State Government, the deduction will be allowed only if the service of the employee is sponsored by the Central Government. In the case of any other individual, the deduction will be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate once issued will continue to be in force till it is withdrawn by the ITO. (xiv) The total income computed in accordance with the provisions of the Act should be rounded off to the nearest multiple of ten rupees by ignoring the fraction which is less than five rupees and increasing the fraction which amounts to five rupees or more, to ten rupees. The net amount of tax deductible should be similarly rounded off to the nearest rupee. (xv) Section 201 provides- (1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax: Provided that no penalty shall be charged under section 221 from such person, principal officer or company, unless the Income-tax Officer is satisfied that such person or principal officer or company, as the case may be, has without good and sufficient reason failed to deduct and pay the tax. (1A) Without prejudice to the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit has to be made by a person whose current income during the financial year exceeds Rs. 15,000. The last date for making the deposit in the case of a person who is not required to pay advance tax under the Income-tax Act, 1961, is the 31st March of the financial year in which the deposit is to be made and the deposit can be made in one or more instalments of his choice at any time during the financial year. A person who is required to pay advance tax, is liable to make the deposit (in one sum or in instalments of his choice) on or before the date on which the last instalment of advance tax is payable by him. 7. These instructions are not exhaustive and are issued only with a view to helping the employers to understand the various relevant provisions. Wherever, there is a difference of opinion, a reference should always be made to the provisions of the Income-tax Act, 1961, and the relevant Finance Act through which the changes in the tax structure are made. 8. These instructions may please be brought to the notice of all disbursing officers and State Undertakings under the control of the State Government. 9. In case any assistance is required the ITO concerned and/or the Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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