CIRCULAR NO : 17/2014

F.No. 275/192/2014-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
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North Block, New Delhi
Dated 10th December, 2014

SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2014-15 UNDER SECTION 192 OF THE INCOMETAX ACT, 1961.

Reference is invited to Circular No.08/2013 dated 25.10.2013 whereby the rates of deduction of income-tax from the payment of income under the head "Salaries" under Section 192 of the Income-tax Act, 1961 (hereinafter ‗the Act‘), during the financial year 2013-14, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2014-15 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia.gov.in.

2.    RATES OF INCOME-TAX AS PER FINANCE (No. 2) ACT, 2014

       Rates of tax
Surcharge on Income tax

       Education Cess on Income tax:

       Secondary and Higher Education Cess on Income-tax

3.    SECTION 192 OF THE INCOME-TAX ACT, 1961: BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM "SALARIES": Method of Tax Calculation

       Payment of Tax on Perquisites by Employer

       Computation of Average Income Tax What is average rate of tax? Click Here to Read More >>

       Salary From More Than One Employer

       Relief When Salary Paid in Arrear or Advance

       Information regarding Income under any other head

       Computation of income under the head “ Income from house property

Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]

       Adjustment for Excess or Shortfall of Deduction

       Salary Paid in Foreign Currency

4.    PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES

       Deduction of Tax at Lower Rate

       Deposit of Tax Deducted

       Due dates for payment of TDS

       Mode of Payment of TDS

Compulsory filing of Statement by PAO, Treasury Officer, etc in case of payment of TDS by Book Entry

       Payment by an Income Tax Challan

       Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted

       Furnishing of Certificate for Tax Deducted (Section 203)

       Authentication by Digital Signatures

       Furnishing of particulars pertaining to perquisites, etc (Section 192(2C)

       Mandatory Quoting of PAN and TAN

       Compulsory Requirement to furnish PAN by employee (Section 206AA)

       Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS]

       Fee for default in furnishing statements (Section 234E)

       Rectification of mistake in filing TDS Statement

       Penalty for failure in furnishing statements or furnishing incorrect information (section 271H)

       TDS on Income from Pension

       Matters pertaining to the TDS made in case of Non Resident

5.    COMPUTATION OF INCOME UNDER THE HEAD "SALARIES"

       INCOME CHARGEABLE UNDER THE HEAD "SALARIES"

DEFINITION OF “SALARY”, “PERQUISITE” AND “PROFIT IN LIEU OF SALARY” (SECTION 17)

Perquisites

Residential Accommodation provided by the employer [Rule 3(1)]

Furnished Accommodation in a Hotel

Perquisite on Motor car provided by the Employer [ Rule 3(2)]

Personal attendants etc. [Rule 3(3)]

Gas, electricity & water for household consumption [Rule 3(4)]

Free or concessional education [Rule 3(5)]

Carriage of Passenger Goods [Rule 3(6)]

Interest free or concessional loans [Rule 3(7)(i)]

Perquisite on account of travelling, touring, accommodation and any other expenses

paid for or reimbursed by the employer for any holiday availed [Rule 3(7)(ii)]

Value of Subsidized / Free food / non-alcoholic beverages provided by employer to an

employee[Rule 3(7)(iii)]

Membership fees and Annual Fees [Rule 3(7)(v)]

Club Expenditure [Rule 3(7)(vi)]

Use of assets [Rule 3(7)(vii)]

Transfer of assets [Rule 3(7)(viii)]

Gifts [Rule 3(7)(iv)]

Medical Reimbursement by the employer exceeding Rs. 15,000/- p.a

Profits in lieu of salary

INCOMES NOT INCLUDED UNDER THE HEAD "SALARIES" (EXEMPTIONS)

Leave Travel Concession (LTC)

Foreign Travel

Death-cum-retirement gratuity

Commutation of pension

Cash-equivalent of the leave salary

Retrenchment compensation

Schemes of voluntary retirement

Sum received under a Life Insurance Policy (Sec 10(10D)

Payment from a Provident Fund

       Expenditure incurred on payment of rent -Section 10(13A)

       Allowances Exempt

       DEDUCTIONS U/S 16 OF THE ACT FROM THE INCOME FROM SALARIES

       Entertainment Allowance [Section 16(ii)]

       Tax on Employment [Section 16(iii)]

       DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT

6.    REBATE OF RS 2000 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO RS 5 LAKH [SECTION 87A]

7.    TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED SUPERANNUATION FUND

8.    DDOS TO SATISFY THEMSELVES ABOUT THE GENUINENESS OF CLAIM

9.    CALCULATION OF INCOME-TAX TO BE DEDUCTED

10.   MISCELLANEOUS