CBDT Circular on deduction of Tax (TDS) on Salaries u/s 192 during FY 2019-20

CBDT Circular on deduction of Tax (TDS) on Salaries u/s 192 of the Income Tax Act, 1961 during FY 2019-20. 

CBDT has issued circular no. 4/2020 specifying guidelines for TDS on Salaries for the Financial Year 2019-20.

CBDT Circular – TDS on Salaries during FY 2019-20. 

The Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head “Salaries” during the financial year 2019-20 and explains certain related provisions of the Income Tax Act 1961 and Income-tax Rules, 1962.

Every person who is responsible for paying any income chargeable under the head “Salaries” is required to deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2019-20. The income-tax is required to be calculated on the basis of the rates given above, subject to the provisions related to requirement to furnish PAN or Aadhaar number, as the case may be, as per sec 206AA of the Act, and shall be deducted at the time of each payment. No tax, however, will be required to be deducted at source in a case unless the estimated salary income including the value of perquisites, for the financial
year exceeds Rs. 2,50,000/- or Rs.3,00,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of the employee.

For the purpose of making the payment of tax it is to be determined at the average of income tax computed on the basis of rate in force for the financial year, on the income chargeable under the head “salaries”, including the value of perquisites for which tax has been paid by the employer himself.

In case of Salary from more than one employer, the employee is now required to furnish to the present/chosen employer details of the income under the head “Salaries” due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer. The present/chosen employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer).

Where with respect to arrears, the employee is entitled to the relief under Section 89 he may furnish to the employer, such particulars in Form No. 10E duly verified by him.

With respect to furnishing information with respect to income under any other head, the particulars may now be furnished by the employee to the employer in a simple statement, which is properly signed and verified by the taxpayer in the manner as prescribed under Rule 26B(2) and shall be annexed to the simple statement.

The form of verification is as under:

I, …………………………(name of the assessee), do declare that what is stated above is true to the best of my information and belief.

Loss under any head (other than house property) cannot be considered by the DDO for calculating the amount of tax to be deducted.

The Circular also specifies the conditions for claim of deduction of interest on borrowed capital for computation of income from house property u/s 24(b). It is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.

Where Non-Residents are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, the refund can be issued to the employer as the tax has been borne by it [Circular No. 707 dated 11.07.1995].

In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India.

For the purpose of deduction u/s 80C it is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

The Circular contains numerous illustrations and sample forms.

Download CBDT Circular No. 4/2020 Click Here >>