CBDT Circular on deduction of Tax TDS on Salaries u/s 192 during FY 2022-23 

CBDT issues Circular on deduction of Tax TDS on Salaries u/s 192 of the Income Tax Act, 1961 during FY 2022-23 

CBDT has issued Circular No. 24/2022 dated 7th December 2022 specifying guidelines for TDS on Salaries for the Financial Year 2022-23.

CBDT Circular – TDS on Salaries during FY 2022-23

The Circular contains the rates of deduction of Income-tax from Salaries during the financial year 2022-23 and explains certain related provisions of the Income Tax Act 1961 and Income-tax Rules, 1962.

As per section 192(1)of the Act, any person responsible for paying any income chargeable under the head “Salaries” shall, at the time of 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 under the head of Salary income for that financial year.

Illustration of computation of average rate of income tax

The income chargeable under the head “salaries” of an employee below sixty years of age is Rs. 50000/-per month inclusive of all perquisites 

Yearly Salary inclusive of all perquisites (50000 x 12) Rs. 600000/-
Tax as per normal rates on Total Salary (including Cess) Rs. 33800/-
Average Rate of Tax [(33, 800/6,00,000) X100] 5.63%
Total Tax payable on Rs. 50,000/= (5.63% of 50,000) Rs. 2815/-
TDS to be deducted and deposited per month (2815/12) Rs. 235/-

However, the Employer is not required to deduct tax at source in a case unless the estimated salary income including the value of perquisites is taxable after giving effect to the exemptions, deductions and relief as applicable.

TDS from 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.

Information regarding Income other than salary 

Taxpayer may in prescribed format, choose to furnish particulars of income other than “Salaries” and tax deducted thereon. However, the employer can not take into account loss claimed except for “Income from house property”. 

Conditions for claim of deduction of interest on borrowed capital for computation of Income from House Property

In respect of payment of interest on borrowed capital for acquisition or construction of the house, it is necessary for the employer 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. The employee has to furnish a certificate from the person to whom any interest is payable on the borrowed capital. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid.

Declaration for claiming deduction of House rent paid 

Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions: –

(a) the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

(b) the employee files the declaration in Form No.10BA.

(c) The employee does not own:

(i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he/she ordinarily resides or performs duties of his office or carries on his business or profession; or

(ii) at any other place, any residential accommodation which is in the occupation of the employee, the value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be.

(d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or Rs. 5,000/-per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG.

The Employer should satisfy that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent.

The format of employee declaration is as under: 

(See rule 11B)
Declaration to be filed by the Assessee claiming deduction u/s 80 GG

I/We ………………………………………………………………………… (Name of the assessee with permanent account number or Aadhar number) do hereby certify that during the previous Year …………. I/We had occupied the premise …………………………. (full address of the premise) for the purpose of my/our own residence for a period of ………………….. months and have paid Rs. ………………. in cash/through crossed cheque, bank draft towards payment of rent to Shri/Ms/M/s …………………………….. (name and complete address of the land lord).

It is further certified that no other residential accommodation is owned by

(a) me/my spouse/my minor child/our family (in case the assessee is HUF), at …………………. where I/we ordinarily reside/perform duties of officer or employment or carry on business or profession, or

(b)me/us at any other place, being accommodation in my occupation, the value of which is to be determined u/s 23(2)(a)(i) of u/s23(2)(b).

Download PDF Copy of Form 10BA Click Here>>

Download CBDT Circular No. 24/2022 Click Here >>

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