CBDT Circular on TDS from salaries during FY 2018-19 u/s 192. Important points to be considered by employers/DDOs
CBDT has issued circular no. 1/2019 dated 1st January, 2019 on income tax deduction from salaries during the financial year 2018-19 under section 192 of the Income-tax Act, 1961
As per the circular, every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2018-19.
Important points detailed in the circular are as under:
The tax is required to be deducted at the time of each payment at the average of income tax.
Compulsory Requirement to furnish PAN by employee (Section 206AA)
Durnishing of PAN by the employee is compulsory in case of receipt of any sum or income or amount, on which tax is deductible. If employee (deductee) fails to furnish his/her PAN to the deductor , the deductor has been made responsible to make TDS at higher rates.
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).
Reporting information regarding Income under any other head
The employee may furnish to the employer, the information regarding income under any other head in a simple statement, which is properly signed and verified by the taxpayer in the manner as prescribed under Rule 26B(2) of the Rules and shall be annexed to the simple statement as under:
I, …………………. (name of the assessee), do declare that what is stated above is true to the best of my information and belief.
Deduction of Interest on Borrowed Capital for Computation of Income From House Property
Deduction from income from houses property on interest on borrowed capital can be claimed as under:-
(i) the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
(ii) the quantum of deduction allowed as per table below:
|Purpose of borrowing capital||Date of borrowing capital||Maximum Deduction allowable|
|1||Repair or renewal or reconstruction of the house||Any time||Rs. 30,000/-|
|2||Acquisition or construction of the house||Before 01.04.1999||Rs. 30,000/-|
|3||Acquisition or construction of the house||On or after 01.04.1999||
Rs. 1,50,000/- (upto AY 2014-15)
Rs. 2,00,000/- (w. e. f. AY 2015-16)
In case of acquisition or construction of the house on or after 01.04.1999:
(a) The acquisition or construction of the house should be completed within 5 years from the end of the FY in which the capital was borrowed. Hence, 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.
(b) Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs.
(c) The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. 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.
Section 192(2D) read with rule 26C makes it mandatory for the Deductor/DDO to obtain following details/evidences in respect of Interest deductible.
(i) Interest payable or paid
(ii)Name of the lender
(iii) Address of the lender
(iv) PAN of the lender
PAN of the lender being financial institution or employer, is mandatory if it is available with the employee however in case of other lender obtaining of PAN is mandatory by the DDO.
Adjustment for Excess or Shortfall of Deduction
The provisions of Section 192(3) allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deductions for that employee within that financial year itself.
Standard deduction under section 16 (ia)
From F.Y. 2018-19 a deduction of forty thousand rupees or the amount of salary whichever is less shall be allowed as standard deduction.
DDOS to obtain evidence/proof of claims for deductions
For the purpose of estimating income of the assesse or computing tax deductions, section 192(2D) provides that person responsible for paying (DDOs) shall obtain from the assessee evidence or proof or particular of claims such as House rent Allowance (where aggregate annual rent exceeds one lakh rupees); Deduction of interest under the head ―Income from house property‖ and deduction under Chapter VI-A as per the prescribed form 12BB laid down by Rule 26C of the Rules. Further, as per section 192 (2D) read with the rule 26C, it is mandatory for the DDOs to obtain details/evidence in respect of claim of exemption for leave travel concession or assistance before allowing the said exemption. The relevant form for furnishing details by employee is Form 12BB.
The circular details the various rules/procedures for obligations of the employees/employers and deductions available to the assessee with illustrations.