CBDT Circular on deduction of Tax (TDS) on Salaries u/s 192 during FY 2024-25

CBDT issues Circular on deduction of Tax TDS on Salaries u/s 192 of the Income Tax Act, 1961 during FY 2024-25 

CBDT has issued Circular No. 03/2025 dated 20th February 2025 specifying guidelines for TDS on Salaries for the Financial Year 2024-25.

CBDT Circular – TDS on Salaries during FY 2024-25

The Circular contains the rates of deduction of Income-tax from Salaries during the financial year 2024-25 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.

The Circular contains the amendments made vide the Finance (No. 2) Act of 2024, Finance (No. 1) Act of 2024 and Finance Act of 2023 in respect of rates of deduction of income-tax from the payment of income under the head “Salaries” under section 192 of the Act. Where no amendments have been made , in such cases, the CBDT Circular No. 24 of 2022 shall continue to be applicable for F.Y. 2024-25. 

The Form No. 16 has been amended vide the Income tax (Fifth Amendments) Rules 2023 w.e.f. 01.07.2023 and shall be applicable for AY 2024-25 and subsequent years.

Further, as per amendment made in Rule 3 w.e.f. 01.09.2023, rates have been prescribed for valuation of perquisite in respect of accommodation provided by any other employer.

Further, the exemption limit of leave encashment in the case of employees other than Government employees has been enhanced to Rs. 25 lakhs vide CBDT Notification No. 31/2023 dated 24.05.2023.

The sub-section (12C) has been inserted in section 10 of the Act vide Finance Act, 2023. Under section 10(12C), any payment from the Agniveer Corpus Fund to a person enrolled under the Agnipath Scheme, or to his nominee shall be exempt.

As per the amendment vide Finance Act, 2023, w.e.f. 01.04.2024, the proviso to section 87A has been inserted for providing addition rebate for New Tax Regime u/s 115BAC.

Section 80CCH of the Act related to Deduction in respect of contribution to Agnipath Scheme has been inserted vide Finance Act, 2023.

Penalty and Prosecution provisions on default on account of TDS –

(i) As per the Finance Act, 2023, section 271C on ‘ Penalty for failure to deduct tax at source ‘ has been amended. Section 271C, inter alia, lays down that if any person fails to deduct whole or any part of tax at source or fails to pay or ensure payment of the whole or any part of tax under the proviso to section 194B (w.e.f. 01.04.2023), sub-section (2) of section 194BA (w.e.f. 01.07.2023), he/she shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid or payment ensured by him.

(ii) As per the Finance Act, 2023, section 276B on ‘Failure to pay tax to the credit of Central Government under Chapter XII-D or XVII-B ‘ has been amended. Section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him or tax payable by him or ensure payment of tax under the proviso to Section 194B (w.e.f. 01.04.2023), or section 194BA(2) (w.e.f. 01.07.2023), he/she shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.”

(iii) Further, proviso has been inserted in section 276B of the Act vide Finance (No.2) Act, 2024 to provide that the provisions this section shall not apply if the payment has been made at any lime on or before the time prescribed for filing the statement for such payment u/s 200(3).

Download CBDT Circular No. 03/2025 Click Here >>

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