The Central Board of Direct Taxes and Customs ( CBDT ) has issued a clarification on the Tax Deduction at Source ( TDS ) from Salaries during FY 2020-21 under Section 192 of the Income Tax Act, 1961.
The CBDT has invited the attention of Circular No. 4/2020 dated January 16, 2020, 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, during the financial year 2019-20, 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 2020-21 and explains certain related provisions of the Act and Income tax Rules, 1962.
The CBDT while elaborating on the normal rates of tax stated that where the total income does not exceed Rs.2,50,000 the rate of tax will be Nil. If the total income exceeds Rs.2,50,000 but does not exceed Rs.5,00,000 then the rate of tax will be 5%.
If the total income exceeds Rs.5,00,000 but does not exceed Rs.10,00,000
then the rate of tax will be Rs.12,500 plus 20%.
If the total income exceeds Rs.10,00,000 then the rate of tax will be Rs.1,12,500 plus 30%.
The circular has elaborated on the Method of Tax Calculation, Payment of Tax on Perquisites by Employer, Computation of Average Income Tax, Illustration 3.3 Salary From More Than One Employer, Relief When Salary Paid in Arrear or Advance, Information regarding Income under any Other head 3.6 Computation of Income under the head “Income from House Property”, Adjustment for Excess or Shortfall of Deduction and Salary Paid in Foreign Currency.
In respect of persons responsible for deducting tax and their duties, the CBDT has explained 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 u/s 200 (2A); Payment by an Income Tax Challan; Interest, Fee, Penalty & Prosecution for Failure to Deposit Tax Deducted; Furnishing of Certificate for Tax Deducted (Section 203); Mandatory Quoting of Permanent Account Number or Aadhaar number, as the case may be, and TAN; Compulsory Requirement to furnish PAN by employee or Aadhaar number, as the case may be. by employee (Section 206AA); Statement of Deduction of tax under section 200 (3) (Quarterly Statement of TDS); TDS on Income from Pension and Matters pertaining to the TDS made in case of Non-Resident.