CBDT issues circular for deduction on taxes on salary income, explaining various provisions and rules therein

You can download the full circular by clicking this link – http://taxmantra.com/wp-content/uploads/2013/10/cbdt-issues-circular-on-income-tax-deduction-from-salaries-for-financial-year-2013-14.aspx_.pdf

Key Highlights of CBDT circular dated the 10th October, 2013 on income tax deduction from salaries during FY 2013-14 under section 192 of the Income Tax Act, 1961. 

1.  RATES OF INCOME-TAX  – As per the Finance Act, 2013, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head “Salaries” for the financial year 2013-14 (i.e. Assessment Year 2014-15) at the following rates:

A.   Normal Rates of tax:

SlNo	Total Income	Rate of tax
1	Where the total income does not exceed Rs. 2,50,000/-	Nil
2	Where the total income exceeds  Rs. 2,50,000 but does not exceed Rs. 5,00,000/-	10 per cent of the amount by which the total income exceeds Rs. 2,50,000/-
3	Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-	Rs. 25,000/- plus 20 per cent of theamount by which the total income exceeds Rs. 5,00,000/-.
4	Where the total income exceeds Rs. 10,00,000/-	Rs. 1,25,000/- plus 30 per cent of theamount   by which the  total income exceeds Rs. 10,00,000/-

C.  In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the financial year: 

SlNo	Total Income	Rate of tax
1	Where the total income does not exceed Rs. 5,00,000/-	Nil
2	Where the total income exceeds    Rs. 5,00,000 but does not exceed    Rs. 10,00,000/-	20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4	Where the total income exceeds    Rs. 10,00,000/-	Rs. 1,00,000/- plus 30 per cent of theamount  by which the  total income exceeds Rs. 10,00,000/-

Surcharge on Income tax:  The amount of income-tax shall be increased by a surcharge @10% of the Income-tax on payments to an individual taxpayer, if the total income of the individual exceeds Rs 1 crore during FY 2013-14 (AY 2014-15). However the amount of Surcharge shall not exceed the amount by which the individual’s total income exceeds Rs 1 crore and if surcharge so arrived at, exceeds such amount (assessee’s total income minus one crore) then it will be restricted to the amount of total income minus Rupees one crore.

Education Cess on Income tax:   The amount of income-tax including the surcharge if any,  shall be increased by Education Cess on Income Tax at the rate of two percent of the income-tax.

Secondary and Higher Education Cess on Income-tax:    An  additional  cess  is  chargeable  at  the  rate  of  one  percent  of  income-tax  including  the surcharge if any, but not including the Education Cess on income tax .

2. The circular also suggests broad scheme of tax deduction at source from “Salaries”

The circular gives methodology for calculation of taxes, also taxes on perquisites,  Computation of Average Income Tax with illustration.

3. Other important points addressed by this circular as below:

1. Salary From More Than One Employer
2. Relief When Salary Paid in Arrear or Advance
3. Information regarding Income under any other head
4. Deduction of Tax at Lower Rate
5. Deposit of Tax Deducted
6. Due dates for payment of TDS
7. Payment by an Income Tax Challan
8. Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted
9. Furnishing of Certificate for Tax Deducted (Section 203)
10. Furnishing of particulars pertaining to perquisites, etc (Section 192(2C)
11. Mandatory Quoting of PAN and TAN
12. Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS]
13. Fee for default in furnishing statements (Section 234E)
14. TDS on Income from Pension
15. Matters pertaining to the TDS made in case of Non Resident
16. Definition of various terms under the salary income
17. List of incomes not to be included under salary income
18. rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e. having total income not exceeding Rs 5,00,000,  the amount of rebate is Rs 2000/- or the amount of tax payable, whichever is lower
19. TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED SUPERANNUATION FUND
20. The Drawing and Disbursing Officers should satisfy themselves about the actual deposits/ subscriptions / payments made by the employees, by calling for such particulars/ information as they deem necessary before allowing the aforesaid deductions.
21. CALCULATION OF INCOME-TAX TO BE DEDUCTED

This circular is very illustrative and hope to answer many unanswered questions as far tax on salary income is concerned.  We are working on the whole circular and would come back with more write up on this.

Please feel free to write to us if you want us to answer any specific query of your. Write us at [info@taxmantra.com].