EXPLORING SECTION 192 OF THE INCOME TAX ACT, 1961

Exploring Section 192 of the Income Tax Act, 1961

  • 192(1) : Any person responsible for paying any income chargeable under 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 this head for that financial year.
  • Average rate of income tax means the rate arrived at by dividing the amount of income tax calculated on the total income, by such income.
  • 192(1A), (1B) -If the employer exercises an option to pay the tax on non-monetary perquisites given to such employee. However, the employer will have to pay the tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head “salaries” to the employee.
  • 192(2) Where the assesse is employed under more than one employer Form 12B to be submitted to the second employer, so that he will consider the previous income and tax deducted thereon, for the purpose of deduction of TDS.
  • 192(2A) While computing tax on arrears of salary form 10-e to be submitted to employer so that he can assess the rebate under Sec 89(1).
  • 192(2B) Employee should furnish all his sources of income during the financial year to the deductor. No loss from any other head to be considered except Loss under the head – Income from House Property.
  • 192(2C) Employer shall submit to employee a statement in Form 12BA giving correct and complete particulars of perquisites or profit in lieu of salary provided to him and the value therof.
  • Sec 192(2D) –Employer has a responsibility to obtain from the employee the evidence or proof or particulars of prescribed claims (including claim for set-off of loss) under the provisions of the Act.
  • 192(3) The provisions of Section 192(3) allow the deductor (payer of salary/DDO) 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.
  • Employee may make an application in Form 13 to the AOthat the total income of the employee justifies the deduction of income tax at lower rate or no deduction of tax.
  • Rule 26C – FORM 12BB Statement showing particulars of claims by an employee for deduction of tax under Sec 192
    • Proofs to be submitted
      •  HRA – Name and address and PAN of the Landlord where the aggregate rent paid during the year exceeds 1 lakh rupees.
      • Salaried employees earning HRA up to Rs 3,000 per month are exempt from the production of rent receipts. This has been laid down in the CBDT circular no. 8/2013 dated 10th October 2013 as well as in 20/2015 dated 2nd December 2015.
  • Family pension received is not taxed under the head of salaries and so TDS is not applicable on family pension under Sec 192 and no other Section prescribes deduction of tax on payment of family pension.
  • Amendment from A.Y. 2021-22 :
    • CBDT Clarification regarding TDS on Salaries  for individual opting 115BAC :
    • As per Sec 115BAC an individual or a Hindu undivided family having income other than income from business or profession”, may exercise option in respect of a previous year to be taxed under the said section II5BAC alongwith his return of income to be furnished under sub-section (I) of section 139 of the Act for each year. The concessional rate provided under section II5BAC of the Act is subject to the condition that the total income shall be computed without specified exemption or deduction, setoff of loss and additional depreciation.
    • Also clarified that an employee, having income other than the income under the head “profit and gains of business or profession” and intending to opt for the concessional rate under section 115BAC of the Act, may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor shall compute his total income, and make TDS thereon in accordance with the provisions of section II5BAC of the Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 115BAC of the Act.
  • It is also clarified that the intimation so made to the deductor shall be only for the purposes of TDS during the previous year and cannot be modified during that year.
  • Forms :
    • 10e –  Relief under 89A
    • 12b –  Form to be submitted to Second Employer
    • 12bb –  Statement of Computation of Tax
    • 13 – Lower rate of deduction

Provisions Related to Deduction and Deposit of TDS & Return Filing :

  • If TDS is not deducted as prescribed then deemed default under sec 201(1) :
    • Penalty under Sec 271C(TDS)/ 271CA(TCS)
    • To the extent of TDS
  • If deducted and not deposited within due dates as prescribed :
    • Interest under Sec 201(1A)
    • 1% If the tax is not deducted
    • 1.5% if the tax is deducted but not deposited
    • Prosecution under Sec 276B
  • If TDS is deducted but return is not filed within due date :
    • Penalty under Sec 234E @ 200 per day to the extent of TDS

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