GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) CENTRAL BOARD OF DIRECT TAXES DEDUCTION OF TAX AT SOURCE- INCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 DURING THE FINANCIAL YEAR 2020-21 NEW DELHI, the 03" December, 2020ng Index General RATES OF INCOME-TAX AS PER FINANCE ACT, 2020 21 Rasies of tx 2.2Concessional Rates of Tax ws 11 SBAC BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM SALARIES 3.1 Method of Tax Calculation: 3.2 Payment of Tax on Perquisites by Employer 3.2.1 Computation of Average lncome Tax 3.22 Uhistration 1.3 Siidary From More This One Employer 3.4 Relief When Salary Paid in Arrear or Advance: 3.5 Information tegarding Inconte tunder aay Onher head 3.6 Computation of Income under the head —“Income thom house Propenty’ 3.7 Adjustinent for Excess ot Shortihill of Deduction 3.8 Salary Paid in Foreign Currency PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES 4.1 Stipulation of section 204 of the Act 41.1 Tax determined tw be dedacted fin Salty wis 192 4.2 Deduction of Tax at Lower Rate 4.3 Deposit of Tax Deductod 4.4.1 Doe dates for payment of TDS 44.2 Mode of payment of TES 44.2.1 Compalsory filing of Stement by PAG, Treasury Officer, le. in cave of payment of TDS by Book Entry ws 200 (2A) 44.22 Payment by am Ineorse Tex Challan 4.5 Interest, Fee, Penabty& Prosecution for Failure to Deposit Tax, Deducted 6 Furnishing of Certificate for Tax Deducted (Section 203) 4.7 Mandnory Quoting of Permanent Account Number or Aadhaar uinber, ax the case may be, and TAN 4.3 Compulsory Requircment to fumish PAN by employer or Aadhaur number, as the case may be, by employer (Section206AA) 4.9 Sunctnent of Deduction of tax under of section 200 (3) [Quarterly Statement of TDS] 4.10-TDS 00 lncome from Pension 4,11 Maners pertaining 1 the TDS made in caxe of Non Resident COMPUTATION OF INCOME UNDER THE HEAD “SALARIES” 5.1 Income chargeable under the head Salaries" 5.2 Definition of Salary”. —Perquisite” nnd profit in lieu of salary™ (Section 17) $5.3 Income novincluded under the Head “Salaries” (Exemptions) 16 16 16 uwi nA it va Vill x 5.4 Deduction ws 16 of the Act 5.3 Deductions under Chapter VI-A of the Act REBATE OF RS.12500 FOR INDIVIDUAL HAVING TOTAL. INCOME UPTO RS. LAKH (SECTON E7A) TDS ON PAYMENT OF ACCUMULATD BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTIBUTION FROM APPROVED SUPERANNUATION FUND, DDOs TO OBTAIN EVIDENCE /PROOF OF CLAIMS: CALCULATION OF INCOME-TAX TO BE DEDUCTED. MISCELLANEOUS ASNEXUKE SOME ILLUTRATIONS FORM NO 128A, FORM NO 1288. PROCEDURE OF PREPARATION AND FURNISHING FORM. 24G_AT TIN-FACILITATION CENTRES (TIN-FOn) THE PROCEDURE OF FURNISHING FORM 4G PERSON RESPONSIBLE FOR FILING FORM 24G IN CASE OF STATE GOVT DEPARTMENTSCENTRAL GOVT DEPARTMENTS: PROCEDURE OF PREPARATION OF QUARTERLY STATEMENT OF DEDUCTION OF TAX ws 20003) DEPTT. OF ECO, AFFAIRS NOTIFICATION DATED 2.122013 BOARD'S NOTIFICATION DATED 24, 11,2000 BOARD'S NOTIFICATION DATED 29.01.2001 FORM NO. 10 BA HW 2 50-62 67-68 6875 Tr #182CIRCULAR NO : 20,2020 F.No. 275/1922020-1T(B} ‘Government of Indin Ministry of Finance Department of Revenue Central Board of Direct Taxes qeenee ‘North Block, New Dethi Dated the 3" December 2020 SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2020-21 UNDER SECTION 192 OF THE, INCOME-TAX ACT, 1961, Reference is invited to Circular No, 42020 dated 16.01.2020 whereby the rates of deduction of income-tax from the payment of income under the head “Salaries” under Section 192 of the Incometax Act, 1961 (hereinafter ‘the Act”), during the finaxcial year 2019-20. were intimated, The present Circtlar contuins the rates of eduction of incdmme-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 (bereinificr the Rules) All the sections and rules referred are of Ineomna-tax Act, 1961 and Income-ax Rules, 1962 respectively unless otherwise specitied. The relevant, Acts, Rules, Forms and Notifications ure available at the website of the Income Tax Department- soe lncemmetacimllavon.ie, 2. RATES OF INCOME-TAN AS PER FINANCE ACT. 2020; As per the Finanee Act, 2020, income-tun is required tir be deducted under Section 192 of the Act from income chargeable under the head “Salaries” for the financial year 2020-21 (Le. Assessment Yeur 2021-22) at the following rates: LD Rates of wy A. Normal Rates of wx: St] ‘Total Income | Rate of tax . | 1 | Where the total income does, Nil not pexceed Rs 250000 0 | 2) | Whore the tatal income exceeds) $ per cent of the amount by which the total income Rs. 250,006 but does exceeds Rs. 2-50,000- motexceed Rs. 00,000. | | 3 | Where the total incorrre Rs. 12300 plus 20 per cent of the amount by which the ‘exceeds Ra $,00,000/%, but total income exceeds Rs. 5.1K).000/+. does not | ___[Hexebed 10,00, 00/6. | @ | Whore the total mcome exseadiy Re 1,12 500 a pe a of the amoutt by which Rs 10,00,000) hee sal lawome exceeds Re 1),00,0100/-[B. Rates af tax for every individual, being a resident in India, who ls of the age of vixty years or more but fess than eighty years at any time during the fluanclal year: Total Income Rate of tix Where the total income des not exceed Ra 3.00,000/- Ni 2 | Where the total income exceeds: Rs. 3,00,000 but does not exceed Rs, 3,00.000/- but does not J exceed Re. 10,00,000% Sper cent of the amount by which the total income exceeds Rs. 3,000,000" OI plus 20 per cent Of the amount by which the total income exceeds Rs. 5,00,000/. 4 | Where the total income exceeds Ri 000" Ref To.d0ne plus 30 per cent of the amaunt by the total income exceeds Rs_ 10, case of every individual, being a resident in India, who is of the age of eighty ‘or more at any time during the Financial year: Total Income ‘Rate of tax 1 eae sa income does not 00,0000 2 Wiese eal Income exceeds ‘Nil 20 per cent of the amount by which the vital Rs. $,00,(00 but does not exceed | income exezeds Res. 3(M),000/- Rs, £6,00,0000~ 1 4 | Where the total indoine exceeds | Re. 100,000. plus 30 per cent of the amount by Rs. $0,00,000/- whiels the total income exéeeds Rx. 10,001,000. 2.2 Concers|inal Rates of Tan ws LSBAC Seetion L1SBAC of the Incame -tx Act, 196), jieserted by the Finaiiie Act, 2090 wef Asemibent Wear 2021-22, intir alia, provides that » pened, being ni individual de a TIF may: exercise option in respect of a previews, year tn be timed wider the said section 115BAC. In ease of a person having income from business or profession, such person is required 10 exercise the option in prescribed manner on or bbofore the due date specified under sub-section {1) of seetion 139 of the Act for any’ previons year relevant to assessment year gommencing on or after OLM.2021 and such nites epee Siete Nell HH 6 mubsequent assessment years. However. in eae of auch perioms, the option once exercised can be withdrawn only once oe person shall never be eligible ti exercise the option again unless such Pettit Geter 10 have inceime fram business or proffewsiin. fh case of perce having inccene from any ether ‘ourve apart from business and profession, such persim is required to exensise the option inthe prescribed tanner along with the return of income to be tumishied under section 13941) of the Act fir the previons year relevant to the sasexsment sear. The concessional rates of tax provided under section 1ISBAC are subject t) the condition that the total income shall be computed without specified exemptions. or Weductions, set off of loss and additional depreciation. The concessional mies of tax w/e 11SRAC are given in table below; = ‘Total Income Rate of tax , Upw Re. 350,000 Nil From Rs. 3.50,00] to Re 300,000 3 per cent 10 per ect [ From Rs..10,00,001 tw Rs. 12,5000 ”a Frum Bs iH ti Rs. 18, 25 per cent Re ‘Sarcharee on {nsome tau ‘The amouit of incorme-tax counpaied is accordance with the preceding provisiens of this Parigraph, of the prcvislotie of section TTA or section 112 or sextion 112A or the: prvisions of section 11SHAC, of the licome-tax Act. shall he Incremsed by: a surcharge for the purposes of the Union, calculmied, im the case of every individual or Hindu undivided family or zssociation of pervons or body of individuals, whether incorwirated OF nat, ar every: siete eee estrada oan Ci of eA )) sae 2 Income-tax Act— a) having 2 total indore (likehiding the income byway’ Of dividend oF income inder the provisions of section 111A and erction 112A of the Income-tex Act) exceeding fifty lakh rupees but pot exceeding one crore rupees. at the rate of tem per cet. of such ineame-ter, () sing » tal income Goch the income by way of dividend ot incom sakes te provisions of section 111A and section I12A of the lncote-tax Act) exceeding one crore rupses but not exceeding two crore napees, at the rae of fiftor per cent. of uch income-tay; {¢) having # total income (excluding te income by way of dividend of income under the provisions of section 11)A nnd section 1124 of the Iricome-tat Act) exceeding two crore: rupees bot not excesding (lve cence rupes, at the rate of! twenty-five pet cet, of such jovomestax; (d) having » soxal incowos (exshating toe incame by way of divide! oF income: under ibe Provisions of section 111A and section 112A af the Income-tix Act) exceeding five crore fupees, at the ate of thirty-seven per cent. of wach incowe-tax: and (e) having 2 total isccene (inchading the income by vay of dividend of meome under the Provisies of section 1114 and section 152A) exceeding two crote rapes, but (8 not covered uncer clauses (c) and (il), shall be applicable at the rate of fifteen per cent. of such inocu tax Prowidd that ini Case Where the total Incoite” includes any income by wily oP divide or income chargeable wader section 1) 1A aml section. 112A of the tneonietax Act, the rate of ‘surcharge on the amount of [ncome-tax computed ia respect of that part of income shall nat acerd fiftoen per cent Provided! firther that in the case of persons mentioned above having total income: cuceedig. Ga) Fits Lakh rupees bet no excending one croee-rupees, the tral amnonet payable x income tas and surcharge ot tach income sll mat exceed the tural ssnoeut payable as iasome-tex ‘on a total icone of fifty lakh rupees by micws than the arnt of icone that exceeds Fifty Jak pees: 0c sere vest tors sree Pre Ss Trees fhe Jota) amount payable: ax ineame-tax and surcharge on sui tetens tuk tox etal weal eat payable ss. incomesiax and surchalpe on a total ficome of ohe:crore rupees by) mero than thio amount of income that exceeds one crore types 46) Two crore rupees bit does not cxceal five crore rupees, tie Hotal amount payable a income-tm. sed surcharge on woch income shall noi euceed the hofal amount paryale ai income-tan and surcharge a a total income Of two croee rupees Dy mow than the amount of income tha ence Pr FEE PEN,(a) five crore rupees, the total amount paynble as income-tax ang surchange on such income shall not exceed the tom! amount payable as income-t and surcharge an a total incewne af five crore rupees by more than the amosnt of incom that execods five crore mupecs. 24 Health and Education Coss “Health and Education Cess™ shall be levied at the rate of four percent of inceme tax including surcharge wherever applicable, No marginal relict shall he wwailable in respect of such cess. 3 SECTION 192 OF THE INCOME-TAN ACT, 1961; BROAD SCHEME OF TAX. Al Method of Tus Calculation: ‘Every perdan who te vexpanilble the payinw any income chargeable under the head "Srlaries" shall edict income-tax on the estimated income of the assessoc under the hicad "Salaries" for the financial year 2020- 21, The income-tx is reguiral to be citlculuted on the braiy. of the rates when above, subject 0 the provisions telated 10 requirement ti furnish PAN or Aadhaar member, ni the case may be, as per sce 206A of the Act, and shall be deducted at tho time of each payment. AAs per section 192(10) of the Act, m person, being am eligible start-up referred 1 ix section 80140, responsible foe paying any income to the mssessce being perquisite of the mulire specified in subvclanese (xi) of clase (2).of Section 17 in any previous year relevant to assessment your 1031-22 and thereafter, shall odiict or pay, as the case may be, tas.on such incor within 14 days— 4) afer the expiry of 48 moots fam end of relevant assessment year; fit 1b). frome the date of tale of such specified security or sweat oquitty site fy the ssspssce: oF ) from the date of the assessee ceasing tr be the empliyer of the person, ‘whicliever in the earliest, on the basis of rates tt force Kor the financial year in which the wait epecttial security or sweat equity shure is allotted or transferred, ‘An employee intencling 10 apt for the concessional rates of tx urddor section |1SBAC of the Act. ruiy {intimate the deductor, beinw his employer, of such intestion for each previous year and- pan such intimation, the deductor sball compute his total incorne, and indke TOS theredin in iccowdance with the provisions of eection (ISBAC If'such intimation is not made by the ore the employer shall make TDS without considering the provision of section [ISHAC of the Act. The intimition so made to the deducing shall be pnly far the purpoys of TDS during the previews year and eer ‘bemodified during that year, (CHDT Cireiilar No. C1 of 2020 dated 13.04.2020) No tix. however, will be required to be deducted at source in a case linless the estimated silty Income including the value of perquisites Is tmmenble after giving effect w the exemptions, deductions and relief as applicuble. (Some nyviewl iilustrationn of computation of tas are given at Annexure-T), 42 Payment of Tax on Perquisites by Emplover: An option has been given to the employer to pay the tax an non-monetiry perquisites given to an employee. The employer muy, at its option, make payment of the tix on such petquisites himself Without making any TDS from the salary of the employee, Havwever, the employer will have to pay the tax at the time when such tax: wns otherwise deductible Le. at the time of payment of income chargeable under the head “salaries’* 10 the employes. 221 Computation of Average Income Taiz For the purpose of making the payment of tax mentioned! in pum 3.2 above, tax is to be determined at the average of income tax computed on the basis of rate in foree for the financial year, onthe income chargeable under the head "salaries", including the value ‘Of perquisites lise Which tax hia Ben paid by the employer hineself 32.2 tMustration: ‘The income chargeable under the head ‘talaries™ of un employee below Sixty yours of aige for the year inclusive of all perquisites is Rs. 6,00,000/-. out of which, Rs. $0,000 is on account of non-monetary perquisites andthe employer omts to. pay the tax on such. perquisites as per the provisions discussed in pura 3.2 above. SLEDS: [Treome i tinder the head Salanes” | Rs, 600,000" ] ehers ofall perquisites | | “Tax as per normal tates on Total Salury (including ] Rs. 33,8000 Ces) | ‘Average Rate of Tay [(33, BOOS 00,000) S | seas | 109) "Tax payable Gn RS 50,000 (5.63% oF 30,000) | Rai2815 ‘Amnoumt required to Be deposited each month | Seca atioe | ‘The tax so-paid by the employer shall be deemed to be TDS made from the salary of the employee. 33 Salary From Mare Than One Employer: Scition 192(2) dealy with situations where an individual is working under more than one eimployet ot hus chinged fram onte employer to another. It provides for deduction of tax at seutce by such employer (os the tax payer may choose) fromthe aggregate salary of the employee, who is or has becn in receipt of salary from more than onc employer. ‘The, employee is ao required to furnish to the present/chosen employer details of the income under the head “Salaries” due or received from the furmer/other employer and also tax deducted gt source therefrom, in writing and duly verified hy him and by the former/other employer, The prescnt/chosen cinployer will be required to deduct tax at sourve on the agoreyate amount of salary (inchidiny salary received from the former or other employer). 340 Belief When Salary Paid in Arrear or Advances 341 Under section 192(2A) where the assessce, being a Goveritictt servant or iin employee in a company, co-operative society, losal authority, university, institution, associution or hody Is entitled to the mil’ vnder Seetion 89 be muty furnish Wy the persan responsible for making the puyiment referred to in Para (3.1), such particulars in Form Na, JOE duly verified by him, and thereupon the person responsible, ax aforesaid, shall ‘compute the reficf on the ‘basis of such paniculars and wke the same into account in making the deduction under Paral3.) above, Further, such assessce shall upload the aforesaid Form 10E electronically in the e-Filing pottal along with the return of income. Here ‘tniversity"* means « university established or ingorporated by or unier a Central, State ‘of Provincial Act, and includes an instintion declared under Section 3 af the University Grants Commission Act, 1956 to be a university forthe purpose oF that Act. 32 With effect from 1/04/2010 (AY 201t 1}, no such relief shall be granted in respectof wy amount received oF receivable by un assessee on his voluntary retirement or torminution of hia service, in accordance with any scheme of schemes of Kctinement or in the cate of a public sector company referred to in section JO(LOC}(i) (read toch, of any other, assexament year, M8 Lafermatinn resarding locome under amy ther head: (i) Scction: 192(218) enabics a:wuxpayer to fumish pariculars of income under any thoad other than “Salarfes” ( not being a Joss under any such head other than the loss under the head — Income from byiuse property!) received by the taxpayer for the same financial year and of any tax deducted at wiuree therenn. The particular tay tow be furnished in a simple statement, which is properly signed and verified by the waxpayer in the manner os prescribed! tinder Rule 268(2) of the Rules and shall be annexed to the simple statement. ‘The form of verificution is reprodued bs under; 4, {name of the asscayce), do declare that whut by ytated above bs trne t the beat of my informution and belief v muy be noted that foss under the tread “Income frum house property can be set off tony wp to Rs. 2.00 lakh with the income wndler any other bad af incume in view of the ameodment to section 71 of the Act vide Finance Act, 2017. Hence, lows under the head “Income from house property” in excess af Rs. 2.00 lakh is to be ignored for calculating, the amount of tax decoction. 3.6 Computation of income under the head“ Income from house property”: ‘While taking into account the Koss from House Property, the DDO sfall ensure that the employee files the declaration referred tw above and encloses therewith a computation of such foss fram hotise property. Following details shail be obtained and Kept by the omployer in respect of lows claimed under the head “low: fiom louie property” separately for each house peoperty: a) Gross annual rew/value bh) Municipal Taxes paid, if'any ©) = Deduction claimed for interest paid, if any d) Other deductions claitied e} Address of the property ‘The DDO shall also ensure furnishing of the evidence or particulars in Form No. 1288 in respect of deduction of interest as specified in Rule 26C read with seetion 192 (2D). Ao) Conslitions fur Claim of Deductive of Interston Herron cl Capital for Commutation of Income From House Property [Section 24ébils Section 24(h) af the Act allows dextuction fom inenme from houses property on interest an horrowed espital as under:- oO the deduction in allowed only. tn-cese of house property which in owned. and is:inthe