Table of Contents

Section 192 of The Income Tax Act, 1961

Tax is required to be deducted by any person responsible for paying any income chargeable under the head “SALARIES”
Tax to be deducted at the time of payment
TDS @ average rate of income-tax on Estimated income of the employee for the financial year
No TDS u/s. 192 if the tax payable (after taking rebate u/s. 87A) by the employee is NIL.

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3 Big Changes in TDS / TCS Provisions w.e.f 1st July, 2021

Excess or Shortage of TDS During The F.Y.

• Any excess/ deficiency arising out of previous deduction or failure to deduct during the financial year can be adjusted subsequently as per Section 192(3).

• Thus, where the assessee did not deduct tax from salaries in each month, rather it deducted tax at end of the financial year, interest u/s. 201(1A) could not be levied – CIT v. Enron Expat Services Inc.(Uttarakhand HC)(ITA No. 78/2007)

• If TDS u/s. 192 is not deducted in equal instalments intentionally(not bona fide) and the deficiency is made good in last months, interest u/s. 201(1A) is liable to be levied – Madhya Gujarat Vij Co. Ltd. v. ITO (Ahmedabad Trib.)(ITA No. 420/Ahd/2011)

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TCS under section 206C(1H) of income tax Act

Relief When Salary Is Paid In Arrears or Advance – Section 89(1)

• Advance Salary and Arrears of salary – Taxable in the year of receipt.

• However, eligible to claim relief u/s. 89(1).

• Relief to be computed as per Rule 21A.

• As per Sec. 192(2A), Form No. 10E is required to be submitted to the employer. Form No. 10E is also required to be submitted electronically on the e-filing portal.

• Section 89(1) and Section 10(10C): If any amount received on voluntary retirement or termination of service as per VRS or in the case of a public sector company, a scheme of voluntary separation is claimed as exempt u/s. 10(10C), relief u/s. 89(1) cannot be claimed.

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TDS Provisions under Income Tax Act, 1961 for FY 2019-20

Salary From More Than One Employer

• Where the assessee is employed simultaneously under more than one employer, or

• Where he has held successively, employment under more than one employer

• The employee may furnish to the employer the details of salary received from the other employer along with TDS deducted therefrom.

• Such details to be submitted in Form No. 12B

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CA. Rajesh Mehta

Important Issues in TDS Provisions under Income Tax Act