The Central Board of Direct Taxes ( CBDT ) has issued a circular clarifying the rates and other important issues in connection with the Tax Deduction at Source ( TDS ) on salaries.
Earlier in March, the apex direct tax body, CBDT 15.03.2022 has clarified 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 2021-22.
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 2022-23 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules).
All the sections and rules referred are of Income-tax Act, 1961 and Income-tax Rules, 1962 respectively unless otherwise specified. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia.gov.in.
As per section 192(1) of the Act, any person responsible for paying any income chargeable under the 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 the head of Salary income for that financial year.
The section also provides that a person responsible for paying any income chargeable under the head “Salaries” shall furnish to the person to whom such payment is made a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof.
The circular stated that every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2022-23. The income-tax is required to be calculated on the basis of the rates given in para 2 above, subject to the provisions related to requirement to furnish PAN or Aadhaar number, as the case may be, as per sec 206AA of the Act, and TDS u/s 192 shall be deducted at the time of each payment. The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee. It may be noted that tax liability may not be the same in case the employee opts for concessional tax regime under section 115BAC of the Act.
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