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CBDT issued a circular on TDS from Salaries under section 192 during the FY 2022-23

CBDT issued a circular on TDS from Salaries under section 192 during the FY 2022-23

Introduction

The Central Board of Direct Taxes means a federal agency that reports to the Finance Ministry of the Government of India. In India, it is the highest policy-making body for increased taxation. It is responsible for framing policies and procedures related to direct taxation, including income tax, corporate tax, wealth tax, capital gains tax, etc. It also supervised the administration of these taxes by the Income Tax Department and other subordinate authorities. CBDT has issued Circular No. 24/2022 dated 7th December 2022 which mentioned some guidelines on Salaries for TDS for the Financial Year 2022-23 (The assessment Year 2023-24).

CBDT issued a Circular on TDS on Salaries during Financial Year 2022-23

The Circular includes the rates of Income-tax deduction from Salaries during the financial year 2022-23 and in which explains specifically related provisions of the Income Tax Act 1961 and Income-tax Rules, 1962.

According to section 192(1) of the Income Tax Act, any person who is responsible for paying any chargeable income under the head “Salaries” shall, on time of payment, deduction of income tax on the amount that is payable at the ordinary rate of income-tax computed based on the rates in force for the financial year in which the payment is made, on the assessee’s estimated income under the head of Salary income for the financial year.

Section 17 provides the Definition of “salary”, “perquisite” and “profit instead of salary”

According to section 15 of the Act, the incomes are chargeable to income tax under the head “Salaries” which are given following: —

  • In the previous year, any salary due from an employer to an assessee, whether paid or not;

  • In the previous year, any salary paid or allowed by him or on behalf of an employer or a former employer though not due or before it became due to him;

  • In the previous year, any arrears of salary paid or allowed by him or on behalf of an employer or a former employer, if not paid to income-tax for any earlier previous year.

For any income to be called a Salary, the existence of an employer-employee relationship is a must. According to section 17 of the Act, Salary includes:

1.    Wages

2.    Any annuity or pension

3.    Any gratuity

4.    Any fees, or any profits instead of or in addition to any salary or wages

5.    Any advance salary

6.    Any payment that is received by an employee in respect of any period of leave, not profit of by him;

7.    Under rule 6 of Part A of the Fourth Schedule, the annual growth of the balance at the credit of an employee who is participating in a recognized provident fund to the extent it is chargeable to tax that given below:

  • More than 12% of the salary of the employee contributions made by the employer to the account of the employee in a recognized provident fund.

  • Interest credited on the balance to the credit of the employee in so far as it is allowed by the central government and also fixed a rate exceeding such rate as may be fixed by notification in the Official Gazette;

8.    The Central Government made the contribution or any other employer to the account of the employee under the New Pension Scheme.

Tax Deducted at Source from salary from more than one employer

Now the employee needs to furnish the present or chosen detail of the income of the employee under the head “Salaries” due or received from the former or other employers. It is also tax deducted at the source therefrom, in writing, and duly confirmable by him and by the former or the other employer.

Conclusion

It concluded that the Circular includes the rates of Income-tax deduction from Salaries during the financial year 2022-23 and in which explains specifically related provisions of the Income Tax Act 1961 and Income-tax Rules, 1962. Under rule 6 of Part A of the Fourth Schedule, the annual growth of the balance at the credit of an employee who is participating in a recognized provident fund to the extent it is chargeable to tax.

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Author:

Radhika Punani
Ambala
I am Radhika from Ambala city. I qualified LLM from Kurukshetra University and B.A.LLB from Maharishi Markandeshwar University


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