Deduction Of Tax At Source From Salary

1.Who is responsible to deduct tax at source in case of income from Salary

Any person responsible for paying any income chargeable under the head “Salaries” is required to deduct tax on the amount payable. For this purpose the following are treated as “Person responsible for paying “ salary income :

ü  In the case of employees of central or State Govt, the appropriate disbursing officer is person responsible for paying salary;

ü  In the case of employees of a non –corporate organization in the private sector, the employer himself is person responsible for paying salary ; and

ü  In the case of employees of private corporate sectors, the person responsible for payment is the company itself as also the principal officer thereof.

  Section 192 requires that once the Salary or remuneration is Paid the Tax Shall be Deducted on such remuneration . Where the entries have been made for the payment of remuneration , the court is not concerned as to who is entitled to draw this remuneration .

2. Where salary is payable by other employee also [section 192 (2) ] 

Where an Employee is in Employment of more than one employer or receives payment from former employer, tax will be deducted at source by that employer which the said employee .

Only after Submission of information in form No. 12B , it become the Obligation of the employer  ( to whom form No 12B is submitted ) to deduct tax at source after considering the considering the information submitted by the employee .

3. When tax is to be deducted

Tax is to be deducted only at the time of payment of salary. If therefore, the employer transfers salary payable to the personal account of the employee in his books of account, tax is not deductible at the time of transfer; it is deductible only at the time of actual payment .

While granting rebate under section 88, the employer cannot enquire into source of investment , the employer can verify correctness of investment . However, TDS cannot be reduced proportionately merely because assessee   give assurance in writing that he will make saving of a particular amount .

4. When income other than salary income is considered by employer [Section 192(2B) ]

The provision are giving below –

A.   The employee may (or may not ) declare his other income to the employer .

B.   If the employee want to declare his other incomes to the employer, then such information should be given plain paper to the employer .

The employee may declare details of his other income ( including loss under the head “Income from house property “ but  not any other loss ) and tax deducted thereon by others. If the aforesaid information is not submitted by the employee to the employer, then employer cannot take into consideration other income of employee ( even if the quantum of other incomes is otherwise known to the employer ) .

5. How to make adjustment of excess or deficiency [ section 192 (2) ]

“ The person responsible for paying “ salary may, at the time of making any deduction , increase or reduce the amount of tax to be deducted under Sec. 192 for the purpose of adjusting any excess or deficiency arising out of any previous deduction or failure to deduction the financial year.

Intention of section 192(3) is not that an employee can casually take deduction of tax from payment of salary in different month and resort to a lump sum deduction at the end of relevant financial year for making good deficiency .

      6. Deduction from provident fund payment [Sec. 192(4)/(5) ]

             It is implicit in Sec 192 (4)/(5) that where contribution made by the employer, or interest credited to the account of an employee, participating in a recognised  provident fund , is in excess  of permissible limit, the excess amount is also includible in the salary income of employee . Similarly, where any contribution made by an employer, including interest on contributions, in an approved superannuation fund, is paid to the employee, the amount is also includible in the salary income . In both such cases, tax will have to be deducted at source from the amount included in salary .

7. Tax deduction and collection account number [ Sec. 203A ]

 Every person, deducting tax or collecting tax, who has not been allotted a tax – deduction account number or, as the case may be, a tax –collection account number, shall within one month from the end of month in which tax is deducted / collected apply to the Assessing  Officer in Form No.  49B for the allotment of a “tax-deduction and collection-account number”. Where a “tax deduction account number “ or “ tax –collection account number “ or “ tax deduction and collection account number” has been allotted to a person, such person shall quote such number 

v  In all challans for the payment of any sum in accordance with provision of Sec. 200 or sec. 206C(3) ;

v  In all certificates furnished under Sec. 203 or Sec. 206C(5) ;

v  In all the returns, delivered in accordance with the provision of Sec. 206 or sec. 206C(5A)/(5B) ; and

v  In all other document pertaining to such transactions as may be prescribed.

8. Where to deposit tax

Tax deducted at source is to be deposited to the credit of central Govt. by remitting the same to any of the following :

·         Any branch of RBI ;

·         Any branch of SBI ;

·         Any branch of selected public Sector bank where income-tax offices are situated .

9. E-payment of tax  : After March 31, 2008 , all corporate assesses and other assesses ( who are subject to compulsory audit under Sec. 44AB ) will have to make electronic payment of tax through internet banking  facility offered by authorized banks . Alternatively, these taxpayers can make electronic payment of tax through internet by way of credit or debit cards . It is not necessary for the dedicator to make payment of tax from his own account in an authorized bank . A deductor can make electronic payment of taxes also from the account of any other person . However, the challan for making such payment must clearly indicate the PAN / TAN of the person on whose behalf the payment is made.  The following bank providing this facility they are as fallows ;

·         Allahabad Bank                               

·         ICICI Bank

·         HDFC Bank

·         IDBI Bank

·         State Bank Of India

·         Punjab National Bank

10. PROCEDURE FOR  E- PAYMENT :     

1.    Open a net – banking  account

2.    Go to website www.incometaxindia.gov.in, click on ‘pay tax on line’.

3.    Select the relevant challan

4.    Enter its PAN /TAN as applicable.

5.    If PAN /TAN is valid the tax payer will be allowed to fill up other challan details like accounting head under which payment is made, name and address, etc, and aiso select the bank through which payment is to be made .

6.    On submission of data entered a confirmation screen will be displayed . If the taxpayer confirms the data entered in challan , it will be directed to the Net – banking site of the bank.

7.    The taxpayer will login to the net banking site with the user id / password provided by bank for net banking purpose and enter payment details at the bank site .

8.    On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made . This counterfoil is proof of payment being made . The Challan Identification Number (SIN) on  this counterfoil should be quoted in Return Of Income .

9.    Print the counterfoil and also save it in the computer if required .

10. Check if your payment has reached the income Tax  Department at https://tin.tin.nsdl.com/oltas/servlet/QueryTaxpayer .