Important Issues in TDS Provisions under Income Tax Act

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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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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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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