Thursday, 26 January 2017

Deduction of tax at source Income-tax deduction from salaries under section 192 of the Income-tax Act, 1961


Deduction of tax at source Income-tax deduction from salaries under section 192 of the Income-tax Act, 1961

CIRCULAR NO : 01/2017
F.No.275/192/2016-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
North Block, New Delhi
Dated the 2nd January, 2017

SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2016-17 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.

Reference is invited to Circular No.20/2015 dated 02.12.2015 whereby 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 (hereinafter ‘the Act’), during the financial year 2015-16, were intimated. 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 2016-17 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia.gov.in.

2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2016:
As per the Finance Act, 2016, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head “Salaries” for the financial year 2016-17 (i.e. Assessment Year 2017-18) at the following rates:

2.1 Rates of tax

A. Normal Rates of tax:
Sl.No.Total IncomeRate of tax
1.Where the total income does not exceed Rs. 2,50,000/Nil
2.Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-10 per cent of the amount by which the total income exceeds Rs. 2,50,000/-
3.Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4.Where the total income exceeds Rs. 10,00,000/Rs. 1,25,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-

B. Rates of tax for every individual, resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year:
Sl.No.Total IncomeRate of tax
1.Where the total income does not exceed Rs. 3,00,000/-Nil
2.Where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000/10 per cent of the amount by which the total income exceeds Rs. 3,00,000/
3.Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-Rs. 20,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4.Where the total income exceeds Rs. 10,00,000/-Rs. 1,20,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/

C. In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the financial year:
Sl.No.Total IncomeRate of tax
1.Where the total income does not exceed Rs. 5,00,000/-Nil
2.Where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000/20 per cent of the amount by which the total income exceeds Rs. 5,00,000/
4.Where the total income exceeds Rs. 10,00,000/-Rs. 1,00,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-

2.2 Surcharge on Income tax:
The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 of the Income-tax Act, shall, in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, having a total income exceeding one crore rupees, be increased by a surcharge for the purpose of the Union calculated at the rate of fifteen per cent of such income-tax:
Provided that in the case of persons mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees.

2.3.1 Education Cess on Income tax:
The amount of income-tax including the surcharge if any, shall be increased by Education Cess on Income Tax at the rate of two percent of the income-tax.

2.3.2 Secondary and Higher Education Cess on Income-tax:
An additional education cess is chargeable at the rate of one percent of income-tax including the surcharge if any, but not including the Education Cess on income tax as in 2.3.1.

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