TDS on Salary for Assessment Year 2015-16

CBDT has released CIRCULAR NO : 17/2014 Dated 10th December, 2014. Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head‘Salaries’ during the financial year 2014-15 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules).  Circular helps employer to correctly deduct TDS on Salary of its employees for Financial year 2014-15 or Assessment Year 2015-16 and it also held Salaried Assessee to Correctly calculate his/her tax liability. Circular explain Provision related to All component of Salary and their Taxability- which includes allowances, perquisites, retirement benefits and  Other benefits.

Circular Contains the Provisions related to the following :-

1. RATES OF INCOME-TAX AS PER FINANCE (No. 2) ACT, 2014 for financial year 2014-15

2.  BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM “SALARIES”:

• Method of Tax Calculation
• Payment of Tax on Perquisites by Employer
• Computation of Average Income Tax
• Salary From More Than One Employer
• Relief When Salary Paid in Arrear or Advance
• Information regarding Income under any other head
• Computation of income under the head “ Income from house property
• Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]
• Adjustment for Excess or Shortfall of Deduction
• Salary Paid in Foreign Currency

3. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES

• Deduction of Tax at Lower Rate
• Deposit of Tax Deducted
• Due dates for payment of TDS
• Mode of Payment of TDS
• Compulsory filing of Statement by PAO, Treasury Officer, etc in case of payment of TDS by Book Entry
• Payment by an Income Tax Challan
• Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted
• Furnishing of Certificate for Tax Deducted (Section 203)
• Authentication by Digital Signatures
• Furnishing of particulars pertaining to perquisites, etc (Section 192(2C)
• Mandatory Quoting of PAN and TAN
• Compulsory Requirement to furnish PAN by employee (Section 206AA)
• Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS]
• Fee for default in furnishing statements (Section 234E)
• Rectification of mistake in filing TDS Statement
• Penalty for failure in furnishing statements or furnishing incorrect information (section 271H)
• TDS on Income from Pension
• Matters pertaining to the TDS made in case of Non Resident

4. COMPUTATION OF INCOME UNDER THE HEAD “SALARIES”

• INCOME CHARGEABLE UNDER THE HEAD “SALARIES”
• DEFINITION OF “SALARY”, “PERQUISITE” AND “PROFIT IN LIEU OF SALARY” (SECTION 17)
• Perquisites
• Residential Accommodation provided by the employer [Rule 3(1)]
• Furnished Accommodation in a Hotel
• Perquisite on Motor car provided by the Employer [ Rule 3(2)]
• Personal attendants etc. [Rule 3(3)]
• Gas, electricity & water for household consumption [Rule 3(4)]
• Free or concessional education [Rule 3(5)]
• Carriage of Passenger Goods [Rule 3(6)]
• Interest free or concessional loans [Rule 3(7)(i)]
• Perquisite on account of travelling, touring, accommodation and any other expenses
• paid for or reimbursed by the employer for any holiday availed [Rule 3(7)(ii)]
• Value of Subsidized / Free food / non-alcoholic beverages provided by employer to an
• employee[Rule 3(7)(iii)]
• Membership fees and Annual Fees [Rule 3(7)(v)]
• Club Expenditure [Rule 3(7)(vi)]
• Use of assets [Rule 3(7)(vii)]
• Transfer of assets [Rule 3(7)(viii)]
• Gifts [Rule 3(7)(iv)]
• Medical Reimbursement by the employer exceeding Rs. 15,000/- p.a
• Profits in lieu of salary
• Incomes Not Included Under The Head “Salaries” (Exemptions)
• Leave Travel Concession (LTC)
• Foreign Travel
• Death-cum-retirement gratuity
• Commutation of pension
• Cash-equivalent of the leave salary
• Retrenchment compensation
• Schemes of voluntary retirement
• Sum received under a Life Insurance Policy (Sec 10(10D)
• Payment from a Provident Fund
• Expenditure incurred on payment of rent -Section 10(13A)
• Allowances Exempt
• Deductions U/S 16 Of The Act From The Income From Salaries
• Entertainment Allowance [Section 16(ii)]
• Tax on Employment [Section 16(iii)]
• Deductions Under Chapter VI-A Of The Act

5. Rebate of Rs 2000 for Individuals Having Total Income Upto Rs 5 Lakh [Section 87A]

6. TDS On Payment Of Accumulated Balance Under Recognised Provident Fund And Contribution From Approved Superannuation Fund

7. Calculation Of Income-Tax To Be Deducted