TDS ON SALARIES UNDER SECTION 192 FOR THE F.Y 2022-23
Section 192 of the Income Tax Act, 1961 deals with tax deducted at source (TDS) on salary. Your employer will deduct TDS from the salary payable to you. The salary you receive from your employer is categorised in ‘Income’ under the head ‘Salary’ and the employer will be responsible for deducting TDS at normal income tax rates applicable to you on your estimated income for the relevant financial year. The TDS deducted u/s 192 is reflected in Form 16, which is issued by the employer to the employee.
Who can Deduct TDS under Section 192
The employer’s can be-
- Companies (Private or Public)
- Partnership firms
- Co-operative societies
All these employers are required to deduct TDS monthly and deposit it to the government within the specific time period. According to section 192 of the Income Tax Act, there must be an employer-employee relationship for the deduction of tax at source. The employer’s status such as HUF, firms or company is irrelevant for the deduction of tax at source under this section. Moreover, the number of employees employed by the employer does not matter while calculating and deducting TDS.
When is TDS Deducted under Section 192
Under Section 192, TDS is deducted at the time of actual payment of salary and not during the accrual of salary. It means tax will be deducted if your employer pays salary in advance or at the time of salary payment in arrears.
In case your estimated salary is not more than the basic exemption limit, tax amount will be zero and hence, TDS will not be deducted.
What amount is to be considered for TDS on Salary?
TDS is to be deducted by the employer from the amount paid to the employee as salary. The term salary includes various allowances and perquisites. Some allowances and perquisites given by the employer to employees are exempt, either fully or partly, subject to some conditions laid by the provisions of the Act. Further, if any employee who was previously employed with another employer during the FY and has given declaration of salary received from previous employer and TDS on that, it also has to be considered by the current employer. In addition to this if any employee has also given declaration regarding his any other income viz. Income from house property or interest income then that is also required to be taken care of by the employer.
CBDT Issued a circular regarding TDS on salaries under the section 192
Circular No. 04/2022 dated 15.03.2022 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 2021-22, 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 2022-23 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules).
All the sections and rules referred are of Income-tax Act, 1961 and Income-tax Rules, 1962 respectively unless otherwise specified. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department.
As per section 192(1) of the Act, any person responsible for paying any income chargeable under the head “Salaries” shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under the head of Salary income for that financial year.
The section also provides that a person responsible for paying any income chargeable under the head “Salaries” shall furnish to the person to whom such payment is made a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof.