TDS :- 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

To view online Complete Circular No. 17 /2014 (Click Here)

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