Tax deduction at source from salaries: employers must include perquisites and apply statutory deductions before withholding tax.

Employers must deduct tax at source from salaries only when estimated salary income exceeds the exemption threshold and must include perquisites and other specified receipts in estimating salary. Taxable salary is computed after allowing the standard deduction (subject to ceilings and special limits where employer provided motor vehicles are used personally). Statutory deductions for approved savings and provident contributions are permitted within the prescribed monetary and percentage limits, exemptions for house rent allowance and special allowances require documentary proof, and prescribed rounding, challan usage and penalty provisions apply.

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