TaxTMI 
TaxTMI 
Deduction of tax at source-Income-tax deduction from salaries during the financial year 1982-83 under section 192 of the Income-tax Act, 1961
X X X X Extracts X X X X
X X X X Extracts X X X X
.... deduction during the financial year 1981-82 from the payments of income chargeable under the head "Salaries" under section 192 of the Income-tax Act, 1961, were intimated. 2. Sub-section (1) of the said section provides that any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of making 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 for that financial year. The provisions of sub-section (3) are intended for making adjustments of excesses or shortfalls of inadvertent nature and/or due to unforeseen circumstances. Thus, the aggregate tax calculated on the estimated income divided by twelve and rounded off to the nearest rupee is required to be deducted from the monthly salary. 3. In the Finance Bill, 1982, some modifications have been made. An extract of Sub-paragraph 1 of Paragraph A of Part III of the First Schedule is at Annex. I. 4. The substance of the main provisions of law in so far as they relate to income chargeable under the head "Salaries", on w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earlier previous years also and the whole or any part of the amount of such payment or payments was or were not included in the total income of the assessee of such previous year or years, the amount exempt from income-tax under this sub-clause shall not exceed thirty thousand rupees, as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such previous year or years: Provided also that the Central Government may, having regard to the maximum amount which may for the time being be exempt under sub-clause (i), increase by notification in the Official Gazette, the limit of thirty thousand rupees, for all the three purposes for which it has been mentioned in the foregoing provisions of this sub-clause, up to such maximum amount: Provided also that in relation to an employee retiring on superannuation or otherwise before the 1st day of January, 1982, the proviso immediately preceding this proviso shall not apply and the remaining provisions of this sub-clause shall have effect as if for the words 'thirty thousand rupees', at the three places where they occur, the words 'twenty-five thousand five hundred rupees' had been substi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so to persons drawing pension during the current financial year at the same rates and subject to the same ceiling as the employees in actual service. Further, the standard deduction will be limited to Rs. 1,000 only in cases where the employee is provided with any motor car, motor cycle, scooter or other moped by his employer (for use otherwise than wholly and exclusively in the performance of his duties), or where he is allowed the use any one or more motor cars (otherwise than wholly and exclusively in the performance of his duties) out of a pool of motor cars owned or hired by the employer at any time during the financial year. In this connection it may be noted that the use of a motor car by the employee for the purposes of going from his residence to the place where the duties of his employment are to be performed, or from such place back to his residence, will not be regarded as use of the motor car in the performance of his duties. (vii) (a) Under section 80C of the Act, while computing the taxable income, the disbursing officers should allow a deduction of the whole of the first Rs. 6,000; 50 per cent. of the next Rs. 6,000 and 40 per cent. of the balance of the qualifyi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1961, any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whichever name called), in respect of residential accommodation occupied by the assessee, is exempt from income-tax to the extent (not exceeding Rs. 400 p.m.) as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. Rule 2A of the Income-tax Rules, 1962, prescribes the limits in respect of the amount which is not to be included in the total income of the assessee for the purpose of section 10(13A) of the Act. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee, subject to the limits laid down in rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy them selves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance from the taxable income of the emplo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bject to the following conditions:- (a) the assessee has not been in receipt of any house rent allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act; (b) he will be entitled to a deduction in respect of house rent paid by him in excess of 10 per cent of his total income, subject to a ceiling of 15 per cent thereof, or Rs. 400 per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG; (c) the assessee does not own any house property himself anywhere nor does his spouse, minor child, or the Hindu undivided family of which he is member, own any house property anywhere; and (d) the accommodation occupied by him for the purpose of his own residence is situated in any of the following places, namely: (i) Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Calcutta, Coimbatore, Delhi, Faridabad, Gwalior (Lashkar), Hyderabad, Indore, Jabalbur, Jaipur, Kanpur, Lucknow, Ludhiana City, Madurai, Nagpur, Patna, Pune (Poona), Srinagar, Surat, Vadodara (Baroda) or Varanasi (Banaras) or the urban agglomeration of each of such places; and (ii) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he ordinarily resides, shall not be regarded for purposes of that clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties. This may be kept in view while deciding whether any expenditure from the special allowance has been actually incurred, and if so, the extent to which it has been incurred to meet the expenses wholly, necessarily and exclusively in the performance of duties of an office or employment of profit. (xii) Section 80RRA provides that where the gross total income of an individual, who is a citizen of India, includes any remuneration received by him in foreign currency from any employer (i.e., a foreign employer of an Indian concern) for any services rendered by him outside India, 50 per cent. of such remuneration will be deducted in computing the taxable income. It also provides that where the assessee renders continuous service abroad for more than 36 months, the remuneration received by him for any period of service after the expiry of the said 36 months will not qualify for any deduction. In the case of employees of the Central Government or any State Government or a person who was, im....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be engaged in gainful employment, a deduction of Rs. 10,000 from the total income is allowable by the employer subject to the production of a certificate from the ITO in favour of the employer as laid down in this Ministry's Circular No. 272 dated 27-5-1980] printed at (1980) 124 ITR (St.) 3. The certificate once issued will continue to be in force till it is withdrawn by the ITO. (xiv) The total income computed in accordance with the provisions of the Act should be rounded off to the nearest multiple of ten rupees by ignoring the fraction which is less than five rupees and increasing the fraction which amounts to five rupees or more, to ten rupees. The net amount of tax deductible should be similarly rounded off to the nearest rupee. (xv) Section 201 provides- (1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejudice to any other consequences which he or it may incur, be deemed to be an assessee in default in respect of the tax: Provided that no penalty shall be ....