Q How is the quantum of tax to be deducted on salary determined? Also clarify on TDS applicable to property let out?
Parikshit Via e-mail A tax will by antotoSection only According 192, have be deducted from salary employer while paying salary. The deduction has to be at the rates applicable to an individual. The benefit of deduction under Chapter VI-A may be allowed over and above the exemptions under Section 10 and deduction for professional tax while deducting tax. The Central Board of Direct Taxes (CBDT) every year issues a circular on TDS on salaries where it clarifies the deduction under chapter VI-A which can be reckoned by the employer.
The employer can also take the cognisance of a loss incurred under the head “Income from House Property”. No cognisance can be taken of loss incurred under any other head of income.
The employer will also have to take into account any other income under the head salaries or other heads. The employer may also in such cases take cognisance of the tax already deducted on such income while deducting tax at source. However, this should not have the effect of reducing the tax deductible under the head “salaries” except where there is a loss under the head income from house property.
Tax is normally deducted in 12 equal instalments. The employer has to issue a Form 16 and also Form 12BA (for salary exceeding Rs 1,50,000) which are statements showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary along with its value.
Section 194 (I) deals with the tax deduction requirement on rent. Under this section, any person other than an individual or Hindu Undivided Family (HUF) subject to tax audit under section 44AB in the immediate previous year by reason of exceeding the specified turnover/sales/gross receipts is to deduct tax at source on the payment of rent.
The deduction has to be made at the time of payment or credit whichever is earlier, if the rent consideration is Rs 1,20,000 during the financial year.
Under this section tax is to be deducted at the following rates:
If the payee is an Individual or HUF , the deduction will be 15 per cent and if the payee is any other person, TDS rate will be 20 per cent.
(Kamal Rathi is a chartered accountant, representing Rathi & Malani, a Hyderabad-based accounting firm. Readers can mail their queries on income-tax tokamalrathi.ca@gmail.com)