The Central Board of Direct Taxes (CBDT) issues a circular that explains the deduction of TDS from salaries. The board said that income tax must be deducted by the person responsible for paying the salary. The circular also said that tax must be deducted while paying the salary amount.
The circular essentially clarifies employers’ responsibilities regarding section 192 of the Income-Tax Act of 1961, that is, source tax deduction requirement for the financial year 2022–2023 from salary.
Section 192 also states that, the person in charge of paying salary is required to give the recipients a statement detailing any perquisites or profits given to them in lieu of salary as well as their worth.
The new circular was issued by CBDT last week. It also gives precise instructions about how the tax should be deducted. It states that the tax should be deducted at the average rate calculated, based on the rates in force for the current financial year, on the estimated salary income of the recipient for that year.
On September 13, 2022, CBDT issued another circular to address issues with Section 194R, which requires the person giving any benefit or perquisite to a resident to deduct tax at source at a rate of 10 per cent.
This deduction in the section 194R was added by the Finance Act 2022, which came into effect from July 1, 2022. The section mandates that the employer deduct tax at source equal to 10 per cent of the value or aggregate value of such benefit or perquisite. Though the benefit or perquisite may or may not be convertible into money, it should arise either from carrying out of business, or from exercising a profession, by such resident, the new guidelines said.
1 Comment
Rate of TDS on perquisites should be at average rate as per last three years ITR.