GOVERNMENT OF INDIA MINISTRY OF FINANCE …

1 GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) CENTRAL BOARD OF DIRECT TAXES deduction OF TAX AT SOURCE- INCOME-TAX deduction FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 DURING THE FINANCIAL YEAR 2016-17 CIRCULAR NO. 01/2017 NEW DELHI, the 2nd January, 2017 INDEX Para No. Page No. 1 GENERAL 1 2 RATES OF INCOME-TAX AS PER FINANCE ACT, 2013 1 Rates of tax 1 Surcharge on Income tax 2 Education Cess on Income tax 2 Secondary and Higher Education Cess on Income-tax 2 3 BROAD SCHEME OF TAX deduction AT SOURCE FROM SALARIES . 2 Method of Tax Calculation 2 Payment of Tax on Non monetary Perquisites by Employer 2 Computation of Average Income Tax 2 Salary From More Than One Employer 3 Relief When Salary Paid in Arrear or Advance 3 Information regarding Income under any Other head 3 Computation of Income under the head Income from house property 3 Adjustment for Excess or Shortfall of deduction 4 Salary Paid in Foreign Currency 4 4 PERSONS RESPONSIBLE FOR deduction TAX AND THEIR DUTIES 4 Stipulation of section 204 of the Act 4 Tax determined to be deducted from Salary u/s 192 4 deduction of Tax at Lower Rate 5 Deposit of Tax

2 Deducted 5 Due dates for payment of TDS 5 Mode of payment of TDS 5 Interest, Fee, Penalty & Prosecution for Failure to Deposit Tax Deducted: 6 Furnishing of Certificate for Tax Deducted (Section 203) 6 Mandatory Quoting of PAN and TAN 8 Compulsory Requirement to furnish PAN by employee (Section 206AA) 8 Statement of deduction of tax under of section 200(3) [Quarterly Statement of TDS] 9 TDS on Income from Pension 10 Para No. Page No. Matters pertaining to the TDS made in case of Non Resident 10 5 COMPUTATION OF INCOME UNDER THE HEAD SALARIES 10 Income chargeable under the head Salaries : 10 Definition of Salary , perquisite and profit in lieu of salary (Section 17) 10 Income not included under the Head Salaries (Exemptions) 16 Deductions u/s 16 of the Act from the Income from Salaries 19 Deductions under Chapter VI-A of the Act 19 6 REBATE OF FOR INDIVIDUAL HAVING TOTAL INCOME UPTO RS.

3 5 LAKHS (SECTION 87A) 27 7 TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED SUPERANNUATION FUND 27 8 DDOS TO SATISFY THEMSELVES OF THE GENUINENESS OF CLAIM 28 9 CALCULATION OF INCOME-TAX TO BE DEDUCTED 28 10 MISCELLANEOUS 28 ANNEXURES Annexure No Descriptions Page No. I SOME ILLUSTRATIONS 31-41 II FORM NO 12BA 42-43 II a FORM NO 12BB 44-45 III REVISED PROCEDURE FOR FURNISHING QTLY E-TDS/TCS STATEMENT BY DEDUCTORS/COLLECTORS 46 IV THE PROCEDURE OF FURNISHING FORM 24G 47-52 V PERSON RESPONSIBLE FOR FILLING FORM 24G IN CASE OF STATE GOVT DEPARTMENTS/CENTRAL GOVT DEPARTMENTS 53 VI PROCEDURE OF PREPARATION OF QUARTERLY STATEMENT OF deduction OF TAX u/s 200 (3) 54-55 VII DEPTT.

4 OF ECO. AFFAIRS NOTIFICATION DATED 56 VIII BOARD S NOTIFICATION DATED 57 IX BOARD S NOTIFICATION DATED 58 X FORM NO. 10 BA 59 CIRCULAR NO : 01/2017 275/192/2016-IT(B) GOVERNMENT of INDIA MINISTRY of FINANCE Department of Revenue Central Board of Direct Taxes ** North Block, New Delhi Dated the 2nd January, 2017 SUBJECT: INCOME-TAX deduction FROM SALARIES DURING THE FINANCIAL YEAR 2016-17 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961. ** Reference is invited to Circular dated whereby the rates of deduction of income-tax from the payment of income under the head "Salaries" under Section 192 of the Income-tax Act, 1961 (hereinafter the Act ), during the financial year 2015-16, were intimated.

5 The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2016-17 and explains certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- 2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2016: As per the FINANCE Act, 2016, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head "Salaries" for the financial year 2016-17 ( Assessment Year 2017-18) at the following rates: Rates of tax A.

6 Normal Rates of tax: Sl No Total Income Rate of tax 1 Where the total income does not exceed Rs. 2,50,000/-. Nil 2 Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. 10 per cent of the amount by which the total income exceeds Rs. 2,50,000/- 3 Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-. 4 Where the total income exceeds Rs. 10,00,000/-. Rs. 1,25,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/- B.

7 Rates of tax for every individual, resident in INDIA , who is of the age of sixty years or more but less than eighty years at any time during the financial year: Sl No Total Income Rate of tax 1 Where the total income does not exceed Rs. 3,00,000/- Nil 2 Where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000/- 10 per cent of the amount by which the total income exceeds Rs. 3,00,000/- 3 Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- Rs. 20,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-. 4 Where the total income exceeds Rs.

8 10,00,000/- Rs. 1,20,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/- 2 C. In case of every individual being a resident in INDIA , who is of the age of eighty years or more at any time during the financial year: Sl No Total Income Rate of tax 1 Where the total income does not exceed Rs. 5,00,000/- Nil 2 Where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000/- 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/- 4 Where the total income exceeds Rs. 10,00,000/- Rs. 1,00,000/- plus 30 per cent of the amount by which the total income exceeds Rs.

9 10,00,000/- Surcharge on Income tax: The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 of the Income-tax Act, shall, in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, having a total income exceeding one crore rupees, be increased by a surcharge for the purpose of the Union calculated at the rate of fifteen per cent of such income-tax.

10 Provided that in the case of persons mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. Education Cess on Income tax: The amount of income-tax including the surcharge if any, shall be increased by Education Cess on Income Tax at the rate of two percent of the income-tax. Secondary and Higher Education Cess on Income-tax: An additional education cess is chargeable at the rate of one percent of income-tax including the surcharge if any, but not including the Education Cess on income tax as in 3.