Sec 192 of Income Tax Act (Updated Information)

Section 192 of Income Tax Act talks about the tax deduction at the source of salary. The person who pays the salary is responsible to deduct TDS at the time of crediting the salary. The TDS is deducted based on the tax rates applicable to the estimated income of the assessee for a financial year. 

However, no TDS is deducted when the total salary falls under the exemption limit in a financial year.

What Is Sec 192 of Income Tax Act?

Section 192 states that any person/corporation/firm who pays salary to any of the assessees is liable to deduct tax at source before crediting the salary to the assessee. The TDS is calculated on the total financial income of the assessee. It is charged as per the tax slab forced for the concerned financial year.

The employer must determine the following at the start of the financial year:

The annual income of the employee and any other forms of income as claimed by the employee. The employer then must calculate the TDS, keeping in mind the deductions, reliefs, and tax payable by the employee. 

As a thumb rule, an amount equal to one-twelfth of the net tax liability must be deducted as TDS from the employee’s salary every month.

Sub-Sections of Section 192 and Their Meaning

Section 192(1A): 

If a non-monetary perquisite is paid by the employee, then the employee may pay tax on the whole or part of it, and without any prior deduction at the time of paying such perquisite. 

Section 192(1B): 

To pay tax under sub-section 1A, the TDS is charged at the average of the Income-tax calculated according to the tax slab applicable for the concerned financial year. The prerequisite is included under the head salary. 

Section 192(1C): 

For deducting TDS on the income under section 80-IAC (profits from a business) and section 17(salary, prerequisite, and profits instead of salary) of the IT Act, in the form of any advance payment or prerequisite in any relevant assessment year, starting from or after April 2021. The tax will be deducted or paid within 14 days:

1. When it has been more than 48 months from the end of the concerned assessment year, or
2. After the date of sale of specified security or equity by the assessee, or  
3. After the date of termination of service of the employee.

Whichever is the earliest. The tax rate is levied according to that financial year.

Sub-section 2: In the case where the assessee has been employed by several employers, he may choose the employer and furnish the details of his income. The employer will have to deduct the TDS from the head salary of the assessee as per the tax rates imposed in that year.

Form No. 12B is used to furnish details of income under section 192(2) for the year.

Subsection 2A: In case the assessee is liable to get relief under section 89, he has to submit/show the records suggesting such relief to the employer. The employer is then liable to deduct TDS after calculating the said relief from his total income.

Sub-section 2B: If the assessee receives income other than the salary, as an addition under any other head of income except loss within the same financial year, he is required to send the proof of such income, and the tax is deducted under any other provisions in a form. The employer is liable to calculate the taxes w.r.t. The income and other deductions into account to calculate tax and deduct it from thereon.

Sub-section 2C: The person paying any extra income/ perquisites/profits under the head salary is liable to give complete information of the additional payment, as suggested in section 56 of the IT Act.

Sub-section 2D: The assessee receiving the additional income in any form is required to furnish particulars of the same to the person liable to deduct tax.

Sub-section 3: The person/employer/corporation/firm/authority who pays the salary or additional income can increase or decrease or adjust the TDS amount, based on the increase or decrease or loss suggested or if any extra taxes paid by the assessee to balance out the equation.

Sub-section 4: In the case where there is a large sum due to be paid to the assessee by the employer, the TDS will be deducted as per the provisions of rule 10 of Part A of the 4th Schedule.

Sub-section 5: If the employer has made any contribution like interest approved by the superannuation fund which is paid to the employee, the TDS will be deducted by the trustee as per rule 6 of Part B of the 4th Schedule.

Sub-section 6: In case the salary is paid in a foreign currency, the amount will be converted into the Indian rupee to calculate the TDS on it as per Section 58, rule 26 and 115 of the IT Act.

Where Can I Show 192A Income in ITR?

Section 192 A was inserted after section 192 with effect from June 2015. It stated that in case of any accumulated payment due to an employee by a trustee or any authorized personnel under the schemes of Provident Funds, the TDS will be deducted

1. At 10% if the amount to be paid is more than INR 30,000.
2. No tax will be deducted if the amount to be paid is less than INR 30,000.
3. If the employee doesn’t furnish his PAN, the tax will be deducted at the maximum marginal rate on the amount being paid.

You can show the income under 192A under section 10(12) Recognised Provident Fund if you have withdrawn money from your EPF account. The exemption is allowed if the service period is for more than 5 years. 

What Is TDS on Salary U/S 192?

The TDS on salary under section 192 is calculated on the amount payable at the average rate of income tax. The rate is decided according to the rates in force for the financial year in which the TDS will be paid.

The TDS calculated also includes the health and education cess at 4%.

What Is the Difference between 192A and 192B?

Section 192 A refers to the TDS on premature withdrawal from the Provident Fund. There is no section named 192 A and 192 B. But, there is section 92 A and 92 B. These sections are used to differentiate the type of employee in Form 16 A while filing the ITR.

Section 92 A is for government employees, excluding union government employees. Section 92 B is for non-government employees and section 92 C is for union government employees.

Section 192 TDS rate for Tax Deduction at source for the Assessment Year 2023-24 can be accessed through this link: TDS Rates 

TDS Calculation Formula

Anybody can calculate the TDS on their salary by using this tool: TDS Calculator

As the TDS is calculated on the net tax payable amount, the formula to calculate the TDS is as follows:

Average income tax rate = income tax payable (as per the tax slab rates for the financial year) divided by Total estimated income for the financial year.

Conclusion

Section 192 of the Income Tax Act says that any person responsible for paying income to any person as salary is liable to deduct tax. This tax deducted before sending the salary is called TDS. The TDS is estimated as per the tax slab applicable for the financial year. There are different provisions to deduct TDS for the various sources of income. This article covers all of the six sub-sections under 192. 

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