Income Tax Department, India: e-Filing, Tax Returns, Refunds, & Compliance

Income-Tax Deduction from Salaries in India (Financial Year 2021-22)

Subject: Circular No. 04/2022 issued by the Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India, dated March 15, 2022.

Purpose: This circular provides comprehensive guidelines on Income-Tax Deduction from Salaries (TDS) during the financial year 2021-22 under Section 192 of the Income-Tax Act, 1961.

Key Themes and Important Ideas/Facts:

1. Tax Rate Slabs and Surcharge:

The circular outlines different tax rate slabs based on income levels and age:

Individuals below 60 years: Progressive rates ranging from nil for income up to Rs. 2,50,000 to 30% for income exceeding Rs. 10,00,000.
Individuals between 60 and 80 years: Similar slabs but with slightly lower tax rates.
Individuals above 80 years: Lowest tax rates among the three age groups.
Surcharge: Applicable on income tax for individuals with income exceeding Rs. 50,00,000. Rates range from 10% to 37% depending on the income level.
2. New Tax Regime (Section 115BAC):

The circular explains the option for individuals and Hindu Undivided Families (HUFs) to choose a new tax regime with lower tax rates but with specific conditions.
This regime requires foregoing various exemptions and deductions, including those under Chapter VI-A.
"Further, where the option is exercised under clause (i) of sub-section (5), in the event of failure to satisfy the conditions contained in sub-section (2), it shall become invalid for subsequent assessment years also and other provisions of the Act shall apply for those years accordingly."
3. Valuation of Perquisites:

The circular elaborates on the rules for valuing perquisites provided to employees, including rent-free accommodation, car usage, interest-free loans, and other benefits.
"The taxable value of perquisites can be determined on the basis of specific rules for valuation of certain perquisites as laid down in Rule 3 of the Income-tax Rules."
4. Deductions under Chapter VI-A:

Detailed information on various deductions available to employees under Chapter VI-A is presented, covering sections like 80C, 80D, 80E, 80EEA, 80EEB, and 80G.
This section covers deductions for investments, insurance premiums, medical expenses, home loan interest, electric vehicle loan interest, and donations.
5. TDS Procedures for Government and Non-Government Deductors:

The circular provides specific instructions for both Government and Non-Government deductors regarding the procedures for deducting and depositing TDS, including the use of Challans and Book Entry.
"In case of deduction by deductor other than an Office of Government: Tax deducted in March - 30 April next financial year"
6. TDS on Pension Income of Senior Citizens (Section 194P):

The circular outlines the procedures for TDS on pension income received by specified senior citizens through specified banks.
7. Quarterly TDS Statements:

Detailed guidelines are provided for preparing and submitting quarterly TDS statements (Form 24G for Government deductors and Form 27A for Non-Government deductors) using electronic filing procedures through TIN-Facilitation Centres (TIN-FCs) or the TIN website.
8. Other Relevant Annexures:

The circular includes several annexures with important information, such as illustrations for calculating income tax and TDS, FAQs on the procedures for filing Form 24G, clarification on the "Person Responsible for filing Form 24G in case of State Govt. Departments," and details on the new pension system for Central Government employees.
Overall: Circular No. 04/2022 serves as a comprehensive guide for employers and employees in India regarding the deduction of income tax from salaries during the financial year 2021-22. It covers all aspects of TDS on salaries, including tax rate slabs, deductions, procedures for depositing TDS, and filing requirements for quarterly statements.

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