Section 192 of the Income-tax Act mandates tax deduction at source on salary income. Proposed amendments under Clause 50 of the Finance Bill 2024 aim to expand sub-section (2B) of Section 192. This change will enable salaried employees to include TCS and all TDS deductions from other incomes for calculating tax deductions on their salaries. The amendment seeks to streamline compliance by avoiding the need for employees to claim refunds separately, thereby addressing cash flow challenges and simplifying tax processes. The effective date for these amendments is set for October 1, 2024.
Budget 2024: Ease in claiming credit for TCS collected/TDS deducted by salaried employees
Section 192 of the Act provides for deduction of tax at source on salary income.
Further, sub-section (2B) of section 192 of the Act provides for consideration of income under any other head and tax, if any, deducted thereon to be taken into account for the purposes of making the deduction under sub- section (1) of the aforesaid section, subject to certain conditions.
2. Representations have been received that credit of TCS paid should be allowed while computing the amount of tax to be deducted on salary income of the employees as this will help in avoiding cash flow issues for employees. Similarly, all TDS may be taken into account for the purpose of deduction of tax from the salary income of employees. Moreover when the TCS etc is not taken into account, the same is required to be claimed as a refund by the employee which adds to the compliance process.
3. In order to ease compliance, it is proposed that sub-section (2B) of section 192 may be amended to expand the scope of the said sub-section to include any tax deducted or collected under the provisions of Chapter XVII-B or Chapter XVII-BB, as the case may be, to be taken into account for the purposes of making the deduction under sub-section (1) of section 192.
4. The amendments will take effect from the 1st day of October, 2024.
Extract of Clause 50 of Finance Bill 2024
Clause 50 of the Bill seeks to amend section 192 of the Income-tax Act relating to salary. Sub-section (2B) of the said section empowers the Board to provide by rules the particulars which is to be send by the assessee to the person responsible for making the payment referred to in sub-section (1) of section 192 of the said Act.
Amendment of section 192.
In section 192 of the Income-tax Act, with effect from the 1st day of October, 2024,—
(I) in sub-section (1C), for the words, brackets and figures “clause (vi) of sub-section (2)”, the words, brackets and figures “sub-clause (vi) of clause (2)” shall be substituted;
(II) in sub-section (2A), the words, brackets and figure “sub-section (1) of” shall be omitted;
(III) for sub-section (2B), the following sub-section shall be substituted, namely:––
‘(2B) Where an assessee who receives any income chargeable under the head “Salaries” has, in addition, —
(i) any income chargeable under any other head of income (not being a loss under any such head other than the loss under the head “Income from house property”); or
(ii) any tax deducted or collected under the provisions of Part B or Part BB of this Chapter, as the case may be,
for the same financial year, he may send to the person responsible for making the payment referred to in subsection (1), the particulars of—
(iii) such other income;
(a) any tax deducted or collected under any other provision of Part B or Part BB of this Chapter, as the case may be; and
(b) the loss, if any, under the head “Income from house property”,
in such form and verified in such manner as may be prescribed, and thereupon the person responsible as aforesaid shall take into account the particulars referred to in clauses (a), (b) and (c) for the purposes of making the deduction under sub- section (1):
Provided that this sub-section shall not in any case have the effect of reducing the tax deductible except where the loss under the head “Income from house property” has been taken into account, from income under the head “Salaries” below the amount that would be so deductible if the other income and the tax deducted in accordance with other provisions of Part B and collected in accordance with the provisions of Part BB, of this Chapter, had not been taken into account.’.
