955. Effect of insertion of sub-sections (2), (2A) and (2B) in section 192 by the Finance Act, 1987 – Relevant rules amended to enable tax deduction at source in situations envisaged in the said sub-sections
1. I am directed to say that under the provisions of section 192, tax was to be deducted at source by any person responsible for paying any income chargeable under the head “Salaries”. The rates of income-tax deduction during the year 1987-88 and the relevant rules applicable have already been circulated under Circular No. 489, dated 25-6-1987. The scope of deduction of tax at source from “salaries” was modified by the Finance Act, 1987, by the insertion of sub-sections (2), (2A) and (2B) in section 192. The salient features of these provisions are given below :
(a) The new sub-section (2) inserted in section 192 deals with situations where an individual is working under more than one employer or has changed from one employer to another. It provides for deduction of tax at source by such employer (as the taxpayer may choose) from the aggregate salary of the employee who is or has been in receipt of salary from more than one employer. The employee is now required to furnish to the present/chosen employer details of the income under the head “Salaries” due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer. The present employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from former or other employer).
(b) Under the existing provisions of section 89(1) it is the ITO who is empowered to give relief from the incidence of tax at a higher rate in a case where an employee receives salary in arrears or in advance. The Amending Act by inserting sub-section (2A) in section 192 provides that in respect of salary payment of employees of Government or public sector undertakings deduction of tax at source may be made after allowing relief under section 89(1).
(c) Presently the person making payment of salary cannot take into account other incomes of the employee for the purpose of deduction of tax at source. The Amending Act by inserting sub-section (2B) enables a taxpayer to furnish particulars of income other than salaries to his employer who shall deduct out of the salary payment, the tax due on the total income subject to the condition that the total amount of tax deducted shall not be less than the amount deductible from income from salaries only.
(d) These amendments will come into force with effect from 1st June, 1987. To meet the requirements of the new provisions, the Central Government have notified necessary amendments in the Income-tax Rules, 1962 vide Notification No. SO 963(E), dated 29-10-1987 [vide the Income-tax (Amendment) Rules, 1987].
Circular: No. 504 [F.No. 275/138/87-IT(B)], dated 8-2-1988.
