CBDT’s Circular No. 1 of 2019 dated 01.01.2019– Major/important Points to Remember
The CBDT has issued circular No. 1 on 01.01.2019 in respect of the Deduction of tax at Source from Salaries u/s 192 of the Income Tax Act, 1961. Some of the major / important points to remember are;
1. Standard Deduction u/s 16(ia).
Standard deduction of Rs.40,000/- has been introduced u/s 16(ia) in lieu of the the following
Note: Up to AY 2018-19, reimbursement of medical expenses up to Rs.15,000/- was not included in ‘Salary’ at all, since the same is not a perk as per section 17(2). Now the same needs to be included in ‘Salary’.
2. Surcharge on Income Tax:
Total Income >50 Lakhs but less than Rs. 1 Crore – @ 10%
Total Income > Rs. 1 Core – @ 15%
3. “Health and Education Cess” shall be levied at the rate of 4% of income tax including surcharge wherever applicable, No marginal relief shall be available in respect of such cess.
4. DDOs Shall obtain documents – section 192(2D) r.w.r.26C: DDOs shall obtain from the assessee evidence or proof or particular of claims such as House rent Allowance (where aggregate annual rent exceeds one lakh rupees); Leave Travel Concession or Assistance etc , Deduction of interest under the head ‘Income from house property’ and deduction under Chapter VI-A as per the prescribed form 12BB laid down by Rule 26C of the Rules.
6. For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the “Telegraphic transfer buying rate” of such currency as on the date on which tax is required to be deducted at source ( see Rule 26).
7. Compulsory Requirement to furnish PAN by employee (Section 206AA):
|a. Total Income is below the taxable limit||NIL|
|b. Total Income is above the taxable limit and the average rate of Tax is less than 20%||20%|
|c. Total Income is above the taxable limit and the average rate of Tax is more than 20%||At the average rate of Tax|
Note: Health and Education cess @ 4% is not to be deducted, in case the tax is deducted at 20% u/s 206AA of the Act
9. DDOs cannot consider any deduction u/s 80G, even if it is paid through the employer. Employees have to claim the same by themselves while filing the return of income