Section 192

2.1   Introduction :

Section 192 of the I.T.Act, 1961 provides that every person responsible for paying any income which is chargeable under the head ‘salary’, shall deduct income tax on the estimated income of the assessee under the head salaries. The tax is required to be calculated at the average rate of income tax as computed on the basis of the rates in force. The deduction is to be made at the time of the actual payment. However, no tax is required to be deducted at source, unless the estimated salary income exceeds the maximum amount not chargeable to tax applicable in case of an individual during the relevant financial year. The tax once deducted is required to be deposited in government account and a certificate of deduction of tax at source (also referred as Form No.16) is to be issued to the employee. This certificate is to be furnished by the employee with his income tax return after which he gets the credit of the TDS in his personal income tax assessment. Finally, the employer/deductor is required to prepare and file quarterly statements in Form No.24Q with the Income-tax Department.

2.2  Who is to deduct tax

The statute requires deduction of tax at source from the income under the head salary. As such the existence of “employer-employee” relationship is the “sine-qua-non” for taxing a particular receipt under the head salaries. Such a relationship is said to exist when the employee not only works under the direct control and supervision of his employer but also is subject to the right of the employer to control the manner in which he carries out the instructions. Thus the law essentially requires the deduction of tax when;

(a)       Payment is made by the employer to the employee.

(b)       The payment is in the nature of salary and

(c)       The income under the head salaries is above the maximum amount not chargeable to tax.

For the various categories of employers, the persons responsible for making payment under the head salaries and for deduction of tax are as below:

In the case of,

1.        Central/State Government/P.S.U   -   The designated

drawing & disbursing officers.

2.        Private & Public Companies         -    The company

itself as also the principal officer thereof.

3.        Firm                                                -   The managing

partners/partner of the firm.

4.        HUF                                                -   Karta of the HUF

5.       Proprietorship concern                 -     The proprietor of

the said concern.

6.        1Trusts                                            -     Managing trustees thereof.

In case of a company, it is to be noted, that though the company may designate an officer /employee to make payments on the behalf

 

1As per sub section 4 of Sec 192, the trustees of a recognised provident fund are required to deduct tax at source at the time of making payment of the accumulated balance due to an employee. The TDS is to be made in a case where sub-rule 9 of part - A of Fourth Schedule of the Act applies and the deduction is to be made as per rule 10 of part A of Fourth Schedule.

of the company, still the statutory responsibility to deduct tax at source rests with the company and its principal officer thereof. In respect of companies, the I.T.Act Section 2(35) has specified principal officer to mean:

(a)       Secretary, Treasurer, Manager or agent of the company.

(b)      Any person connected with the management or administration of the company or upon whom the assessing officer has served the notice of his intention to treat him as a principal officer.