Clarification regarding deduction of TDS under section 192 read with sub-section (IA) of section 115BAC of the Income-tax Act, 1961 - reg.
Circular No. 04 of2023
F. No.370142/06/2023-TPL
Government
of India
Ministry of
Finance
Department of Revenue Central Board of DirectTaxes (TPL Division)
Dated: 5th
April 2023
Sub:
Clarification regarding deduction of TDS under section 192 read with sub-section
(IA) of section 115BAC of the Income-tax Act, 1961 - reg.
Vide Finance Act, 2023, sub-section
(IA) has been inserted in section 115BAC of the Income-tax Act, 1961 ( the Act)
to provide for a new tax regime with effect from the assessment year beginning
on or after the 1st day of April 2024. This regime applies to an individual or
Hindu undivided family or association of persons [other than a cooperative
society] or body of individuals, whether incorporated or not, or an artificial judicial
person. Under this new regime, the income tax in respect of the total income of
the person shall be computed at the rates provided in sub-section (IA) of
section 115BAC, subject to certain conditions, including the condition that the
person does not avail of specified exemptions and deductions.
2.
The above-mentioned new tax regime
is the default tax regime applicable to all persons mentioned above. However,
under sub-section (6) of section 115BAC of the Act, a person may exercise an
option to opt out of this tax regime. A person not having income from business
or profession can exercise this option every year.
3.
Representations have been received
expressing concerns regarding tax to be deducted at source (TDS) on salary
income of a person under section 192 of the Act as the deductor, being an
employer, would not know if the person, being an employee, would opt out from
taxation under sub-section (I A) of section 1 15BAC of the Act or not.
4.
In order to avoid genuine hardship
in such cases, the Board, in the exercise of powers conferred under section 1
19 of the Act, hereby directs that a deductor, being an employer, shall seek
information from each of its employees having income under section 192 of the
Act regarding their intended tax regime and each such employee shall intimate
the same to the deductor, being his employer, regarding his intended tax regime
for each year and upon intimation, the deductor shall compute his total income,
and deduct tax at source thereon according to the option exercised.
5.
If intimation is not made by the
employee, it shall be presumed that the employee continues to be in the default
tax regime and has not exercised the option to opt out of the new tax regime.
Accordingly, in such a case, the employer shall deduct tax at source, on income
under section 192 of the Act, in accordance with the rates provided under
sub-section (IA) of section 115BAC of the Act.
6.
It is also clarified that the
intimation would not amount to exercising option in terms of sub-section (6) of
section 115BAC of the Act and the person shall be required to do so separately
in accordance with the provisions of the sub-section.
7.
This circular is in supersession of
Circular No. CI of 2020 dated 13.04.2020 and shall be applicable for TDS during
the financial year 2023-24 and subsequent years.
VipulAgarwal
Director(TPL-1)
Copy to the:
1.
PS/ OSD to FM/ PS/OSD to Most).
2.
PS to the Finance Secretary.
3.
Chairman and Members, CBDT.
4.
Joint Secretaries/ CsIT/ Directors/
Deputy Secretaries/ Under Secretaries, CBDT.
5.
C&AG of India (30 copies).
6.
JS & Legal Adviser, Ministry of
Law & Justice. New Delhi.
7.
Institute of Chartered Accountants
of India.
8.
CIT (M&TP). Official
Spokesperson of CBDT.
9.
Principal DGIT (Systems) for
uploading on departmental website.
Vipul
Agarwal
Director(TPL-I)
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