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December 5, 2020

Know Rules to Deduct TDS from Salaries for FY 2020-21

by CA Shivam Jaiswal in Income Tax

Know Rules to Deduct TDS from Salaries for FY 2020-21

Reference is invited to Circular No. 4/2020 dated 16.01.2020 whereby the rates of deduction of income-tax  from the payment of income under the head “Salaries” under Section 192 of the Income-tax Act,1961 (hereinafter ‘the Act’), during the financial year 2019-20, were intimated. The present Circular contains the rates of deduction of income-tax  from the payment of income chargeable under the head “Salaries’ during the financial  year 2020-21 and explain certain related provision of the Act and Income-tax Rules, 1962 (hereinafter the Rules).

Rate of Income-tax as per finance Act. 2020

As per the Finance Act, 2020, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head “Salaries” for the financial year 2020-21 (i.e, Assessment Year 2021-22)- at the Following tales:

2.1. Rate of Tax

A. Normal Rate of tax

Sr. no.Total IncomeRate of tax
1.Where the Total income does not Exceed Rs.  2,50,000/-Nil
2.Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-5 per cent of the amount by which the total income exceeds Rs. 2,50,000/-
3.Where the total Income exceeds Rs. 5,00,000/- but does not exceed Rs, 10,00,000/-Rs. 12,500/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4.Where the total income exceeds Rs.10,00,000/-Rs. 1,12,500/- plus 30 per cent of the amount by which the total income exceed Rs. 10,00,000/-

B. Rate of tax for every individual, being a resident in India, who is the age of sixty years or more but less than eighty year at any time during the financial years:

Sr. no.Total IncomeRate of tax
1.Where the Total income does not Exceed Rs.  3,00,000/-Nil
2.Where the total income exceeds Rs. 3,00,000/-but does not exceed  Rs. 5,00,000/-5 per cent of the amount by which the total income exceeds Rs. 3,00,000/-
3.Where the total Income exceeds Rs. 5,00,000/- but does not exceed Rs, 10,00,000/-Rs. 10,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4.Where the total income exceeds Rs. 10,00,000/-Rs. 1,10,000/- plus 30 per cent of the amount by which the total income exceed Rs. 10,00,000/-

C. In case of every Individual, who is the age of eighty years or more at any time during the financial year:

Sr. no.Total IncomeRate of tax
1.Where the Total income does not Exceed Rs.  5,00,000/-Nil
2.Where the total income exceeds Rs. 5,00,000/-but does not exceed  Rs. 10,00,000/-20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4.Where the total income exceeds Rs. 10,00,000/-Rs. 1,00,000/- plus 30 per cent of the amount by which the total income exceed Rs. 10,00,000/-

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