Tds On Salary For Financial Year 2021 2022

Central Board of Direct Taxation (CBDT) has released Circular No. 04/2022 dated 15th March 2022, which explains provisions related to

Tax Deduction at Source on Salary under Section 192 of Income Tax Act, 1961 applicable for Financial Year 2021-2022. CBDT Circular also explains the rates of deduction of income-tax from the payment of income chargeable under the head Salaries during the financial year 2021-2022 and explains certain related provisions of the act and Income-tax Rules, 1961 and Income-tax Rules, 1962. The present article briefs the Tds On Salary For Financial Year 2021 2022.

Rate of Income Tax as per Finance Act, 2021

As per the finance act, 2021, income-tax is required to be deducted under Section 192 of the Income-tax Act from income chargeable under the head “Salaries” for the financial year 2021-2022 (The assessment Year 2022-2023) at the following rates:

Normal Rate of Tax

Tax computation for every individual other than the resident individual who is of the age of 60 years or more at any time during the financial year 2021-2022 is as follows:

Sl.No	Income	Tax Liability
1	Upto Rs.2,50,000	Nil
2	Between Rs.2,50,001 – Rs.5,00,000	5% of income in excess of Rs.2,50,000
3	Between Rs.5,00,001 – Rs.10,00,000	Rs.12,500 + 20% of income in excess of Rs.5,00,000
4	Above Rs.10,00,000	Rs.1,12,500 + 30% of income in excess of Rs.10,00,000

Tax liability for a resident individual who is of the age of 60 years or more but less than 80 years at any time during the financial year 2021-2022 is as follows:

Sl.No	Income	Tax Liability
1	Upto Rs.3,00,000	Nil
2	Between Rs.3,00,001 – Rs.5,00,000	5% of income above Rs.3,00,000
3	Between Rs.5,00,001 – 10,00,000	Rs.10,000 + 20% of income in excess of Rs.5,00,000
4	Above Rs 10,00,000	Rs.1,10,000 + 30% of income in excess of Rs.10,00,000

In the case of a resident individual who is of the age of 80 years or more at any time during the financial year 2021-2022 is as follows:

Sl.No	Income	Tax Liability
1	Upto Rs.5,00,000	Nil
2	Between Rs.5,00,001 – Rs.10,00,000	20% of income above Rs.5,00,000
3	Above Rs.10,00,000	Rs.1,00,000 + 30% of income in excess of Rs.10,00,000

Surcharge on Income-tax

Income tax surcharge is an additional charge payable on

income tax. It is an added tax on the taxpayers having a higher income inflow during a particular financial year.

Surcharge rates for different taxpayers for FY 2021-2022

There are different rates of surcharge applicable to different taxpayers under the Income Tax Act, 1961.

Taxpayer	Income limit	Surcharge Rate on the amount of income tax
Individual/HUF/AOP/BOI/ Artificial Judicial Person	Net income (excluding the income by way of dividend or income under the provisions of section 11A and section 112A) exceeds Rs.50 Lakhs but doesn’t exceed Rs. 1 Crore	10%
Individual/HUF/AOP/BOI/ Artificial Judicial Person	Net income (excluding the income by way of dividend or income under the provisions of section 11A and section 112A) exceeds Rs.1 Crore but doesn’t exceed Rs 2 crore	15%
Individual/HUF/AOP/BOI/ Artificial Judicial Person	Net income excluding the income by way of dividend or income under the provisions of section 11A and section 112A) exceeds Rs.2 Crore but doesn’t exceed Rs 5 crore	25%*
Individual/HUF/AOP/BOI/ Artificial Judicial Person	Net income (excluding the income by way of dividend or income under the provisions of section 11A and section 112A) exceeds Rs.5 Crore	37%*
Individual/HUF/AOP/BOI/ Artificial Judicial Person	Net income (including the income by way of dividend or income under the provisions of section 11A and section 112A) exceeding Rs.2 crore rupees

Health and Education Cess

Health and Education Cess will be levied at the rate of 4% of income tax including surcharge wherever applicable, No marginal relief will be available in respect of such cess.

The Concessional Rate of Tax under Section 115BAC

The Finance Act 2020 has inserted a new

section 115BAC of the Income Tax Act, wherein an individual or an undivided Hindu family (HUF) gets an option to choose between the actual tax rates and the new concessional tax rates without considering prescribed exemptions or deductions. Such a person is required to exercise the option in the prescribed manner along with the return of income to be furnished under section 139( J) of the Act for the previous year relevant to the assessment year. The concessional rate of tax provided under section 115BAC will be computed without specified exemptions or deductions, set off of a loss and additional depreciation. The concessional rates of tax under section 115BAC are tabulated here

Sl.No	Total Income	Rate of Tax
1	Upto Rs.250000	Nil
2	From Rs. 250001 to Rs.500000	5%
3	From Rs. 500001 to Rs.750000	10%
4	From Rs. 750001 to Rs.1000000	15%
5	From Rs. 1000001 to Rs.1250000	20%
6	From Rs. 1250001 to Rs.1500000	25%
7	Above Rs.1500000	30%

The concessional rates of tax provided under section 115 BAC are subject to the condition that the total income of the individual or HUF shall be computed:

Without any exemption or deduction specified under clause (i) of sub-section (2) of section 115BA
Without set off of any loss specified in clause (ii} of sub-section (2) of section 11 5BAC
Without any exemption or deduction for allowance s or perquisite, by whatever name called provided under any other law for the time being in force, as specified in the clause (iv) of sub-section (2) of section JISBAC

The official notification about the TDS on Salary for Financial Year 2021-2022 is as follows:

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Frequently Asked Questions

Common questions about TDS on Salary.

The income tax slabs for the financial year 2021-2022 have been revised in the Finance Act, 2021. For individuals below 60 years of age, there is no tax up to an income of Rs. 2.5 lakh. Tax rates of 5%, 20%, and 30% apply for different income brackets above Rs. 2.5 lakh. For senior citizens aged 60 years and above, the basic exemption limit is higher at Rs. 3 lakh or Rs. 5 lakh, depending on their age.

The surcharge rates for the financial year 2021-2022 vary based on the individual's taxable income. A surcharge of 10% applies if the income exceeds Rs. 50 lakh but is below Rs. 1 crore. For incomes between Rs. 1 crore and Rs. 2 crore, the surcharge is 15%. For incomes between Rs. 2 crore and Rs. 5 crore, the surcharge is 25%. For incomes above Rs. 5 crore, the surcharge is 37%.

The Finance Act 2020 introduced a new Section 115BAC, which provides an optional concessional tax regime for individuals and Hindu Undivided Families (HUFs). Under this regime, taxpayers can opt for lower tax rates without claiming specified exemptions or deductions. The tax rates range from 5% to 30%, depending on the income levels.

No, there is no change in the Health and Education Cess for the financial year 2021-2022. It will continue to be levied at the rate of 4% on the income tax, including surcharge (wherever applicable).

An individual or HUF willing to opt for the concessional tax regime under Section 115BAC must exercise the option in the prescribed manner along with the return of income to be filed under Section 139(1) of the Income Tax Act for the relevant assessment year.

No, an individual opting for the concessional tax regime under Section 115BAC cannot claim any exemption or deduction specified under the Income Tax Act. Additionally, they cannot claim any deduction or exemption for allowances or perquisites provided under any other law.

No, the Finance Act, 2021 has clarified that no marginal relief will be available in respect of the surcharge on income tax.

For resident individuals aged 80 years or above during the financial year 2021-2022, the basic exemption limit is Rs. 5 lakh. There is no tax liability up to an income of Rs. 5 lakh for this category of taxpayers.

Yes, the TDS rates on salary have been revised in accordance with the new income tax slabs and rates for the financial year 2021-2022. Employers must deduct TDS from employees' salaries based on the updated rates and slabs.

No, the concessional tax regime under Section 115BAC is optional. Individuals and HUFs can choose to either opt for the concessional tax regime or continue with the regular tax regime, depending on their specific circumstances and tax implications.