TDS on Salary for Financial Year 2021-2022

TDS on Salary for Financial Year 2021-2022

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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:

TDS on Salary for Financial Year 2021-2022

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