Opinion Of Eminent Legal Luminaries On Controversial Issues

How To Calculate Tax From Salary Income?

QUERY: X is in employment of of A Ltd. drawing salary of Rs. 4,20,540/-. During the year, he contributes Rs. 30,000/- to PPF. He has disclosed the following additional information to the employer:-


Professional income from Consultancy (Net) 50,000

TDS u/s. 194J on consulting income 20,000

Losses under the head House Property (1,40,000)

Loss under the head Short Term
Capital Gain (5,000)

Donation covered u/s. 80G 50,000

What will be the withholding tax liability and how will it be calculated by the employer?
ANSWER: – As per S. 192(2B), where an employee having any income chargeable under the head “Salaries” has in addition, any income chargeable under any other head of income for the financial year, he may send to his employer, a statement of particulars of such other income and the tax, if any, deducted thereon and also the loss, if any, under the head “Income from house property” [vide Rule 26B(1)]. This statement is to be accompanied by verification as prescribed in Rule 26B(2), when such statement of particulars are sent by the employee, the employer shall take into account such income and tax for TDS.

– It has been specifically provided in the proviso to S. 192(2B) that this sub-section shall not in any case have the effect of reducing the TDS, except where the loss under the head “Income from house property” has been taken into account, from the income under the head “salaries” below the amount that would be so deductible, if other income and TDS thereon had not been taken into account.

– Thus, while calculating total income, A Ltd would take into account Rs. 30,000/- contributed to PPF under S. 80C, however, donation for charitable purpose under S. 80G would not be taken as per CBDT cir. No. 1 dt. 11/01/10 for financial year 2009/10. TDS after reducing loss from house property, without taking other income and tax would be Rs. 10,354/- i.e.

On first Rs. 1,60,000/- Nil

On Rs. 1,60,000/- to Rs. 3,00,000/- 10%

On Rs. 3,00,000/- to Rs. 5,00,000/- 20%

On above Rs. 5,00,000/- 30%

So tax liability of employer would be Rs. 10,354/- as under:

Normal (Rs.) u/s. 192(2B)(Rs.)

Salary 4,20,540 4,20,540

Other income – Professional 70,000

_______ ________

4,90,540 4.20.540
Loss under House Property 1,40,000 1,40,000

3,50,540 2,80,540
Less: PPF u/s. 80C 30,000 30,000
3,20,540 2,50,540
Tax payable 19,681 10,354
Less: Tax deducted 20,000 —

Refund 319 —

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