Section 192 of ITA, 1961 : Section 192: Salary

Explanation using Example

Example Scenario for Section 192 of The Income-tax Act, 1961:

Raj is an employee at a software company in India. His annual salary is ₹8,00,000. The financial year is 2022-2023, and the tax rates for that year are provided by the government. Raj's employer is responsible for deducting income tax from his salary each month.

As per Section 192(1), the employer calculates the average rate of income tax based on Raj's estimated income for the financial year, which includes his basic salary, house rent allowance, and other components of his salary. The employer then deducts the calculated tax amount from Raj's monthly salary before making the payment to him.

In November, Raj receives a bonus of ₹50,000, which is also subject to tax deduction under Section 192. The employer recalculates the average rate of income tax considering the bonus and adjusts the tax deduction in the subsequent months.

Raj also has a home loan and is paying interest on it, which is eligible for deduction under the head "Income from house property". As per Section 192(2B), Raj submits the details of his home loan interest to his employer. The employer takes this into account and reduces the tax deducted from Raj's salary accordingly.

If Raj switches jobs during the year and has income from multiple employers, he can furnish the details of his income and tax deductions to his current employer as per Section 192(2), who will then consider this information for TDS.

The employer provides Raj with a statement of perquisites and profits in lieu of salary as per Section 192(2C) at the end of the financial year, which Raj uses to file his income tax return.