DEDUCTION OF TAX AT SOURCE — INCOME–TAX DEDUCTION FROM SALARIES

Clarification regarding deduction of tax at source from payments of second installment of arrears to Government employees

Circular No-6/2009
F.No.275/192/2008-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

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New Delhi, dated the 31st August, 2009.

Subject :- Clarification regarding deduction of tax at source from payments of second installment of arrears to Government employees on account of implementation of Sixth Central Pay Commission’s recommendations matter regarding.

Under the provisions of Section 192 of the Income-tax Act, an employer is required to deduct tax at source from any payments in the nature of salary, which interalia also includes any arrear payments. The Implementation Cell of the Department of Expenditure, Govt of India, vide its Office Order dated 30th Aug’08 had stated that 40% of the aggregate arrear (first installment of arrears) would be payable during FY 2008-09. In Circular No. 09/2008 dated 29th Sept.2008 issued from this office it was stated that during 2008-09 the tax has to be deducted at source on this 40% of aggregate arrear during FY 2008-09.The OM,F.No-1//1/2008-IC, of the Implementation Cell of the Department of Expenditure, Govt of India, vide its order dated 25th August,2009 has stated that the remaining 60% of the aggregate arrear (second installment of arrears) would be paid to the concerned Government servants during FY 2009-10. Such arrangements could be followed by State Governments also.
In this regard, all the DDOs and PAOs as the case may be, in the Central/State Government and various organizations under them are advised to compute the correct tax liability of every employee on second installment of arrears drawn by him and immediately recover the full tax liability along with education cess thereon at the rates in force. The deduction of tax at source on such arrear payment should not be deferred in any circumstance. They should further ensure that the tax so recovered is paid to the account of Central Government account immediately as per the Income Tax Rules, 1962. The DDOs/PAOs are further advised that they should ensure that the PAN details of the deductees (recipient of arrears) are correctly quoted in the relevant quarterly e-TDS returns filed by them so that the Government Servants get proper credit of their tax deducted in their respective income tax returns.
DDOs/PAOs who fail to comply with the provisions of Section 192 of the Income-tax Act, 1961 would be liable to pay interest under section 201(1)/(1A) of Income Tax Act along with other penal consequences.

( Ansuman Pattnaik )

Director ( Budget )

Income of NPS Trust to be exempt from income tax; also from DDT and STT

Shri Pranab Mukherjee, Minister of Finance in his Budget Speech informed the Lok Sabha today that he proposes to exempt the income of New Pension System (NPS) Trust from the income tax and any dividend paid to this Trust from Dividend Distribution Tax (DDT). Similarly, all purchases sales of equity shares and derivatives by the NPS Trust will also be exempt from this Securities Transaction Tax (STT), he added.

The Finance Minister further proposed to enable self employed persons to participate in the NPS and avail of the tax benefits available thereto. Underlining that NPS will continue to be subjected to the Exempt-Exempt-Taxed (EET) method of tax treatment of savings, Shri Mukherjee said that it is proposed to provide necessary fiscal support to the NPS for the establishment this much needed social security system.

“The New Pension System is an important milestone in the development of a sustainable, efficient, voluntary and defined pension system in India”, Shri Mukherjee emphasized.

UTN not mendatory for filing it returns

PIB
The Central Board of Direct Taxes have further decided that the Notification No. 31 of 2009 dated 25.3.2009 amending or substituting Rules 30, 31, 31A and 31AA of the Income Tax Rules, 1962 shall be kept in abeyance for the time being.

Taxpayers filing their income tax returns for assessment year (AY) 2009-10, or any other earlier AY, may continue to file their returns without mentioning the Unique Transaction Number (UTN) as required under the said Notification. The filing of such returns shall be treated as valid and in compliance to the requirements under section 139 of the Income Tax Act, 1961.

Further, the date from which the Notification No. 31 / 2009 shall become applicable on tax deducted at source (TDS) or tax collected at source (TCS) and deposited during the current financial year shall be notified by the Central Board of Direct Taxes subsequently.

All deductors / collectors of TDS / TCS may continue to deposit their TDS / TCS and file their quarterly TDS / TCS returns as per procedure existing prior to issuance of Notification No.31 / 2009 dated 25.3.2009.

BSC/BY/GN-154/09

New ITR 1 form notified for AY 2009-10

click here for download

Income Tax rate AY 2008-09 and AY 2009-10

For detail Please see Link