Statutory provisions of section 192(1) on deducting average rate of Income Tax every month from payment of salaries to employees

Statutory provisions of section 192(1) on deducting average rate of Income Tax every month from payment of salaries to employees - Intimation-reg

DTOS/STOs in the Directorate of Treasures & Accounts, PAOS/APAOS in the Directorate of Works Accounts in Government of Andhra Pradesh deduct and remit Income Tax (TDS) on salaries paid to their employees (Section 192) and also on payments made to contractors (Section 194C), etc.

2. From the month-wise consolidated Income Tax TDS remittance details by these deductors in Andhra Pradesh in the FY: 2021-22, it has been observed that TDS is being deducted and remitted in the fag end of the financial year i.e., during the months of January, 2022 to March, 2022 (last quarter of the FY) which is not in line with section 192 of the Income Tax Act. Section 192 of the I.T. Act reads as:

"As per Section 192, Sub-section (1) of the Income Tax Act, any person responsible for paying any income chargeable under the head "Salaries" shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year"

3. Average rate of TDS (Total tax on estimated income for year / No.of months) needs to be deducted every month mandatorily from salaries of employees. When the average rate of income tax method is not followed by the DDO/Deductor on the tax deduction on Salary payments as per Section 192(1) and other sections, the TDS Assessing Officer may charge Interest U/s. 201(1A) @1% per month or part of the month on such late deduction of tax from the DDO/Deductor.

4. Hence it is requested to instruct all the DDOS coming under your jurisdiction to follow deducting average rate of Income Tax (TDS) and ensure the same hereafter from this month.

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