Rates of Income Tax on Salary Under Section 192 of the Income Tax Act, 1961 for FY 2021-22 (i.e.Assessment Year 2022-23)
GOVERNMENT OF INDIA MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
CENTRAL BOARD OF DIRECT TAXES
DEDUCTION OF TAX AT SOURCEINCOME-TAX DEDUCTION FROM SALARIES
UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961
DURING THE FINANCIAL YEAR 2021-22
CIRCULAR NO : 04 12022
F.No. 275/19212020-IT(B)
Government of India
Min istry of Finance
Department of Revenue
Central Board of Direct Taxes
North Block, New Delhi
Dated the 15th March, 2022
SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2021-22 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.
Reference is invited to Circular No. 20/2020 dated 03.12.2020 whereby the rates of deduction of income-tax from the payment of income under the head “Salaries” under Section 192 of the Income-tax Act 1961 (hereinafter ‘the Act’), during the financial year 2020-21, were intimated. The present Circular contains the rates of deduction of Income-tax from the payment of income chargeable under the head “Salaries” during the financial year 2021-22 and explains certain related provisions of the Act and Income-tax Rules. 1962 (hereinafter the Rules). All the sections and rules referred are of Income-tax Act. 1961 and Income-tax Rules, 1962 respectively unless otherwise specified. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia. gov.in.
As per section 192 (1) of the 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 the head of Salary income for that financial year.
RATES OF INCOME-TAX AS PER FINANCE ACT, 2021
As per the Finance Act, 2021 , the rates of income tax for the FY 2021 -22 (i.e. Assessment Year 2022-23) are as follows:
2.1 Rates of tax
A. Normal Rates of tax: In the case of even individual other than the individuals referred to in para (B) and (C) below:
| S. No | Total Income | Rate of tax |
| 1 | Where the total income does not exceed Rs. 2,50,000/-. | Nil; |
| 2 | Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/-. | 5 per cent of the amount by which the total income exceeds Rs. 2,50,000/-: |
| 3 | Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. | Rs. 12,500/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-; |
| 4 | Where the total income exceeds Rs. 10,00,000/-. | Rs. 1,12,500/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-. |
B. Rates of tax for every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year:
| SI. No | Total Income | Rate of tax |
| 1 | Where the total income does not exceed Rs. 3,00,000/- | Nil; |
| 2 | Where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000/- | 5 per cent of the amount by which the total income exceeds Rs. 3,00,000/-; |
| 3 | Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- | Rs. 10,000/- plus 20 percent of the amount by which the total income exceeds Rs. 5,00,000/-; |
| 4 | Where the total income exceeds Rs. 10,00,000/- | Rs. 1,10,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/- |
C. In case of every individual, being a resident in India, w ho is of the age of eighty years or more at any time during the financial year:
| SI. No | Total Income | Rate of tax |
| 1 | Where the total income does not exceed Rs. 5,00,000/- | Nil; |
| 2 | Where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000/- | 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-; |
| 4 | Where the total income exceeds Rs. 10,00,000/- | Rs. 1,00,000/-plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-. |
2.2 Surcharge on Income-tax
The amount of Income-tax computed in accordance with the provisions of section 111A or section 112 or section 112A or the provisions of section II5BAC of the Income-tax Act shall be increased by a surcharge for the purposes of the Union, calculated, in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not. or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act 1961 —
(a) having a total income (including the income by way of dividend or income under the provisions of section I 11A and section II2A of the Income-tax Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate often per cent, of such income-tax;
(b) having a total income (including the income by way of dividend or income under the provisions of section I 11A and section 112A of the Income-tax Act) exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent, of such income-tax;
(c) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and section 112A of the Income-tax Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent of such income-tax;
(d) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and section 112A of the Income-tax Act) exceeding five crore rupees, at the rate of thirty-seven per cent of such income-tax; and
(e) having a total income (including the income by way of dividend or income under the provisions of section 111A and section 112) exceeding two crore rupees, but is not covered under clauses (c) and (d). shall be applicable at the rate of fifteen per cent, of such income- tax;
Provided that in case where the total income includes any income by way of dividend or income chargeable under section IMA and section 112A of the Income-tax Act the rate of surcharge on the amount of Income-tax computed in respect of that part of income shall not exceed fifteen per cent.
Provided further that in the case of persons mentioned above having total income exceeding.
(a) fifty lakh rupees but not exceeding one crore rupees, the total amount payable as income- tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees;
(b) one crore rupees but does not exceed two crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees;
(c) two crore rupees but does not exceed five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees;
(d) five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees.
2.3 Health and Education Cess
The amount of Income tax as increased by the applicable surcharge shall be further increased by an additional surcharge, for the purposes of Union, to he called “Health and Education Cess on Income-tax”.
Health and Education Cess on Income-tax shall be levied at the rate of four percent of income tax including surcharge wherever applicable. No marginal relief shall be available in respect of such cess.
2.4 Concessional Rates of Tax u/s 115BAC
Section 115BAC of the Income-tax Act. 1961 was inserted by the Finance Act, 2020 w.e.f. Assessment Year 2021-22. The new section 115BAC provides that the income-tax payable in respect of the total income of a person, being an individual or a HUF. for any previous year relevant to the assessment year beginning on or alter the 1st day of April. 2021. shall, at the option of such person, be computed at the concessional rates as given in table below:
| SI.
No. |
Total Income | Rate of tax |
| 1 | Up to Rs. 2,50,000 | Nil |
| 2 | From Rs. 2,50,001 to Rs. 5.00.000 | 5 per cent |
| 3 | From Rs. 5,00,001 to Rs. 7,50,000 | 10 per cent |
| 4 | From Rs. 7,50,001 to Rs. 10,00,000 | 15 per cent |
| 5 | From Rs. 10.00,001 to Rs. 12,50.000 | 20 per cent |
| 6 | From Rs. 12,50,001 to Rs. 15,00,000 | 25 per cent |
| 7 | Above Rs. 15,00,000 | 30 percent |
Such person is required to exercise the option in the prescribed manner along with the return of income to be furnished under section 139(1) of the Act for the previous year relevant to the assessment year. The concessional rates of tax provided under section II5BAC are subject to the condition that the total income of the individual or HUF shall be computed : –
a) Without any exemption or deduction specified under clause (i) of sub-section (2) of section 115BAC.
b) Without set off of any loss specified in clause (ii) of sub-section (2) of section I15BAC.
c) Without any exemption or deduction for allowances 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 115BAC.
Further, surcharge on income-tax as contained in Para 2.2 shall be applicable in case of person opting for concessional tax regime. Where the person fails to satisfy the conditions contained in sub-section (2) in any previous year, the option shall become invalid in respect of the assessment year relevant to that previous year and other provisions of the Act shall apply, as if the option had not been exercised for the assessment year relevant to that previous year. Further, where the option is exercised under clause (i) of sub-section (5), in the event of failure to satisfy the conditions contained in sub-section (2). it shall become invalid for subsequent assessment years also and other provisions of the Act shall apply for those years accordingly.
3. SECTION 192 OF THE INCOME-TAX ACT, 1961: BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM ‘ SALARIES”
3.1 Method of Tax Calculation
Every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2021-22. The income-tax is required to be calculated on the basis of the rales given in para 2 above, subject to the provisions related to requirement to furnish PAN or Aadhaar number, as the case may be. as per sec 206AA of the Act. and TDS u/s 192 shall be deducted at the time of each payment.
As per section 192(IC) of the Act. a person, being an eligible start-up referred to in section 80-1AC, responsible for paying any income to the assessee being perquisite of the nature specified in sub-clause (vi) of clause (2) of Section 17 in any previous year relevant to Assessment year 2021-22 and thereafter, shall deduct or pay, as the case may be, tax on such income within 14 days
a) after the expiry of 48 months from end of the relevant assessment year; or
b) from the date of sale of such specified security or sweat equity share by the assessee; or
c) from the date of the assessee ceasing to be the employee of the person.
whichever is the earliest, on the basis of rales in force for the financial year in which the said specified security or sweat equity share is allotted or transferred.
Any employee intending to opt for the concessional rates of tax under section 115BAC of the Act, may intimate the deductor, being his employer, of such intention for each previous year and upon such intimation, the deductor shall compute his total income, and make TDS thereon in accordance with the provisions of section 115BAC. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 115BAC of the Act. The intimation so made to the deductor shall be only for the purpose of TDS during the previous year and cannot be modified during that y ear. (CBDT Circular No. Cl of 2020 dated 13.04.2020)
No tax. however, will be required to be deducted at source in a case unless the estimated salary income including the value of perquisites is taxable after giving effect to the exemptions, deductions and relief as applicable. (Some typical illustrations of computation of tax are given at Annexure-I).