Chartered Accountant
130 Points
Joined September 2009
As per Sec.192, the rate of tax is "Average Rate of income Tax", which means we have to follow the following steps:
1.Calculate the Total Income (including income from all heads)
2.Calculate the Tax thereon
3.Calculate the "Average Rate of Income tax" which is Tax divided by Total Income.
4.The Average Rate is the rate at which tax has to be deducted.
5.Previously employees (at their option) are supposed to give infn to the employers in Form No.12C reg their income (not losses) from other "sources / heads" to the employer. Now, the Form is not their in the Rule book.
However, in practice, Employers deduct the tax on "Taxable salary as reduced by deductions eligible to be considered at TDS point itself u/s.80C...etc.,.) at the normal rates applicable i.e., 10%, 20% and 30% as the case may be (+ the Edn Cess).