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Deduction of Tax from Salary

jatin kapoor 
Updated on 01 May 2021



SECTION 192(1): Tax to be deducted at average of income-tax

The total tax to be deducted, on the estimated income of the employee for the relevant financial year, is divided by the number of months of his employment during that financial year. The amount so arrived at is the monthly deduction of tax at source. No tax will, however, be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, exceeds the maximum amount which is chargeable to income-tax.

Liability to Tax arise: Liability to tax arise at the time of payment.

SECTION 192(1A) and SECTION 192(1B)

1A-  provides that an employer shall have an option to pay tax on behalf of an employee, without making any deduction from his income, on the income in the nature of perquisites, where are not provided for by way of monetary payment. However, the employer shall also continue to have the option to deduct the tax on whole or part of such income.

1B-  tax on salary including the income referred to in section 192(1A) shall be at average rate as in section 192(1).

SECTION 192(2): Salary from more than one employer

Where during the financial year, an assessee:

1. Is employed simultaneously under more than one employer, or

2. Has changed the employement during the previous year,

He may furnish to the employer details of salry received from earlier employer or the details of salary received simultaneously from other employer(s), the tax deducted at source therefrom and such other particulars as may be prescribed, in form no. 12 B(Rule 26A(1)). In this case, the employer, so chosen, shall take into account these details while making deduction of tax at source.

RELIEF U/S 89(1)[ Section 192(2A) and Rule 21AA]:

Where the assessee is:

1.      A Government Servant, or

2.      An Employee in a :

a) Company

b) Co-operative society

c) Local authority

d) University

e) Institution

f) Association or body

And if he is entitled to relief under section 89, he may furnish to his employer such particulars in form no. 10E.

Note: where the assessee has claimed exemption under section 10(10C) on account of compensation under VRS, he shall not be allowed relief under section 89. On the other hand, if he wishes to claim relief under section 89, he shall not be entitled to exemption under section 10(10C).


Where an employee also has any income (not being a loss) for the same financial year, chargeable under any other head, he may furnish the statement of such other income and any tax deducted thereon to his employer to take them into consideration while deducting tax from his salary. However, the resultant tax deductible at source cannot be less than the amount that would have been deductible if such other income and tax deducted thereon had not been taken into account.


Loss from house property may be adjusted [ Rule 26B]:

As stated above in section 192(2B), statement of loss under any head cannot be furnished but a statement of loss under the head income from house property can be furnished. If the employee incurring the loss.

Category Income Tax
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jatin kapoor 

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