TDS on Salary of March paid in April

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Query on TDS deduction timing for March salary paid in April and its reporting in Form 24Q. It was clarified that TDS is deducted on payment basis using the financial year in which payment is made. March salary paid in April is reported in next FY, and it should not be included in the previous year's 24Q return, ensuring Part A and Part B of Form 16 match correctly.

Manish

Manish (Querist)
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06 April 2023 Dear all,

This is extract of section 192 of Income Tax Act:
(1) 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.
In the above text, what does this sentence mean - “rates in force for the financial year in which the payment is made”?
E.g., the salary for Mar 2023 is paid in the next month (Apr 2023), then at what rate TDS should be deducted? Of which FY, rates and estimated income will be considered to calculate the average rate of tax?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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07 April 2023 It's financial year 2023-24 rates will be considered.

Manish

Manish (Querist)
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07 April 2023 Thank you sir for the reply.

How it's done practically, sir? How to show it in TDS returns?
March salary will appear in annexure-2 of 24Q-Q4 TDS return of 22-23, but payment will appear in the Q1 TDS return of 23-24.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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08 April 2023 Salary TDS is on payment basis.
Don't show March salary in Q4 TDS return show it in 1st quarter return of next year.

Manish

Manish (Querist)
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08 April 2023 Ok, sir.
And in annexure 2 24Q-Q4, do I need to include that Mar salary into the gross salary figure?
If yes, part B form 16 will show more than due to this Mar salary but part A will show lesser amount of TDS.
Should the total tax in part A and part B be matched?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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09 April 2023 No don't include March salary.
Yes, part A and part B should be matched

Manish

Manish (Querist)
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10 April 2023 Ok, sir.
But if Mar salary is not included, how part A total TDS and part B total tax would match.
Part A would not have Mar salary, whereas Part B would include it!

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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10 April 2023 Part B also not include it

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