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Education and Health Cess

CuriousMind (NA) (126 Points)

24 July 2022

Dear CA Club ,

Hope you doing well , Can you please help clarify

Question : When individual taxpayers( salaried ) already paid health and education cess ( X) from salary income ( A) , why IT portal charging additional health and education cess ( Y ) when we add fixed deposit interest income (B) while filing the return ?

Observation : Surprisingly Y is higher than X while B is much lesser than A .

How can we nullify this additional HEC please ?

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6 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 24 July 2022

There seems to be some misunderstanding.

Employer deduct TDS and pay it to treasury, but assessee can claim it to full value against its tax liability.

The ITR Utility calculates tax only over the net taxable amount, which doesn't include any cess (initially)

Over the net tax liability cess is added, that is only at last and is not charged on every individual income..

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CuriousMind (NA) (126 Points)
Replied 24 July 2022

Thanks Dhirajlal sir for your kind and prompt response and yes, 1st time I'm seeing this additional HEC and hence I need your help further because

1. my employer has deducted the tax as usual and my form-16 has a HEC component .

2. Now while filing ITR1 , am adding my FD interest income and seeing another HEC component under tax liabilities which is marginally higher than the previous HEC component .

3. How to resolve this and nullify the additional HEC component from last tab of ITR1 ?

Kindly help !

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 25 July 2022

1. As I said before it was for TDS calculation, which in full amount (including cess) is adjusted against tax liability while filing your ITR. so, the payment is recoverable.

2. You need to recalculate tax liability over (salary + interest on FD) while filing your ITR, and pay only additional tax liability.

3. Think again and reconsider the recovered amount in ITR, there is no duplication.

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