Questions regarding tds under section 192

How will we deduct TDS under section 192 if employee opting for 115 BAC
Case 1) he is doing business

Case 2) he is not doing any business
Replies (1)

Clarification in respect of option under section 115BAC of the Income-tax Act, 1961

Representations expressing concern regarding tax to be deducted at source (TDS) has been received stating that as the option is required to be exercised at the time of filing of return, the deductor, being an employer, would not know if the person, being an employee, would opt for taxation under section 115BAC of the Act or not. Hence, there is lack of clarity regarding whether the provisions of section 115BAC of the Act are to be considered at the time of deducting tax.

In order to avoid the genuine hardship in such cases, the Board, in exercise of powers conferred under section 119 of the Act, hereby clarifies that an employee, having income other than the income under the head "profit and gains of business or profession" and intending to opt for the concessional rate 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 of the Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 1 15BAC of the Act.

Please check out Department Circular for more clarification

Link:  https://incometaxindia.gov.in/communications/circular/circular_c1_2020.pdf

Please note that 115BAC will not apply if employee has business income for the purpose of TDS.

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