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Your creditworthiness is essentially quantified by your credit score. This rating demonstrates to lenders or other financial institutions your capacity to pay back the amount borrowed. A three-digit CIBIL Score typically ranges from 300 to 900.

The terms "Credit Score" and "CIBIL Score" are frequently used synonymously. However, one of the most reputable credit information businesses in the nation is CIBIL, also known as TransUnion CIBIL Limited. Millions of people's credit histories and information are gathered by this company. The CIBIL Score is frequently referred to as the "Credit Score" in India due to its excellent reputation. Let's understand what affects CIBIL score and how to improve CIBIL score in this article.

What do you mean by CIBIL Score?

The full form of CIBIL is Credit Information Bureau (India) Limited, which is an authorised credit agency by the Reserve Bank of India (RBI) that can calculate an individual's credit score.

The CIBIL Score, which ranges from 300 to 900, is a three-digit numerical summary of your credit history, rating, and report. This rating demonstrates to lenders or other financial institutions your capacity to pay back the borrowed amount..

A credit score of 750 or higher is typically thought to be good for getting a loan or credit card application approved. It will be difficult for you to access credit if your score is below 750. The interest rates will probably be higher even if your application is accepted. A bank or NBFC is also very unlikely to approve your application for a credit card if your CIBIL score is below 650.

CREDIT SCORE RANGE

RANGE RATING

300-500 POOR

550-650 AVERAGE

650-750 GOOD

750-900 EXCELLENT

What elements affect your CREDIT SCORE?

Your CIBIL or credit score is impacted by a number of factors, which helps to lower the number. However, the main elements that could affect your credit standing are listed below.

Repayment Of Loan

Your ability to make credit repayments is revealed by your credit repayment history. It is also the main factor taken into account when calculating your credit score. Your ability to diligently meet your financial obligations by making on-time credit and EMI payments is demonstrated by your repayment history. Your credit health is harmed and your credit score is significantly reduced when you fall behind on credit card payments or do not repay loans within the allotted time.

If you have a history of missing payments, it may be prudent for no lending institution to offer you any credit to be on the safe side. Therefore, if you've previously neglected to pay your claims, it will show negatively on your credit rating, which will eventually cause your credit score to drop.

Having several loans and credit cards

Multiple loans, both unsecured and secured, could lower your credit score. Similarly, having several credit cards could lower your credit score. Because they show just how much debt you already have. Before approving your loan request, banks or other financial institutions typically look at your debt to income (DTI) ratio. If your DTI ratio indicates that you are already overextended, they may not be willing to extend you additional credit. They will assume that you are unable to pay your monthly EMIs. However, not only does having multiple credit cards harm your credit score; closing old credit cards may also harm your credit score. When you close a credit card, it reduces your total available credit. Unless you reduce your spending, your credit utilisation rate, which is one of the most important factors used to calculate your credit score, will suffer. As a result, if you have multiple loans, credit cards, both active and closed, and new accounts, your credit score may experience severe.

Make Use Of Old Credit Cards

It is totally false to think that credit card accounts that aren't being used anymore should be deactivated. Many people are unaware of how such a move affects the three-digit rating. It's actually a blessing in disguise to have a well-managed credit card account that has been kept for a long time and has no outstanding balance. These cards provide the credit score with the much-needed boost. The longer a person keeps a credit card with a good repayment history, the better their chances are of improving their CIBIL rating.

Credit Utilisation Ratio

The credit utilisation ratio is the percentage of total credit used compared to total available credit limit across all credit products.

With a high credit utilisation ratio on a consistent basis, you are considered to be at high risk of default, which lowers your CIBIL score.

It shows your total credit limit as well as how much you've used so far, i.e. how much you owe. The less credit you use, the higher your credit score.

Credit Mix

The mix of credit accounts against your loan portfolio also has a significant impact on your credit score. A portfolio is simply the number of secured and unsecured credit lines in your name. A secured loan, as the name implies, is backed by collateral in the form of an asset. A non-secured loan is one that does not require collateral. Servicing a mix of loan EMIs and credit card dues effectively demonstrates your ability to manage the various types of available loan options. It also contributes to the strengthening of your credit history and makes your profile appear creditworthy.

Outstanding Dept

Your credit report will be greatly impacted by unpaid debt. Make sure to pay off any outstanding debt as soon as possible. Unpaid debt history can negatively affect your score significantly. Make sure to pay back both large and small sums as soon as possible.

How Can You Improve or Raise Your CIBIL Score?

Maintain a good balance of secured and unsecured debts in your lending activities.

Maintain a low frequency of loan applications.

Review and monitor your credit report on a regular basis.

Choose a Balanced Credit Mix

Pay your credit card and loan EMIs on time:

Keep your credit utilisation ratio low.

Make no immediate loan inquiries.

Create a credit history

Request Increased Credit Limits

Keep old debt records

Maintain Multiple Credit Lines

Maintain Consistency

When applying for new credit, use caution.

What Does It Mean to Have No Credit Score?

If you don't have a credit score, it means you've never opened a credit account, such as a loan or credit card. Young adults frequently lack a credit score because they have no credit in their name.

It's not the same as having bad credit to have no credit score. When you misuse credit, it shows up on your credit reports negatively, which leads to bad credit. Your credit score will therefore be affected if you have a history of late payments, defaulting on loans, bankruptcy, liens, or any other actions that result in bad credit.

On the contrary side, having no credit indicates that there hasn't been any recent credit activity that the credit bureaus can use to calculate your credit score.

You might not have a score for a few reasons. Because you might be young and inexperienced with credit, you might not have had enough time to establish a credit history. There isn't enough recent data to generate a score because you could have used credit in the past but haven't done so recently.

Even if you've recently used credit, you might still end up without a score. That's because some lenders might only or never report the activity on your account to the credit bureaus. In reality, although most do, lenders are not required to report to any of them.

Conclusion

Any donation where the recipient (TRUST) does not keep track of the donor is considered an anonymous donation. The Income-tax Act's Section 115BBC is explained in this article. The section discusses whether income related to anonymous donations received by charitable trusts is taxable.

Anonymous Donation Meaning

According to Section 115BBC, a "anonymous donation" is defined as any voluntary contribution described in Section 2(24)(iiia) for which the recipient does not keep a record of the identity containing the name and address of the contributor as well as any other information that may be required.

Anonymous donations are contributions made by taxpayers to a location or person where proper records are not kept. Exemptions are permitted up to 5% of total donations or Rs.1,00,000 whichever is greater. Donations made to a trust that is wholly religious or wholly religious & charitable purpose in nature, on the other hand, will be completely exempt. If the donation is for educational purposes and the Trust operates in the same manner, the donation is taxable.

Section 115BBC: Taxation of Anonymous Donations received by Trust

According to sub-section (1) of Section 115BBC, any anonymous donation received in excess of the higher of the following two amounts will be subject to a 30% tax;

5% of the total amount of the donation.

1,00,000  rupees.

A wholly religious trust received an anonymous donation.

Institutions that are wholly religious are exempt from taxes when they receive anonymous donations.

Taxation of institutions that are partly religious and partly charitable.

Anonymous donations to medical or educational institutions run by partly religious, partly charitable organisations are only taxed to the extent that they exceed 5% of all donations received by the trust or organisation, or a sum of Rs. 1 lakh, whichever is higher. Other donations to institutions that are partly religious and partly charitable shall continue to be exempt from taxation.

Taxation of wholly charitable institutions.

Anonymous donations to wholly charitable institutions are taxable only to the extent that they exceed 5% of total donations received by such trust or institution, or a sum of Rs. 1 lakh, whichever is higher.

Who is eligible for anonymous donations?

Anonymous donations are acceptable for:

Charitable trusts/institutions as defined in section 11

u/s 10(23C)(iiiad) and 10(23C)(vi) or universities and other educational institutions

Hospitals and other medical institutions are referred to in sections 10(23C)(iiiae) and 10(23C)(iiiae) (via)

Notified funds or institutions as defined in section 10(23C)(iv) or

Notified trusts or institutions established wholly for public religious purposes or wholly for public religious or public charitable purposes are referred to in section 10(23C) (v)

Conclusion

It is crucial to keep in mind that any late payments are noted in your credit report, which lowers your credit score further and makes it more challenging for you to be approved for the best terms and interest rates on loans and credit cards from lenders.

Let's look at some of the most common reasons for late credit card payments, as well as why you should overcome those obstacles and complete your credit card overdue.

Missed or late credit card bill payments have a number of consequences. This article will explain how late payments can affect your finances for weeks, months, or even years to come.

Reasons for Late Credit Card Payments

Condition Now, there could be a few causes for credit card payment delays. No matter how difficult it becomes, you should always try to get past these obstacles so that you can make your credit card payments on time. Several circumstances that could result in delayed repayment are listed below:

Inadequate funds

There might be times when you spend more than you should given your credit limit. However, even after receiving your salary, you might still be unable to repay the loan (this would certainly happen because you spent more than you earn). Being aware of your cash inflows and outflows will make it easier for you to avoid such situations. So, in order to be able to pay back the debt later, you should only spend up to about 60% of your credit limit.

Delaying Tactics

Many people have a tendency to put off paying their bills until the very last minute. Making the bill payments well in advance is always a better idea, even though paying it before the due date has no bearing. This helps you avoid the risk of forgetting to pay a bill and eliminates the possibility of having to pay exorbitant interest fees for paying a credit card late.

Due Date

Even though it is unlikely, there may be a few instances where you become confused about your due date and fail to pay your credit card bill. As a result, it is recommended that when you receive your monthly statement, you investigate the billing date and payment due date and set reminders accordingly.

Reasons to stop making late credit card payments

There may be times when deferring credit card payments seems appropriate, especially if there is a financial crisis. Missing credit payments, on the other hand, can result in consequences severe enough to have a long-term impact on financial status in addition to late payment penalties. The following are some of the reasons why you should make every effort to avoid late credit card payments.

We've discussed a few reasons why you shouldn't put off paying your credit card bills-

Charges for late payments

One of the main reasons you should avoid paying your credit card bill after the due date is to avoid paying late fees. Banks impose steep penalties for late credit card payments, which is an unnecessary expense.

Interest rates are extremely high

If a credit card payment is late for more than 60 days, the credit card company will usually charge a penalty interest rate. Many credit card companies charge a penalty rate of up to 35% on the outstanding bill amount. Even if the credit card bill has been paid on time for six months, the increased interest is charged on any new purchases or cash withdrawals.

Effect on credit score

Banks and other lenders use your credit score to determine your creditworthiness. To put it simply, the higher your credit score, the more likely your loans and other banking requests will be approved. Your payment history is an important factor in determining your credit score. When you miss credit card payments, your bank notifies credit reporting agencies, which is reflected in your credit score. Delayed/late payments lower your credit score, limiting your ability to apply for new credit with the same or other lenders. A low credit score not only causes loan applications to be rejected, but it can also result in you being charged high interest rates on future loans.

decrease in credit limit

Your credit limit may be decreased by banks or credit card companies if you repeatedly miss payments or pay your bills late. Your ability to purchase things will be limited, and your financial stability will be disrupted.

Interest is charged on unpaid balances

Contrary to popular belief, you are not required to pay only the minimum amount due on your credit card bill before the due date. Although it is widely assumed that paying only the minimum balance will not subject you to interest charges, this is not the case. In reality, you will be paying interest on the outstanding balance beginning on the due date. As a result, it is strongly advised that you pay your past-due credit card balance in full.

There is no interest-free period

A customer's unpaid balance is carried forward if they only make the minimum payment due or miss a payment. The interest-free period expires after the rollover facility has been used. Both the unpaid balance and any subsequent purchases will be subject to interest. Only after the entire balance of the bill has been paid is the interest-free period accepted.

Problems with debt collection

Once an account has been in collections for several months, credit card companies will go to any length to collect the debt. They might also demand additional charges, which are not illegal. Not only will credit card companies pursue the defaulter repeatedly, but if a customer fails to pay despite the company's constraints, the collection agency can mark the credit account as a defaulting one on the credit report.

Conclusion

For Indian citizens who get a salary, timely filing of income tax forms is crucial to their financial health. However, a number of misconceptions and a general lack of knowledge continue to surround the return filing process. We clarified this article by responding to all inquiries on how to file income tax forms online for salaried employees.

Why are income tax returns for salaried employees necessary?

 Let's explain why salaried workers should submit ITRs by outlining the advantages of doing so:

capital profits or losses are revised

If you invest in the stock market and purchase or sell shares, filing income tax returns is very important for you. When you submit the ITR for a specific financial year, the adjusted short-term capital losses can also be carried forward for up to 8 years.

Request tax refunds

Once the tax has been subtracted, the only way to obtain a tax refund is to file your IT return for the financial year. Refunds of TDS on fixed deposits or rent payments therefore begin once you file your returns and get the tax deduction you want.

convenient loan application

An income tax return includes information about your annual earnings in addition to being a financial statement. As a result, while offering loans like a home loan or car loan, banks and NBFCs frequently demand copies of ITRs. Furthermore, compared to someone with the same income but no ITRs, someone who files returns while having no taxable income has a higher probability of getting a loan approved.

Visa processing

Several foreign consulates demand that you present your ITR receipts from the previous two years during the visa interview. Producing this document demonstrates that a person has a significant source of income in India, which improves his or her chances of getting a visa.

A Description of Income Tax Return

Indian taxpayers must fill out a form with information about their income earned and any associated taxes, according to the Income Tax Act of 1961. An income tax return, or ITR, is what this form is called. As a result, an assesses sends this form to the Indian Income Tax Department.

Furthermore, let's clarify who needs to file income tax returns before we delve into how to do so for salaried employees. People who fit into the following categories must file an ITR:

A taxpayer whose gross income, net of deductions made under Sections 80C, 80CCD, 80D, 80TTB, and 80TTB, exceeds the basic exemption limit. The basic exemption limit is summarised in the table below:

Age of the Individual

Amount of Income

Up to 60 years of age

2,50,000

Between 60 years to 80 years of age

3,00,000

Above the age of 80 years

5,00,000

ITR forms that are applicable to salaried employees

ITR-1 (Sahaj): Salaried workers who earn up to 50,00,000 in total income must use ITR-1 to file their income tax returns. Here, salaries and earnings under the category of "Income from Other Sources" are included in the overall income. However, an assessee cannot have more than one residential property in order to file an ITR-1. Additionally, he or she should not make more than 5,000 from agriculture.

ITR-2: It is applicable to salaried individuals whose combined income is greater than 50,00,000. Additionally, ITR-2 filing is available to people who own more than one residential property. If you get income from capital gains and/or other sources but not from profits or gains from your business or profession, you can still file income tax returns using ITR-2.

ITR-3: If you are a salaried employee and you earn income from a salary, a business or profession, a single or multiple piece of real estate, capital gains, or any other source, you may file an ITR-3.

Documents needed to submit an online income tax return

The following documents are necessary for ITR filing.

Form 16 & Form 16AS

Interest income certificate from bank

Investment Proofs

A receipt from rent ( for those who lived in rented accommodation )

House rental income ( for those who have rented out property ) 

Interest certificate on housing loan

Proof for other income sources

How to File a Salary Employee Income Tax Return Online?

Since you are already familiar with completing income tax returns, allow us to go into more detail about how to file online income tax return if you are a salaried individual. Follow these simple instructions:

Step 1: Find the Income Tax Department's e-filing portal.

Step 2: Enter your user ID (PAN), password, and a Captcha code to log in to the portal. Your Permanent Account Number (PAN), which will act as your user ID if you are not already enrolled with this portal, can be used to register.

Step 3: Click on "Income Tax Return" from the drop-down menu under "e-file" and choose the appropriate assessment year. You must now choose and download the relevant income tax return (ITR) form. Salary employees may select ITR-1, ITR-2, or ITR-3.

Step 4: If you are not filing a revised return, choose "Original" as the filing type.

Step 5: Select "Prepare and Submit Online" as your mode of submission and press "Continue."

Step 6: At this point, enter all the relevant information on your income, deductions, exemptions, and investments in the appropriate ITR form. The information regarding tax payments made via TDS, TCS, and advance tax must then be added. But make sure all the information is correct. Additionally, to prevent data loss as a result of technological difficulties, frequently click on the "Save The Draft" option.

Step 7: Determine the amount of tax due and pay it. Then, fill out the challan information on your tax return. (If you don't owe any taxes, you should skip this step.)

Step 8: Verify the information you entered on the form. Next, click "Submit." This is how a salaried employee can submit online income tax return.

Your computer's screen flashes a notice at this point indicating that the e-filing was successful. The ITR-V acknowledgement form is subsequently generated. You must now confirm your return using one of the following methods:

Aadhaar OTP

Bank account number

Demat account number

Registered mobile number

Net banking

Bank ATM

Posting a hard copy of the acknowledgement to Bengaluru's Centralized Processing Center (CPC)

This is how a salaried person's ITR should be filed.

Conclusion

A business incurs a range of expenses in a single day. It could include things like paying for services, making repairs, paying employees, and buying raw materials. Since it is impossible to compile a complete inventory of such expenses or to establish their veracity, Section 40A(3) of the Income Tax Act was introduced.

According to section 40A(3), business expenses paid in cash that total more than Rs 10,000 are not deductible for income tax purposes. Additionally, there are certain exceptions to this rule. The specific guidelines have been further clarified in this guide.

What is the meaning of Section 40A(3) of the Income Tax Act?

If a business makes a payment or incurs an expense to -

A single person

In a single day

Aside from an account payee cheque or account payee bank draught or use of electronic system (i.e. Makes payment via cash)

Exceeding Rs 10,000/-

Therefore section 40A(3) of the income tax act does not permit such an expense to be deducted.

This indicates that it won't be viewed as a business expense and will instead be deducted from the income. Additionally, it will result in greater tax payments. However, Rule 6DD specifies specific instances and situations in which the aforementioned expenses will be recognised as a deduction even if they were paid in cash.

The maximum has been set at Rs. 35,000 instead of Rs. 10,000/- in the event of a transporter (i.e., if the payments are made for renting or leasing carriages for commodities such as lorries, trucks, etc.).

The following list contains the provisions of section 40A(3):

The maximum is 35,000 if payment is made to the transporter.

For the purpose of calculating business/profession income, the assessee incurs any expenses that are normally deductible under the other provisions of the Act (e.g., expenditure for purchase of raw material, trading goods, expenditure on salary, etc.). The cost is greater than Rs. 10,000. (Rs. 35,000 if an assessee makes payment for Plying, Hiring or Leasing Goods Carriages).

The following payment is made using a method other than an account payee demand draught, account payee cheque, or an electronic clearing system through a bank account. If all of the aforementioned requirements are met, the entire payment will be disallowed.

If an expense was paid via cross cheque, no deduction is permitted.

This section will not be applicable to any payments made by commission agents to receive items for commission-based sales (as commission treated as income of agent). However, if a commission agent purchases products on his own expense, this section's restrictions will be applicable.

What are the exceptions specified in Rule 6DD?

According to Rule 6DD of the Income Tax Act, if a payment in cash or by bearer cheque in excess of Rs 10,000 is made, it is allowed under the following exceptional cases:

The Reserve Bank of India, LIC, banks, the government, primary agriculture credit societies, co-operative banks, or land mortgage banks are the recipients of payments.

Payment is made by RTGS, ECS, UPI, BHIM, NEFT, Credit Card and Debit Card.

Payment made by the payee's book entry adjustment against the amount owed to the assessee for the provision of goods or services.

Amount paid to a cultivator, grower, or producer of an agricultural product, a forest product, an animal husbandry product (including live animals, meat, hides, and skin), a dairy product, a poultry product, a fish or fisheries product, an agricultural product, etc.

When a gratuity payment is paid to an employee or the employee's heir in connection with the employee's retirement, retrenchment, resignation, or death, the amount must not exceed Rs. 50,000.

payment of salary to an employee who is transferred to another location or ship for a period of time of at least 15 days outside of his regular place of duty.

When purchasing goods produced in a cottage industry without the use of power, payment is provided to the manufacturer of those goods.

Payment had to be made on a bank holiday or strike- or holiday on which banks were closed.

A payment made in the course of regular business by a licensed dealer or money changer in exchange for the purchase of foreign currency or traveller's cheques.

Payment made where Banking facility not available.

Conclusion

Section 234F of the Income Tax (I-T) Act imposes a late filing fee on income tax returns that are filed after the deadline. For individual taxpayers, the deadline to submit your Income Tax Return  for the AY 2022-23 (FY 2021–22) has been extended to December 31, 2022. A penalty may result from not submitting your ITR on time, but there are other impacts and inconveniences as well. Let's examine these in more detail below.

Section 234F

A belated return, as the name suggests, is one that is submitted after the deadline set forth in the income tax regulations. According to Section 139(1) of the Income-tax Act ("the Act"), an assessee (other than a company) whose accounts are not required to be audited by a chartered accountant is required to furnish a return of his income on or before July 31 of the applicable Assessment year. The penalty amount under Section 234F, its applicability, and more are all provided below.

The ITR filing deadline for the assessment year 2022–2023

According to section 139(1), the deadline for filing returns for the Assessment Year 2022–23 is July 31, 2022, unless the government extends the deadline.

The common misconception among taxpayers is that once their taxes are paid, they are free from further responsibility. Legal repercussions, however, can result from failing to file an ITR by the deadline. For returns submitted after the deadline, a late filing fee is charged.

S.No.

Particulars

Due Date

1

ITR filing for individuals and entities that are not subject to tax audit

31st July 2022

2

ITR filing for taxpayers subject to a tax audit 

31st Oct 2022

3

ITR filing for taxpayers subject to transfer pricing

30th Nov 2022

4

Due date for belated return income for FY 2021-22

31st Dec 2022

Penalties For Filing Income Tax Returns Late

Failure to file your ITR by the deadline may result in a penalty or late filing fees, in addition to the inconveniences associated with the delay. Section 234F discusses late filing fees and the circumstances under which they apply. We have covered every aspect of the applicability of section 234F under the Income Tax Act of 1961 in this guide. To avoid being subjected to the Section 234F penalty, read carefully.

For example, the deadline for filing returns for financial year 2021-22 is July 31, 2022. If you fail to file your ITR by the due date, you can file a belated return by December 31, 2022. However, you must pay the penalty for late filing.

If you file your ITR after the due date of July 31, 2022 but before December 31, 2022, you will face a maximum penalty of Rs 5,000.

However, small taxpayers are protected: if their total income does not exceed Rs 5 lakh, the maximum penalty for late payment is Rs 1000.

Particulars

Amount

If the Income is less than Rs. 5 Lakhs

Rs. 1,000

If the Income is more than Rs. 5 Lakhs

Belated Return filed before 31st Dec

Rs. 5,000

Belated Return filed after 31st Jan

Rs. 10,000

Impact of Missing the Due Date for Filing

Interest on late filing

Aside from the penalty for late filing, interest at 1% per month or part thereof on tax due will be charged under Section 234A until taxes are paid.

It is critical to note that you cannot file an ITR unless you have paid your taxes. The interest calculation under this section will begin on the day following the due date, i.e. 31 August 2022 for FY 2021-22. As a result, the longer you wait, the more you will pay.

Refunds Are Delayed

If you have overpaid taxes and are entitled to a refund from the government, you must file your returns by the deadline in order to get your money as soon as possible.

Penalty

A penalty of up to 50% of the tax due may also be assessed by the income tax officer in cases where income is underreported.

A taxpayer may experience additional repercussions for filing returns late in addition to the penalty assessed by the IT Department.

Losses not being stimulated

Losses incurred (aside from losses to real estate owned by the taxpayer) may not be carried over to succeeding years. If the return has not been filed by the due date, you cannot use these losses as an offset against future gains. Losses may, however, be carried forward if they relate to house property.

Prosecution

If a person purposely fails to file a return despite receiving notices, the income tax officer may initiate prosecution proceedings. The sentence can range from three months to two years in prison, plus a fine.

If you owe more money to the Income Tax Department, the prosecution period may be extended to seven years.

Conclusion

Salary is the most important component of an employee's annual taxable income. So, if you are employed, your salary will determine the amount of tax you must pay. However, before crediting your salary, your employer must deduct TDS (Tax Deducted at Source) from your salary income i.e. Income Tax TDS Return and then credit your salary to your bank account. Let's go over what TDS on salary is all about. The Income Tax Act of 1961, Section 192, deals with tax deducted at source (TDS) on salaried income. In addition, this article explains the basics of TDS on salary.

Section 192 TDS on Salary

TDS is deductible on salary income under Section 192 of the Income Tax Act of 1961. TDS is deducted by the employer on your behalf and deposited with the income tax department based on your net taxable salary. The employer's TDS is reflected on Form no 16 Income Tax, which is issued annually. Then, at the end of the financial year, you can calculate your tax liability and adjust the TDS to pay either the differential liability or to claim a tax refund.

Because salary is a type of income, the payer, i.e. the employer, is required to deduct TDS on the amount payable to you. Section 192 requires employers to deduct and remit their employees' income taxes to the government.

Who is eligible to deduct TDS under Section 192?

Employers in the following categories are required to deduct TDS on salary:

Public and private companies

Individual taxpayers

Trusts

Hindu Undivided Families

Co-operative societies

Partnership firms

Section 192 of the Income Tax Act requires an employer-employee relationship for tax deduction at source.

When does TDS under Section 192 get deducted?

If your estimated salary is less than the basic exemption limit, the tax amount will be zero, and no TDS will be deducted.

Basic Exemption Limit

AGE MINIMUM INCOME

Individual taxpayers and HUFs below 60 years of age Rs 2.5 lakhs

Senior citizens aged between 60 and 79 years Rs 3 lakhs

Super senior citizens aged 80 years and above Rs 5 lakhs

Deduction of tax at source under the head 'Salaries' (Section 192)

This section requires anyone who is responsible for paying any taxable income under the heading of salaries to deduct income tax on the amount payable. TDS must only be deducted by the employer at the time of payment.

 TDS on withdrawals from provident funds is covered by Section 192A of the Income Tax Act of 1961. TDS is 10% if the PAN card is submitted.

If the payee fails to provide his PAN to the payer, the TDS rate will be the rate specified in the respective section or the rate of 20%, whichever is greater.

In cases where an assessee is simultaneously employed by more than one employer or takes up a job with another employer during the financial year following his resignation or retirement from the services of the former employer, he may provide his current employer with details of the income under the heading "salaries" due or received from the other employer, the tax deducted there from, and such other particulars. Following that, the subsequent employer should consider such information and deduct the tax remaining payable in respect of the employee's remuneration from both employers combined for the respect of financial year.

Employer shall not consider employee losses unless those who fall under the category of "Income from house property." 

Employer must consider details of employee's other income and deductions if provided by employee. Employees must provide proof of such deductions, exemptions, and losses.

Sections 192(1A) and 1(B) provide for the payment of tax on non-monetary perquisites . These sections state that the employer may pay this tax, at his discretion, in lieu of deducting tax at source from the employee's salary. Such tax must be calculated at the average rate applicable to the employee's aggregate salary income, and payment must be made monthly, in addition to tax deducted at source on monetary payments of salary, allowances, and so on.

When a firm pays a partner a salary, section 192 does not apply because the salary is taxable in the partner's hands under the heading Business/Profession.

If an employee intends to elect the concessional rate of tax under section 115BAC and informs the deductor, which is his employer, of his intention, the employer must compute his total income and deduct tax in accordance with the provisions of section 115BAC. If the employee fails to provide such notice, the employer must deduct tax at source without regard to the provisions of Section 115BAC of the act.

Conclusion