{"id":17754,"date":"2020-12-09T14:43:27","date_gmt":"2020-12-09T09:13:27","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=17754"},"modified":"2020-12-09T14:45:00","modified_gmt":"2020-12-09T09:15:00","slug":"cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/","title":{"rendered":"CBDT Clarifies Provisions Regarding TDS Deduction from Salaries for F.Y. 2020-21"},"content":{"rendered":"\n<p>Recently, <strong>CBDT<\/strong> (Central Bureau of Direct Taxes) by way of <strong>Circular No: 20\/ 2020<\/strong>, issued on <strong>03.12.2020<\/strong>, has clarified provisions regarding the <strong>\u201cTDS Deduction from Salaries for the Financial Year 2020 \u2013 2021\u201d<\/strong>.<\/p>\n\n\n\n<p>Further, such a circular was passed in <strong>furtherance<\/strong> to <strong>Circular No: 4\/2020<\/strong>, issued on <strong>16.01.2020<\/strong>, which dealt with the <strong>Rates concerning TDS Deduction from salaries<\/strong> under <strong>section 192<\/strong> of the <strong>Income Tax Act 1961<\/strong>.<\/p>\n\n\n\n<p>In this blog, we will discuss in brief the clarifications made by CBDT regarding the new TDS Deduction from Salaries rates, which will be applicable on salaries from the Financial Year 2020 \u2013 2021, together with other issues taken into consideration.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a35a12c0c6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a35a12c0c6\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Concept_of_Tax_Deducted_at_Source\" title=\"Concept of Tax Deducted at Source\">Concept of Tax Deducted at Source<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Who_are_all_Eligible_for_Circular_No_202020\" title=\"Who are all Eligible for Circular No 20\/2020?\">Who are all Eligible for Circular No 20\/2020?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#How_is_TDS_calculated_on_the_Salary\" title=\"How is TDS calculated on the Salary?\">How is TDS calculated on the Salary?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Different_Tax_Slabs_For_Charging_Tax_Under_The_Salary_Head\" title=\"Different Tax Slabs For Charging Tax Under The Salary Head \">Different Tax Slabs For Charging Tax Under The Salary Head <\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Normal_Rates_of_Income_Tax\" title=\"Normal Rates of Income Tax\">Normal Rates of Income Tax<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Clarifications_Regarding_Arrears_in_Circular_No_202020\" title=\"Clarifications Regarding Arrears in Circular No 20\/2020\">Clarifications Regarding Arrears in Circular No 20\/2020<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Clarifications_Regarding_Losses_Incurred_Under_Any_Head\" title=\"Clarifications\nRegarding Losses\nIncurred Under Any Head \">Clarifications\nRegarding Losses\nIncurred Under Any Head <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Other_Clarifications_Made_in_Circular_No_202020\" title=\"Other Clarifications Made in Circular No 20\/2020\">Other Clarifications Made in Circular No 20\/2020<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/cbdt-clarifies-provisions-regarding-tds-deduction-from-salaries-for-f-y-2020-21\/#Circular_No_202020\" title=\"Circular No: 20\/2020\">Circular No: 20\/2020<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Tax_Deducted_at_Source\"><\/span>Concept of Tax Deducted at Source<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term Tax Deducted\nat Source or TDS denotes the amount deducted by the payer prior to paying the\nsalary to the payee. Further, it is a type of Direct Tax and is levied on\ndividends, incomes, rents, interests payments received from the bank, sale of\nassets, etc.<\/p>\n\n\n\n<p>Moreover, the provisions\nof TDS or Tax Deducted at Source are governed by the Central Board of Direct\nTaxes and regulated under the framework of the Income Tax Act 1961.&nbsp; <\/p>\n\n\n\n<p>Specifically, section\n194 IA, 194 IB, 194 IC of the Income Tax Act 1961 regulates the TDS to be\ndeducted on sale of goods. However, section 302 of the act, deals with the TDS\ncharged on dividends. Lastly, TDS is a form of Advance Tax, whose returns are\nfiled by the assessee in every quarter.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_are_all_Eligible_for_Circular_No_202020\"><\/span>Who are all Eligible for Circular No 20\/2020?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every person who needs to pay an amount as the income earned by the assessee can deduct tax chargeable under the head \u201cSalaries\u201d on the said income earned for the Financial Year 2020 \u2013 2021.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"How_is_TDS_calculated_on_the_Salary\"><\/span>How is TDS calculated on the Salary?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per the provision of the <strong>Income Tax Act 1961<sup><a href=\"https:\/\/www.incometaxindia.gov.in\/pages\/acts\/income-tax-act.aspx\" class=\"text-primary\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><\/strong>, TDS is calculated on the basis of the salary tax slab in which an employee falls. That means no tax will be levied if the estimated salary (inclusive of perquisites) of an employee does not exceed the normal tax slabs or the new Tax Regime under section 115BAC.<\/p>\n\n\n\n<p>The Formula of Calculating Salary for deducting TDS: <\/p>\n\n\n\n<p><strong><em>Salary = Basic Salary + Perquisites<\/em><\/strong><\/p>\n\n\n\n<p>However, if in case an employee receives a salary from more than one employer, then, in that case, the said employee needs to furnish the details of the present employer in writing, which shall again be verified by him\/her, together with the other employer. Also, the present employer needs to deduct TDS on an aggregate basis.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Different_Tax_Slabs_For_Charging_Tax_Under_The_Salary_Head\"><\/span>Different Tax Slabs For Charging Tax Under The Salary Head <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the\nprovisions of the Finance Act 2020, the rates at which the tax will be charged\nfor the financial year 2020 \u2013 2021 are as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Normal_Rates_of_Income_Tax\"><\/span>Normal Rates of Income Tax<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<table width=\"624\">\n<tbody>\n<tr>\n<td width=\"66\">\n<p><strong>SI<\/strong>. <strong>No<\/strong><\/p>\n<\/td>\n<td width=\"282\">\n<p><strong>Total Income Earned<\/strong><\/p>\n<\/td>\n<td width=\"276\">\n<p><strong>Rate of Income Tax<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"66\">&nbsp;1<\/td>\n<td width=\"282\">\n<p>Where the Total Income earned does not exceed Rs 250000<\/p>\n<\/td>\n<td width=\"276\">\n<p>Nil<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"66\">&nbsp;2<\/td>\n<td width=\"282\">\n<p>Where the Total Income earned exceeds the threshold of Rs 250000 but does not exceed Rs 500000<\/p>\n<\/td>\n<td width=\"276\">\n<p>5% of the amount by which the total income earned exceeds Rs 250000<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"66\">&nbsp;3<\/td>\n<td width=\"282\">\n<p>Where the Total Income exceeds Rs 500000 but does not exceed Rs 1000000<\/p>\n<\/td>\n<td width=\"276\">\n<p>Rs 12500 plus 20% of the amount by which the total income exceeds Rs 500000<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"66\">&nbsp;4<\/td>\n<td width=\"282\">\n<p>Where the Total Income exceeds Rs 1000000<\/p>\n<\/td>\n<td width=\"276\">\n<p>Rs 112500 plus 30% of the amount by which the total income earned exceeds the threshold of Rs 1000000<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<p><strong>When the Assessee is an Indian Resident, who is above the age of 60 years but below 80 years<\/strong><\/p>\n\n\n\n<table width=\"100%\">\n<tbody>\n<tr>\n<td style=\"width: 10%;\">\n<p><strong>SI No<\/strong><\/p>\n<\/td>\n<td style=\"width: 45%;\">\n<p><strong>Total Income Earned <\/strong><\/p>\n<\/td>\n<td style=\"width: 44%;\">\n<p><strong>Rate of Income Tax<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 10%;\">&nbsp;1<\/td>\n<td style=\"width: 45%;\">\n<p>Where the Total Income Earned does not exceed Rs 300000<\/p>\n<\/td>\n<td style=\"width: 44%;\">\n<p>Nil<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 10%;\">&nbsp;2<\/td>\n<td style=\"width: 45%;\">\n<p>Where the Total Income Earned exceeds Rs 300000 but does not exceed Rs 500000<\/p>\n<\/td>\n<td style=\"width: 44%;\">\n<p>5% of the amount by which the Total Income earned exceeds Rs 300000<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 10%;\">&nbsp;3<\/td>\n<td style=\"width: 45%;\">\n<p>Where the Total Income Earned exceeds Rs 500000 but does not exceed Rs 1000000<\/p>\n<\/td>\n<td style=\"width: 44%;\">\n<p>Rs 100001 plus 20% of the amount by which the Total Income Earned exceeds Rs 500000<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 10%;\">4<\/td>\n<td style=\"width: 45%;\">\n<p>Where the Total Income Earned exceeds Rs 1000000<\/p>\n<\/td>\n<td style=\"width: 44%;\">\n<p>Rs 110000 plus 30% of the total amount by which the total income earned exceeds Rs 1000000<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<p><strong>When the Assessee is an Indian Resident, who is above the age of 80 years or more<\/strong><\/p>\n\n\n\n<table width=\"624\">\n<tbody>\n<tr>\n<td width=\"66\">\n<p><strong>SI No<\/strong><\/p>\n<\/td>\n<td width=\"282\">\n<p><strong>Total Income Earned <\/strong><\/p>\n<\/td>\n<td width=\"276\">\n<p><strong>Rate of Income Tax<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"66\">&nbsp;1<\/td>\n<td width=\"282\">\n<p>Where the Total Income Earned does not exceed Rs 500000<\/p>\n<\/td>\n<td width=\"276\">\n<p>Nil<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"66\">&nbsp;2<\/td>\n<td width=\"282\">\n<p>Where the Total Income Earned exceeds Rs 500000 but does not exceed Rs 1000000<\/p>\n<\/td>\n<td width=\"276\">\n<p>20% of the total amount by which the total income earned exceeds Rs 500000<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"66\">&nbsp;3<\/td>\n<td width=\"282\">\n<p>Where the Total Income Earned exceeds Rs 1000000<\/p>\n<\/td>\n<td width=\"276\">\n<p>Rs 100000 plus 30% of the amount by which the total income earned exceeds Rs 1000000<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Clarifications_Regarding_Arrears_in_Circular_No_202020\"><\/span>Clarifications Regarding Arrears in Circular No 20\/2020<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>With regard to arrears, the employee is\neligible to claim relief, under section 89 of the IT Act. Further, for claiming\nrelief the employer needs to provide details in Form 10E, which shall be duly\nverified by him.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Clarifications_Regarding_Losses_Incurred_Under_Any_Head\"><\/span>Clarifications\nRegarding Losses\nIncurred Under Any Head <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If in case a loss has been incurred under any head (other than the\nHouse Property), the same will not be considered by DDO for the calculation of\nTDS. <\/p>\n\n\n\n<p>However, if in case the loss has been incurred from the House\nProperty up to Rs 2 lakhs, then the DDO will need to file the declaration,\ntogether with the computation of loss.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Other_Clarifications_Made_in_Circular_No_202020\"><\/span>Other Clarifications Made in Circular No 20\/2020<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>With respect to the persons authorised\nto deduct tax, CBDT has provided clarifications regarding the provisions\nconcerning the following in Circular No 20\/ 2020: <\/p>\n\n\n\n<ol><li>Deduction of Tax at Lower Rates;<\/li><li>Deposit of the Tax Deducted at Source; <\/li><li>Due Dates for paying TDS;<\/li><li>Modes of paying TDS;<\/li><li>Compulsory Filing of the Statement by PAO or Treasure Officer;<\/li><li>Payment of Income Tax by Challan;<\/li><li>Payment of Interest;<\/li><li>Penalty and Prosecution;<\/li><li>Failure to Deposit TDS;<\/li><li>Furnishing of TDS Certificate;<\/li><li>Mandatory quoting of PAN or Aadhar Number;<\/li><li>The compulsory requirement to furnish PAN;<\/li><li>TDS on Income generated by way of Pension;<\/li><li>Matters concerning TDS made in the case of Non-Resident;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, CBDT (Central Bureau of Direct Taxes) by way of Circular No: 20\/ 2020, issued on 03.12.2020, has clarified the new TDS Deduction from Salaries rates, which will be applicable on salaries from the Financial Year 2020 \u2013 2021.<\/p>\n\n\n\n<p>Also, all the clarifications made are in\nconsonance with the provisions of the Income Tax Act 1961 and Income Tax Rules\n1962.<\/p>\n\n\n\n<p>For any other doubt or perplexity, reach out to Swarit Advisors, our proficient tax consultants will assist you with all the clarification made in the circular, together with the process of <strong><a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/income-tax-return-filing\">filing Income Tax Return<\/a><\/strong>.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/extension-of-due-dates-for-filing-gst-annual-return-by-cbic\/\">Extension of Due Dates for Filing GST Annual Return by CBIC<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Circular_No_202020\"><\/span>Circular No: 20\/2020<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<a href=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/12\/circular_20-1-2.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">circular_20-1-2<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently, CBDT (Central Bureau of Direct Taxes) by way of Circular No: 20\/ 2020, issued on 03.12.2020, has clarified provisions regarding the \u201cTDS Deduction from Salaries for the Financial Year 2020 \u2013 2021\u201d. Further, such a circular was passed in furtherance to Circular No: 4\/2020, issued on 16.01.2020, which dealt with the Rates concerning TDS [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":17756,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[416,1],"tags":[1052],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/17754"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=17754"}],"version-history":[{"count":10,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/17754\/revisions"}],"predecessor-version":[{"id":17769,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/17754\/revisions\/17769"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/17756"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=17754"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=17754"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=17754"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}