The Central Board of Direct Tax (CBDT) modified the provisions of the Income Tax Act related to the collection of Taxes from the salaried staff. The changes were made for the Financial Year 2019-20.
Mr. Naveen Kapoor, the Secretary of Government of India was issued a circular by the department comprising the changes in Paragraph 3.1 with heading “Method of Tax Collection” was modified on 5th March 2020.
According to officials now the provision of deduction has been removed from Section 192 of Income Tax Act, 1961
Section 192 of Income Tax Act, 1961 states that the TDS (Tax Deducted at Source) of the salaried individuals will be deducted at the time of payment of salary, rather than at the accrual of salary. The following taxpayers will now be exempted from deduction of TDS from now on:
| Age | Minimum Income |
|---|---|
| Below 60 Years | INR 2.5 Lakh |
| Senior Citizen between the age of 60-80 | INR 3 Lakh |
| Senior Citizen above the age of 80 | INR 5 Lakh |
Read Also: Current Income Tax Rates for FY 2019-20 (AY 2020-21)
Firstly, the tax is calculated by deducting all the deductions from the salary then the tax is calculated on it and the TDS is deducted by the employer at the beginning of the financial year. The TDS is deducted on the basis of the employed time-period of the assessee. So, the circular will now be modifying the rules under Section 192 accordingly.
The circular has made changes in various tax determining factors like Salary, PF Deductions, etc.