Income tax department circular for FY 2020-21, 20/2020

 CIRCULAR NO : 20/2020 FINANCIAL YEAR 20-21

Govt of India issued a circular to compute income tax for financial year 2020-2021 For all employees in India. To compute income tax for financial year 20- 21 download the circular here. circular no 20/2020 for financial year 2020-21.

SOME INFORMATION HERE FROM ABOVE  CIRCULAR:

SUBJECT: DEDUCTION OF INCOME TAX FROM SALARIES DURING THE FINANCIAL YEAR 2020-21 I UNDER SECTION 192 OF THE INCOME TAX ACT, 1961.

Reference is invited to refer to Circular No. 4/2020 of 16.01.2020 by which the income tax deduction rates from the payment of income under the heading "Salaries" under Section 192 of the Income Tax Law of 1961 (hereinafter, 'the Law'), during the financial year 2019-20, were announced This Circular contains the income tax deduction rates for the payment of the income attributable to the heading "Salaries" during the financial  year 2020-21 and explains certain related provisions of the 1962 Income Tax Law and Regulations. (hereinafter, the Regulations All the sections and rules referred to are from the Income Tax Law of 1961 and the Income Tax Rules of 1962, respectively, unless otherwise specified. The relevant Laws, Rules, Forms and Notifications are available on the Income Tax Department website.

Tax calculation method;

Any person who is responsible for the payment of the income attributable to the heading "Salaries" will deduct the income tax from the estimated income of the taxpayer in the heading "Salaries" for the financial year 2020-21. The income tax must be calculated based on the rates indicated above, subject to the provisions related to the requirement to provide the PAN or Aadhaar number, as the case may be, according to section 206AA of the Act, and will be deducted at the time of each payment.

An employee who intends to opt for the favorable tax rates according to section 115BAC of the Act may suggest to the deductor, being his employer, of such intention for each previous year and upon such indication, the deductor will calculate his total income and IDS will do so in accordance with the provisions of section 115SAC. If the employee does not make such a suggestion, the employer will make IDS without considering the provision of section115SAC of the law. The hint that is made to the deductor will be solely for the purpose of TDS during the previous year and cannot be modified during that year. (Circular CBDT No. CI of 2020 dated 04/13/2020)

However, no tax will be required to be deducted at source in a case, unless the estimated wage income, including the value of the gratuities, is subject to tax after giving effect to the exemptions, deductions and allowances as applicable. . (Some typical illustrations of calculating a tax are given in Annexure-I).

5.1 INCOME TO BE COLLECTED UNDER THE HEADING "SALARIES":

 16 (I) The following income will be charged to income tax under the heading "Salaries":

 (a) any wages owed by an employer or a former employer to an appraiser in the previous year, paid or not;

 (b) any wages paid or awarded to him in the previous year by or on behalf of an employer or a former employer even though neither owed or before he is owed.

 (c) any delay in salary paid or allowed to him in the previous year by or on behalf of an employer or a farming employer, if not charged to the income tax of any previous year.

(2) To clear up doubts, it is clarified that when any salary paid in advance is included in the total income of any person for any previous year, it will not be included again in the total income of the person when the salary expires. .

Any salary, bonus, commission or remuneration, whatever the name is said, owed to, or received by a partner of a Finnish company, will not be considered as "Salary".

5.2.1 "Salary" includes: -

I. salaries, fees, commissions, gratuities, benefits in lieu of or, in addition to salary, salary advance, annuity or pension, gratuity, payments in connection with the collection of leave, etc.

ll. the part of the annual accrual in the employee's account balance that participates in a provident fund recognized according to {Rule 6 of Part A of the Fourth Annex of the Law}:

a)    contributions made by the employer to the employee's account in a recognized provident fund in excess of 12% of the employee's salary, and

b)    b) Interest credited on the balance in favor of the employee, insofar as it is permitted, at a rate that exceeds the rate that the Central Government may set through notification in the Official Gazette.

Ill. The contribution made by the Central Government or any other employer to the employee's account under the New Pension Plan notified in Notification FN 51712003- ECB & PR of 22.12.2003 (attached as Annex VII) mentioned in section 80CCD ( paragraph 5.5 .3 of this Circular).

It should be noted that since the salary includes the pension, the tax at source should also be deducted from the pension, unless otherwise required. However, no tax is required to be deducted from the commuted portion of the pension to the extent that it is exempt pursuant to section 10 (10A).

The family pension is taxable under the heading "Income from other sources" and not under the heading "Wages". Therefore, the provisions of article 192 of the Law are not applicable. Therefore, DOOs are not required to deduct TDS from the family pension paid to the person.

DOWNLOAD CIRCULAR:-Income tax department circular for FY 2020-21,  20/2020