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Salary TDS – Employee to inform Employer for concessional rate

Section 115BAC has been inserted in the Finance Act 2020 in the recent budget. This allows the option to Individuals & HUF to avail concessional rate of income tax with certain conditions pertaining to claiming deductions & other concessions. The other existing option will also continue.

This comes into effect from April 2020 (i.e. FY:2020-21 / AY:2021-22).

Since the Employers need to deduct tax (TDS) on salaries, CBDT vide its Circular No. C1 of 2020 dated 13/04/2020 has clarified the procedure and rules related exercising either of the two options for calculating TDS. This is summarized as under:

Click Here to view the original circular

The concessional tax slabs as per Section 115BAC is as under:

 

Income Slab

In Rupees (Lakhs)

Tax Rate (%)

Section 115BAC

Tax Rate (%)

Existing System

Less than 5.00 Exempted Exempted
5.00 – 7.50 10% 20%
7.50 – 10.00 15% 20%
10.00 – 12.50 20% 30%
12.50 – 15.00 25% 30%
Above 15.00 30% 30%

 Note: The taxable income as computed under the provisions of Section 115BAC is without Deductions and other Reliefs.

Click Here to view the original circular

 

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