Income Tax Deduction

at the out set let us be clear on our concept of taxation.  Tax is charged on the income earned during the financial year on the basis either of accural or receipt.. Sectin 15(a) of I.T.Act on due basis. whether paid or not. As per section 15(c) when any arrears of salary paid or allowed during te financial year will be charged to incme tax on that year if not charged for tax on any previous year.

In your case the revision pay pay structure resulted in enhancement of your salary pacakage. Hence Income tax is to be paid on that incrase subject to the releif entitled to you as provided as relief under section 8((1) of income tax.  Hence your employees were within the frame work of law in deducting tax as TDS.

At first you have earned the income and then a portion of income has been retained by the Bank towards your pension pacakge. Hence the tax is deducted at the first instance. At first the pay is accrued and then the amount was retained instead paying to you as part of your contribution. Hence the tax is deducted.

Adv.A.R.Sathyan.

pl make necessary correctin there is typing mistake

the relief is mentioned as 8(1) i plese read it as 89(1) releif.

Section 192 deals with tax to be deducted at the payment of salaries. It lays down that any person responsible for paying anyincome chargeable under the head "salaries" shall, at the time of payment, deduct income-tax on the amount payable at the average of income-tax computed on the basis of the rates in force for the financial year in which payment is made.