Income-Tax deduction from salaries during the financial year 2005 - 06 under section 192 of Income - Tax ACT , 1961

The Finance Ministry has explained certain provisions related to Income-Tax deduction from salaries during the financial year 2005-2006 under section 192 of the Income-Tax act, 1961; vide the Circular No. 9/2005 dtd. 30th November, 2005.

Your kind attention is invited to the following provisions:-

1. Deductions under chapter VI-A of the Act

“In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act is to be allowed from his gross total income:

As per section 80C, an employee will be entitled to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.1,00,000/-:”

The paragraph 5.4(13) clarifies about the Tuition Fee admissible for deductions under section 80C, as follows:

Quote
“Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.

It is clarified that any payment towards any development fees or donation or payment of similar nature does not qualify for deduction under these provisions.”

Unquote
As per this paragraph, the total amount of the tuition fee for two children is admissible for deductions under section 80C, subject to the limit of Rs. 1,00,000/-
Also, it includes all the expenditure as incurred by the employee on children’s education, excluding Development Fee and Donations, payments of the similar nature.

2. Adjustment for Excess or Shortfall of Deduction:

Quote
“The provisions of sub-section (3) of Section 192 allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deduction for that employee within that
financial year itself.”

Unquote

Income Tax Act provides for the adjustment of excess/shortfall of IT deduction within the same Financial Year. But this is not being followed. It is understood that the employees make savings at the end of the year and have to get, from IT department, the refund of the excess income tax deducted at source by ONGC.

It is requested that following aspects may be taken care of:

1. Excess TDS be adjusted in the subsequent months of the same financial year as per the Income Tax Act.
2. Expenditure on children Education to be taken care of under section 80C.
3. A presentation to be arranged to ASTO as to how Income tax, including the valuation of perquisites is being calculated by SAP Payroll.

With warm regards

Yours sincerely,

(Amit Kumar)
President ASTO, Delhi

Copy for information to:

1. Director (HR), ONGC, New Delhi.
2. GGM-Chief, ER, ONGC, Dehradun.
3. GM (CA&C), New Delhi – with a request to kindly instruct DGM (F&A), New Delhi to do the needful and circulate the format for providing details of savings etc.
4. President ASTO – CWC, Delhi/ Jorhat and Delhi/Kolkata.
5. President/Secretary – All ASTO units.