Documents employer should have while deducting TDS of employee – Rule 26C

written by Income tax Expert | July 17, 2020

When an employer employees someone one of the major responsibility under Income tax is to properly deduct TDS.

Although employer has to not become an assessing officer and check for validity of each document provided, however he/she still needs to maintain a record of various documents based on which tax is calculated on salary of employee and TDS has been deducted.

TDS on salary of employee is covered under section 192 wherein it has been said that:

“Any person responsible for paying any income chargeable under the head “Salaries” shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year.

Where an assessee who receives any income chargeable under the head “Salaries” has, in addition, any income chargeable under any other head of income (not being a loss under any such head other than the loss under the head “Income from house property”) for the same financial year, he may send to the person responsible for making the payment referred to in sub-section (1) the particulars of—

(a) such other income and of any tax deducted thereon under any other provision of this Chapter;

(b) the loss, if any, under the head “Income from house property”,

in such form and verified in such manner as may be prescribed“

The employer needs to collect information of various deduction the employee will claim in Form 12BB.

As per rule 26C, the employee has to submit the following details with employer to claim various deductions which are as follows:

Sl. No Nature of claims Evidence or particulars
(1) (2) (3)
1. House Rent Allowance. Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previous year exceeds rupees one lakh.
2. Leave travel concession or assistance. Evidence of expenditure.
3. Deduction of interest under the head “Income from house property”. Name, address and permanent account number of the lender.
4. Deduction under Chapter VI-A. Evidence of investment or expenditure.

Thus, employer needs to remember to collect the above documents before the end of financial year so that correct TDS is deducted and no liability comes on employer.

 

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