Salary income for the purpose of Section 192 shall be computed as follow:-
- First compute the gross salary as mentioned in para 5.1 including all the incomes mentioned in para 5.2 and excluding the income mentioned in para 5.3.
- Allow deductions mentioned in para 5.4 from the figure arrived at (a) above and compute the amount to arrive at Net salary of the employee
- Add income from all other heads- House property, Profits & gains of Business or Profession, capital gains and Income from other Sources to arrive at the Gross Total Income as shown in the form of simple statement mentioned para3.6. However it may be remembered that no loss under any such head is allowable by DDO other than loss under the Head "Income from House property".
- Allow deductions mentioned in para 5.5 from the figure arrived at (c) above ensuring that the relevant conditions are satisfied. The aggregate of the deductions subject to the threshold limits mentioned in para 5.5 shall not exceed the amount at (b) above and if it exceeds, it should be restricted to that amount.
This will be the amount of Total income of the employee on which income tax would be required to be deducted. This income should be rounded off to the nearest multiple of ten rupees.
Income-tax on such income shall be calculated at the rates given in para 2 of this Circular keeping in view the age of the employee and subject to the provisions of section 206AA, as discussed in para 4.8.
The amount of tax payable so arrived at shall be increased by educational cess as applicable (2% for primary and 1% for secondary education) to arrive at the total tax payable.
The amount of tax as arrived at para 8.3 should be deducted every month in equal instalments. Any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deductions during the same financial year.