Most of employee enjoying 6th Pay and its arrears also paid by the Central Government & State Government also to employee's. Apart from this till today some employee will not got 6th Pay Arrears such Teacher of U.G. & P.G. Colleges as prescribed by the UGC. Now a days the employee got arrears and thus major part of deduction of Tax at source thus the Clarification are as follows:
Clarification regarding tax deduction at source on arrears of salary paid to Government servants on account of implementation of the recommendations of Sixth Central Pay Commission
The Implementation Cell of the Department of Expenditure, Ministry of Finance vide its Office Order F. No. 1/1/2008-IC, dated 30th August, 2008 has stated at Para 2(v) :
“Bills may be drawn separately in respect of the arrears of pay and allowances for the period from January 1, 2006 to August 31, 2008. The aggregate arrears, computed after deduction of subscription at enhanced rates of GPF and NPS with reference to the revised pay, may be paid in two instalments, the first instalment being restricted to 40 per cent of the aggregate arrears. DDOs/POs will ensure that action is taken simultaneously in regard to Government’s contribution towards enhanced subscription. Orders in regard to the payment of the second instalment of arrears will be issued separately.”
2. A number of representations have been received by Central Board of Direct Taxes (CBDT) seeking clarification as to whether TDS need to be deducted on 40 per cent of arrear to be paid during 2008-09 or on the entire arrear payable to the Government servant. The matter has been examined by the CBDT and the issue is clarified as under:—
Salary is as defined under section 15 of Income-tax Act, 1961:—
(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;
(b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him;
(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.
3. It is clear from the Office Memorandum issued by the Department of Expenditure that 60 per cent of the pay arrears neither fall in the category of due nor are allowed. Moreover, section 192 of Income-tax Act, 1961, inter alia, requires any person responsible for paying any income chargeable under the head “Salaries” to deduct income-tax on the amount payable at the stipulated rate at the time of payment. Therefore it is clarified that Income-tax at source would be deducted under section 192 only from the arrears of salary actually paid during financial year 2008-09. On the balance, tax would be deducted during the financial year in which these pay arrears are actually paid.
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