Guidelines for Income Tax Deduction from Salaries for Financial Year 2024-25 under Section 192 of the Income-tax Act, 1961
The Central Board of Direct Taxes (CBDT) has issued Circular No. 3/2025 to provide updated guidelines on tax deduction from salaries for FY 2024-25. These guidelines incorporate changes made by Finance Acts of 2023 and 2024, ensuring compliance with the latest tax laws.
Key Updates and Amendments
Definition of Salary (Section 17(1))
The term "salary" now includes contributions made by the Central Government to the Agniveer Corpus Fund under the Agnipath Scheme.
Definition of Perquisites (Section 17(2))
The value of rent-free and concessional accommodation provided by employers has been revised in computation methods.
Surcharge Rates Under Old Tax Regime
The revised surcharge rates for individuals under the old tax regime are:
Total Income Surcharge Rate ₹50 lakh - ₹1 crore 10% ₹1 crore - ₹2 crore 15% ₹2 crore - ₹5 crore (excluding dividends and capital gains under sections 111A, 112, 112A) 25% Above ₹5 crore (excluding dividends and capital gains under sections 111A, 112, 112A) 37% ₹2 crore+ (including dividends and capital gains under sections 111A, 112, 112A) 15%
Income Tax Rates Under New Tax Regime (Section 115BAC)
The tax rates for individuals opting for the new tax regime in FY 2024-25 are:
Total Income Tax Rate Up to ₹3 lakh Nil ₹3,00,001 - ₹7 lakh 5% ₹7,00,001 - ₹10 lakh 10% ₹10,00,001 - ₹12 lakh 15% ₹12,00,001 - ₹15 lakh 20% Above ₹15 lakh 30% Deductions & exemptions NOT allowed under the new regime, except for NPS employer contributions under Section 80CCD(2) and certain specified deductions.
Reporting of Additional Income (Section 192(2B))
Employees with other income sources (except capital losses) can report these to their employer for accurate TDS deduction.
Changes to Form 16 and Form 24Q
Form 16 has been revised under the Income-tax (Fifth and Eighth Amendment) Rules, 2024.
Form 24Q modifications include:
Replacement of "Education Cess" with "Health and Education Cess."
New reporting column for additional tax deducted/collected under various tax provisions.
Revised Rules for Perquisites and Remote Areas
The definition of "remote areas" has been updated, limiting exemptions for accommodations provided within 30 km of municipalities with populations over 1 lakh.
Employer-provided meal vouchers are now taxable under the new tax regime if an employee opts for Section 115BAC.
Enhanced Leave Encashment Exemption
The maximum exempted leave encashment for non-government employees has increased to ₹25 lakh.
Employees claiming this exemption in multiple years will have their cumulative exemption limited to ₹25 lakh.
Tax Exemption for Agniveer Corpus Fund Payments
Any payment from the Agniveer Corpus Fund to an Agniveer or their nominee is fully exempt from tax under Section 10(12C).
Employer Responsibilities
Employers must ensure correct TDS deduction and compliance based on the latest tax rates and reporting requirements.
Updated forms and cess changes must be incorporated in payroll processes.
