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T. Banusekar

WHILE deducting tax at source it is now required that the education cess (additional surcharge) is also to be considered.

Kindly clarify the date from which the requirement to increase the tax deduction by the additional surcharge will arise.

Arumugam

Reply

The tax deduction requirement, including the additional surcharge, will arise in respect of payments or credits made on or after the date on which the Finance Bill received the assent of the President of India, that is, from September 10, 2004. It may be noted that if the first of the events, that is, payment or credit has taken place prior to this date, there will be no need to increase the tax deduction by the additional surcharge.

It may also be noted that insofar as tax deduction under Section 192 in respect of salary is concerned the additional surcharge will have to be taken into account for deducting tax at source for the entire previous year 2004-05 and not from September 10, 2004.

Note: The Central Board of Direct Taxes has issued Circular No. 2/2005 dated January 12, 2005. Through this Circular it has been clarified that the deduction under Section 80G in respect of contributions made to the Prime Minister's National Relief Fund, Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund by employees through their employers, will be available on the basis of the certificate issued by the drawing and disbursing officer/employer.

The certificate issued by the respective funds may not be in the name of the employee.

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