CIRCULAR NO : 3/2025

F. No. 275/107/2024-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

North Block, New Delhi

Dated the 20^thFebruary, 2025

SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2024-25 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.

Reference is invited to Circular No. 24/2022 dated 07.12.2022, whereby the rates of deduction of income-tax from the payment of income under the head "Salaries" under section 192 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), during the financial year 2022-23, were intimated. 'the said Circular also explained certain related provisions of the Act and Income-tax Rules, 1962 (hereinafter referred to as 'the Rules').

The present Circular contains the amendments made vide the Finance (No.2) Act of 2024, Finance (No.1) Act of 2024 and Finance Act of 2023 in respect of rates of deduction of income-tax 11^-om the payment of income under the head "Salaries" under section 192 of the Act. Where no amendments have been made by the above referred Acts, in such cases, the above refen^-cd Circular No. 24 of 2022 shall continue to be applicable for F.Y. 2024-25. The relevant Acts, Rules, Forms and Notifications arc available at the wehsite of the Income Tax Department- wit,w.incomeiaxinclia.gov.in.

Amendments made vide the Finance (No. 2) Act of 2024, Finance (No. 1) Act of 2024 and Finance Act of 2023 in respect of rates of deduction of income-tax from the payment of income under the head "Salaries" under section 192 of the Income-tax Act, 1961, during the financial year 2024-25

1. The term "Salary" has been defined in section 15 of the Act. It has been further explained in section 1.7. As per the amendment in section 1 7(1) of the Act vide the Finance Act, 2021 "salary", inter cilia, includes the following:

ix) the contribution made by the Central Government in the previous year. to the Agniveer Corpus Fund account of an individual enrolled in the Agnipath Scheme referred to in section 80("CH;

2. As per the amendment vide the Finance Act, 2023 in section 17(2) of the Act, "perquisite", inter alia , includes the following:

(i) 11w value of rentiree accommodation provided to the employee hi- his employer [computed in such manner as may be prescribed':

(ii) /he value of any accommodation provided to the assesses by his employer at a conce,s..vionai rate...."

3.  As per the amendment vide Finance (No. 2) Act, 2024, the provisions related to Surcharge (under Old Tax Regime) applicable in the case of every individual arc as under:

4. As per the amendment vide Finance (No. 2) Act, 2024 in respect of section 115BAC,

the rates of income tax (under New Tax Regime) for the FY 2024-25 (i.e. Assessment Year 2025-26) are as under:

Further, for the purposes of sub-section (1A) of section 115BAC, the total income of the person shall be computed—

(i) without am. exemption or deduction under the provisions of clause (5) or clause (13A) or prescribed under clause (14)(other than those as may he prescribed Jor this purpose) or clause (17) or clause (32), of section 10 or section 10AA or clause (ii) or clause (iii) ofsection 16 or clause (h) of section 24 [in respect of the properly referred to in sub-section (2) of section 231 or clause (rki) of sub-section (1) of section 32 or section 32AJ) or section 33AB or section 33ABA or sub-clause (ii) or suh-clause (iia) or sub-clause (iii) of suh-section (1) or sub-section (2A4) of section 35 or section 35AD or .section 35C(I: or under any of the provisions of Chapter 1¹1-A other than the provisions of sub-section (2) of section 80C'CD or sub-section (2) of section 80C('H or section 80JJAA.

ii. without set off of any loss,

(a) carried Ibrward or depreciation from any earlier assessment year. if such loss or depreciation is attributable to any of the deductions referred to in clause (i);

(b) under the head "Income from house property" with any other head of income;

iii. by claiming the depreciation, if any, under any provision of section 32. except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed;

 and

iv. without any exemption or deduction for allowances or perquisite, by whatever name called_ provided under any other law for the time being in force.

5. As per the amendment made vide Finance (No. 2) Act, 2024, section 192(28) is reproduced as under:

"(2B) Where an assessee who receives. any income chargeable under the head

"Salaries" has, in addition,

1. anv 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 properly"): or
2. any lax deducted or collected under the provisions of Part B or Part BB of this Chapter, as the case may be,

far the same financial year, he may send to the person responsible ,fOr making the payment referred to in sub-section (1), the particulars Of

1. such other income:
2. any tax deducted or collected under any other provision of Part B or Part BB of this Chapter, as the case may be; and

(c) the loss, if any, under the head "Income, from house properly",

in such jh rm and verified in such manner as nun.' be prescribed, and thereupon the person responsible as alaresaid shall take into account the particulars^. referred to in clauses (a). (b) and (OP,- the purposes of making the deduction under sub-section (I):

Provided that this sub-section shall not in any case have the effect of reducing the lax deductible _.fi-om iriC0177C under the head "Salarie.v", except where the loss under the head "Income from house property" and the lax deducted in accordance with other p•ovisitms of Part B and lax collected in accordance with /ho provisions of Part 1113. of this Chapter, has been taken into account.]

    6.  The Form No. 16 has been amended vide the Income-tax (Filth Amendment) Rules, 2023, w.e.f. 1-7-2023 and shall be applicable for the assessment year 2024-25 and subsequent assessment years. Form No. 16 (has been further modified vide the Income-tax (Eighth Arndt.) Rules, 2024. w.e.U. 15-10-2024. The modified Form No. 16 is placed at Annexure-A.

7.  The amendments in Form No. 24Q made by the Income-tax (Fifth Amendment) Rules, 2023 are as under:

1. In Annexurc-I : Deductee wise Break up of TDS, "Health and Education Cess has been substituted for "Education Cess".
2. Annexure-Il : Details of salary paid or credited during the financial year......... and net tax payable (under section 192) has been substituted by the Income-tax (Fifth Amendment) Rules. 2023, w.e.f. 01.07.2023.

Further, the amendment in Form No. 24Q made by the Income-tax (Eighth Amendment) Rules, 2024 w.e.f. 15.10.2024 is as under:

(i) In Annexure-II, column No. 388A- "Amount reported as per section 192(2B), of other tax deducted at source or tax collected at source, other than (388)' has been inserted.

8.   As per the amendment vide Income-tax (Eighteenth Amendment) Rules, 2023 w.c.f. 01.09.2023 in the Rule 3 of the Rules, in respect of the accommodation provided by any other employer, the rates prescribed for valuation of perquisites arc as under:

 9. The defin ition of "remote area" given in Explanation (v) to Rule 3 of the Rules has been amended vide Income-tax (Eighteenth Amendment) Rules, 2023 w.e.f. 01 .09.2023 as under:

" .. (v) "remote area", for purposes o/proviso 10 sub-rule (I) means any area other than an area which is located-

(a) within the lncallimits of,' or

(b) within a distance, measured aerially, of 30 kilometers ji-om the local limits of, any municipality or a cantonment hoard having a population of 1,00,000 or more based on the 20 /1 census ... "

10. As per clause (iii) of sub-rulc (7) of Rule 3, the value of free food and nonalcoholic beverages provided by thc employer to the employee shall bc thc amount of expenditure incurred by such employer. As per the amendment vide Income-tax (Tenth

Amendment) Rulcs, 2023, w.e.f. 2 1.0G.2023, the second proviso to clause ( iii) of sub-rule (7) of Rule 3 reads as under-

"Provided jurther that the provisions of the first proviso in respect of ji-ee food and non-alcoholic beverage provided by the employer through paid voucher shall not apply to an employee, being an assessee, who has exercised an option under

,wb-section (5) (If section 115BAC or whose income is chargeable to tax under sub-section (1 A) of section 115BAC "

11 . The exemption limit of leave encashmcnt, in the case of employees other than Government employees, has been enhanced to Rs 25,00,000/- vide C130T Notification No, 3 1/2023 datcd 24,05 ,2023, Accordingly, the exemption in respect of leave eneashmcnt in case of a non-Govenunent employee at the time of retirement shall be lower of the following amounts:

• Period of earned leave standing to the credit in the employee's account at the time ofretircment x average monthly salary,

• Average monthly sa lary x 10 (i ,e., 10 months' average salary),

• Maximum amount as specified by the Central Government, i.e., Rs. 25,00,000.

• Leave cncashment actua lly received at the time of retirement.

If an employee receives leave salary from morc than one employer in the same year, then the 6

maximum amount of exemption under section 10(1 OAA)(ii) of the Act ealIDot exceed the amount specilled by the Central Governmelll (i.e., Rs. 25,00,000). Where any employee has claimed exemption of leave salary under this section in any earlier year(s), then in case of such employee, the ceiling limit (i.e., Rs. 25,00,000) shall be reduced by the amount of

exemption earlier claimed.

12. The sub-section (12C) has been inserted in section 10 of the Act vide Finance Act, 2023 . UncleI' section 1 0(12e) of the Aet, any payment from the Agniveer Corpus Fund to a person enrolled under the Agnipath Scheme, or to his nominee shall be exempt. Section I 0(l2C) of the Act is reproduced as under:

"(l2C) any payment ./i·om the Agniveer Corpus Fund to a person enrolled under Ihe Agnipcllh Scheme. or 10 his nominee.

Explanation. - For the purposes 0/ Ihis clause "Agniveer Corpus Fund" and "Agnipath Scheme" shall have the meanings respectively assigned to them in seclion 80CCII; "

13. Section 87 A provides relief in the form of rebate to individual taxpayers, resident in India, who are in lower income bracket, i.e. having total income not exceeding Rs 5,00,000/-. The amount of rebate available under section 87 A is Rs 12,500/- or the amount of tax payable, whichever is less. As per the amendment vide Finance Act, 2023, w.e.f. 01.04.2024, the proviso

to section 87 A has been inserted and the same is reproduced as under:

" ...... Provided Ihal where Ihe 10101 income 0/ the assessee is chargeable 10 lax under sub-seclion (fA) 0/sectionI15BAC, and Ihe 10101 income-

(a) does nol exceed seven hundred IhousCind rupees, Ihe assessee shall be enlilled 10 a deduction from Ihe amounl 0/ income-tax (as compUled be/ore allowing /01' Ihe deductions under Ihis Chaplel) on his lotal income with which he is chargeable lor any

assessmenl year, of an amounl equal 10 one hundred per cenl 0/ such income-tax or an amount o/rwenryc/ive Ihousand rupees. whichever is less;

(b) exceeds seven hundred thousand rupees and Ihe income-lax payable on such lotal income exceeds Ihe amounl by which Ihe 10101 income is in excess 0/ seven hundred thousand rupees, the assessee shall be enlilled 10 a deduclion from Ihe amounl 0/

income-lax (as compuled before allowing the deduclions under Ihis Chaptel) on his lotal income, of an amounl equal /0 the CI!/'lOunl by which Ihe income-lax payable on such 10101 income is in excess o/Ihe amounl by which Ihe 10101 income exceeds seven 7 hundred thousand rupees.

14. Section 80CCH of the Act related to ' Dcduction in respcct of contribution to Agnipatb Scbeme' has been inserted vide Finance Act, 2023 . Accordingly after paragraph No. II of para 5.5.3 the fo llowing paragraph No. 12 is inserted and the same is to be read as under:

"80CCII. (I) Where an assessee, being an individual enrolled in the Agnipath Scheme and subscribing to the Agniveer Corpus Fund on or after Ihe isl day of November, 2022, has in the previous year paid or deposiled any amount in his account In the said Fimd, he shull be ut/uwed u deductiurt irt lite compulalion o.lhis lotal income, o.llhe whole ollhe amnunl w) paid or depnsiled.

(2) Where the Central Governmel1l makes any conlribulion 10 the accoul1l of an assessee in Ihe Agniveer Corpus Fund referred 10 in sub-section ( I). Ihe assessee shall be allowed a deduction in Ihe compulation a/his 10101 income o/Ihe whole o.flhe amount so contribuled.

Explanalion. - For Ihe purposes of this section,--

(a) "Agnipalh Scheme" means Ihe scheme for enrolmel1l in Indian Armed Forces inlrodLiced vide leller No. I 23)2022/D(Pay/Services), daled Ihe 29117 December. 2022 a/the Government a/India in Ihe Minis/ly of Defence:

(b) "Agniveer Corpus Fund" means afimd in which consolidated contributions of all Ihe Agniveers and malching conlributions o/Ihe Cenlral Government along wilh inleresl on bOlh Ihese conlribulions are held. "

15. Amcndmcnts in Pcnalty and Prosccution provisions on default on account of TDS-

(i) As per the Finance Act, 2023 , section 271C on ' Penalty ror (" ilure to deduct tax at source' has been amended. Section 271 C, inler alia, lays down that if any person fa ils to deduct whole or any part of tax at source or fails to payor ensure payment of;

tbe whole or any part of tllX under the proviso to section 1948 (w.e.f. 01.04.2023), sub-section (2) of section 1948A (w.c.f. 0 1.07.2023), he/she sha ll bc liable to pay, by way of penalty, a sum equal to the amollnt of tax not deducted or paid or payment

ensured by him.

(ii) As per the Finance I\ct, 2023, section 2761l on 'Fai lure to pay tax to the credit of Ccntral Government under Chapter XII -O or XVII-B ' has bccn amcnded. Section 276B lays down that if a person fails to pay to the credit of the Central Government wi thin the prcscribed time, as above, the tax deducted at so urce by him or tax payable 8 by him or cnsure payment of tax under the proviso to Section 1940 (w.e.f. 01.04.2023), or section 194BA(2) (w.e. r. 01.07.2023), he/she shall be punishable wi th rigorous imprisonment for a term whieh shall not be less than th ree months but which may extend to seven years and with fi ne."

(iii) Further, the following proviso has been inserted in section 276B of the Act vide Finance (No.2) Act, 2024:

"Provil/ed Ihal the provisions ol lhis section shall nol apply if Ihe paymenl relerred 10 in clause (a) has been made to the credit ollhe Central Government al any lime on or belore Ihe lime prescribed jor .filing Ihe slalemenl lor such paymenl under sub-section (3) 01 section 200. "

16. Miscellaneous

16. 1 These instructions are not exhaustive and are issued only with a view to guide the employers. Wherever there is any doubt, reference may be made to the provisions of the Income-tax Act, 196 1, the Income-tax Rules, 1962, the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2022 (No. 38 of 2022), the above mentioned Finance Acts, the relevant circulars / notifications, etc.

16.2 It is stated that in ease any assistance is requ ired, the Assessing Orricer/the Local Public Relation Officcr of thc Income-tax Department may be contacted.

16.3 These instructions may be brought to the notice of all Disbursing Officers and Undertaki ngs including those under the control of the Central/ State Governments.

16.4 Copies of this Circular are available at the fo llowing websites: www.finmin.ni c.in & www.incometaxindia.gov.in

Hindi version will follow.

Cory to:

I. All State Governments/Union Territories.

2. All Ministries/Departments of Government of India etc.

3. President's Secretariat

4. Vice-Presidcnt's Secretari at

5. Primc Minister's Office

6. Lok Sabha Secretariat

7. Rajya Sabha Secretariat

8. Cabinet Secretariat

9. Secretary, U.P.S.C., Dholpur House, New Delhi

10. Secretary, Staff Selection Commission, Lodhi Complex, New Delhi

I I . Supreme COlllt of I ndia, New Delhi

12. Election Commission, New Delhi Planning Commission, New Delhi

13. Secretari at of Governor siLt. Governors of all States/Union Terri tories

14. All Integrated f inancial Advisors to Mini stri es/Departments of Government of India

15. All heads of Departments & Offices subordi nate to the Department of Revenue CnDT, CBEC

16. Army headq uarters, New Delhi

17. Air headquarters, New Delhi Naval headquarters, New Delhi

18. Di rector-General of Posts & Telegraphs, New Delhi

19. Comptro ller & Auditor General of India

20. Accountant Generals of all State Governments

2 1. Director of Aud it (Central)Kolkata, Ncw Delhi, Mumbai.

22. All Banks (Public Sector, Nationali zed including State Bank of India)

23. Secretary, Reserve Bank of India Central Office P.B.No.406, MlIITIbai 40000 I (25 copies for distri bution to its Branches).

24. Accounts Officer, Inspector General of Assam Rifles, (Hqrs), Shillong All Chambers of Commerce & Industry

25. Lok Sabha /Rajya Sabha Secretariat Libraries ( 15 copies each)

26. All Offi cers and Sections in Technical Wing of CnDT

27. Asstt . Chief Inspec tor, RBI Inspection Deptt. Regional Cell Mumbai/Kolkatai Chennai/New Del hi/and Kanpur.

28. Contro ller of Accounts, Deptt. Of Economic Affairs, New Delhi

29. Manage r, Reserve Bank of Ind ia, Public Debt Office, Ahmedabadl13engalurul Bhllbaneswarl Mumbai/KolkatalHyderabad/Kanpllr/JaipurlChennailNagpurlNew Delhil Patnal GuwahatilTri vandrum.

30. Contro ller General of Defence Accounts, New Delhi .

3 1. Directorate of Audit, De fence Services, New Delhi . National Saving Organi sation, Nagpur.

32. Deputy Accountant General, Post & Telegraph, Kolkata.

33. The Legal Adviser, Export-Import Bank of India, P.B.No. I 9969, Mumbai 400002 1. Chief Controller of Accounts, CBDT, Lok Nayak Bhawan, Khan Market, New Delhi

34. N. S. Branch, Department of Economic Affairs, New Delhi

35. The Min. of Law (Deptt. of Legal Affai rs), Shastri Bhawan New Delhi . All foreign Banks operating in India

36. Air India, New Delhi .

37. Uni versity Grants Commission, Bahad ur Shah Jafar Marg, New Delhi .

Deputy Secretary

(IT-Budget), CBDT

FORM NO.16