If an employee has also income from other sources apart from salary, can the employer take these into account while deducting tax from salary?
Ans : Yes, if the employee furnishes the required particulars on plain paper to the employer. This is subject to the condition that the income under any of the other heads except 'Income from House Property' is not a loss. If the employee has incurred a loss under the head 'Income from House Property', he may furnish details thereof to the employer on plain paper and the employer may then take into account the said loss while deducting tax from salary.
Sub-section (2B) of section 192 enables a taxpayer to furnish particulars of income under any head other than "Salaries" ( not being a loss under any such head other than the loss under the head “ income from house property”) received by the assesse for the same financial year and of any tax deducted at source thereon.
Form no. 12C, which was earlier prescribed for furnishing such particulars, has since been omitted from the Income Tax Rules by the IT (24th amendment) Rules, 2003, w.e.f. 01.10.2003. However, the particulars may now be furnished in a simple statement, which is properly verified by the taxpayer in the manner as prescribed under Rule 26B(2 ) of the Income Tax Rules,1962 and shall be annexed to the simple statement. The form of verification is reproduced as under
I, …………………. (name of the assesse), do declare that what is stated above is true to the best of my information and belief.
Such income should not be a loss under any such head other than the loss under the head "Income from House Property" for the same financial year. The person responsible for making payment (DDO) shall take such other income and tax deducted at source, if any, on such income and the loss, if any, under the head "Income from House Property" into account for the purpose of computing tax deductible in terms of section 192(2B) of the Income-tax Act.
However, this sub-section shall not in any case have the effect of reducing the tax deductible (except where the loss under the head "Income from House Property" has been taken into account) from income under the head "Salaries" below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account'.
In other words, the DDO can take into account any loss (negative income) only under the head “income from House Property” and no other head for working out the amount of total tax to be deducted.`
While taking into account the loss from House Property, the DDO shall ensure that the assessee files the declaration referred to above and encloses therewith a computation of such loss from House Property.
Following details shall be obtained and kept by the employer in respect of loss claimed under the head “ income from house property” separately for each house property:
(A) Computation of income under the head “ income from house property” specifying
- Gross annual rent/value
- Municipal Taxes paid, if any
- Deduction claimed for interest paid, if any
- Other deductions claimed
(B) Address of the property
(C) Amount of loan, if any; and
(D) Name and address of the lender (loan provider)