CBDT’s Circular on income-tax deductions from salaries for Financial Year (F.Y.) 2024-25 u/s 192 of the Income tax Act

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CBDT Circular

The CBDT issued Circular No. 03/2025 dated February 20, 2025, regarding income-tax deductions from salaries for the Financial Year (F.Y.) 2024-25 under Section 192 of the Income-tax Act, 1961.

  1. Amendments to Income-Tax Deduction Rates for Salaries
  • The Circular updates the rates of income-tax deduction from salaries for the financial year 2024-25 under Section 192 of the Income-tax Act, 1961. It incorporates amendments made by the Finance Acts of 2023 and 2024.
  1. Definition and Scope of ‘Salary’
  • The term “salary” now includes contributions made by the Central Government to the Agniveer Corpus Fund account of individuals enrolled in the Agnipath Scheme. This is part of the amendments made by the Finance Act, 2023.
  1. Perquisites and Their Valuation
  • The value of rent-free accommodation and other perquisites provided by employers is now defined more clearly. The valuation of perquisites for accommodation provided by other employers has been updated based on population and lease rental details.
  1. Surcharge Rates for High-Income Individuals
  • New surcharge rates have been introduced for individuals with higher incomes under the Old Tax Regime. These rates range from 10% to 37% based on income brackets.
  1. Income-Tax Rates Under the New Tax Regime
  • The Circular outlines the income-tax rates for the New Tax Regime for the financial year 2024-25. These rates range from 0% for income up to Rs. 3,00,000 to 30% for income above Rs. 15,00,000.
  1. Updated Form No. 16
  • Form No. 16 has been amended to reflect the new tax regulations. The form now includes details of other income, tax deductions, and exemptions. It also provides a comprehensive breakdown of salary components and tax calculations.
  1. Changes in Form No. 24Q
  • Form No. 24Q, used for reporting TDS (Tax Deducted at Source), has been updated. The form now includes details of health and education cess and other tax deductions.
  1. Exemptions and Deductions
  • The Circular highlights new exemptions and deductions, including contributions to the Agniveer Corpus Fund and leave encashment up to Rs. 25,00,000 for non-government employees.
  1. Penalty and Prosecution Provisions
  • The Circular updates penalty provisions for failure to deduct tax at source and failure to pay tax to the Central Government. It also includes provisions for imprisonment and fines for non-compliance.
  1. Guidance and Assistance
  • The Circular provides guidance for employers and taxpayers, emphasizing the importance of consulting relevant tax laws and seeking assistance from the Income-tax Department if needed. It also includes detailed instructions for filling out the updated forms.

The Complete Circular can be accessed at: https://incometaxindia.gov.in/communications/circular/circular-no-03-2025.pdf

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