Income-tax Act, 2025, section 392
Section 392, Sub-section by Sub-section
| Sub-section | Rule | Rate or figure |
|---|---|---|
| 392(1) | Any person responsible for paying income chargeable under the head Salaries deducts income-tax on the amount payable, at the time of payment, on the estimated income of the assessee under this head for the tax year. | Average rate of income-tax computed on the basis of the rates in force |
| 392(2) | The employer may, at his option, pay the tax on the whole or part of a non-monetary perquisite chargeable under section 17(1) without deducting it from the employee. The tax is determined on the salary income including that perquisite. | Average rate |
| 392(3) | An eligible start-up referred to in section 140 paying income of the nature specified in section 17(1)(d) (specified security or sweat equity shares) deducts or pays the tax within the time specified for the payee in section 289(3). | Rates in force for the tax year of allotment or transfer |
| 392(4)(a) | The employer takes into account particulars furnished by the employee, at his option, in the prescribed form: salary from any other employer during the tax year; relief under section 157; loss under the head Income from house property; income under any other head (not being a loss, other than the house property loss); tax deducted or collected at source for the same tax year. | Increases or decreases the tax to be deducted |
| 392(4)(b) | The tax deductible from salary shall not be reduced in any case except on account of loss under the head Income from house property and the tax deducted and collected under other provisions of the Chapter. | No other reduction |
| 392(5) | The employer furnishes to the employee a statement of perquisites or profits in lieu of salary with their value; obtains evidence or proof of the prescribed claims (including set off of loss); and may increase or reduce the deduction to adjust any excess or deficiency from an earlier deduction or failure to deduct during the tax year. | Adjustment within the tax year |
| 392(6) | Trustees of a recognised provident fund deduct tax on the accumulated balance where paragraph 9 of Part A of Schedule XI applies, as provided in paragraph 10 of that Part. Trustees of an approved superannuation fund deduct tax on employer contributions and interest paid to the employee, as provided in paragraph 7 of Part B of Schedule XI. | As provided in Schedule XI |
| 392(7) | Trustees of the Employees Provident Funds Scheme, 1952, or a person authorised under it, deduct tax on payment of the accumulated balance where the aggregate amount of such payment is ₹50,000 or more and the balance is includible in total income because paragraph 8 of Part A of Schedule XI does not apply. | 10% |
| 392(8) | For salary payable in foreign currency, the value in rupees is calculated at the prescribed rate of exchange. | Prescribed rate of exchange |
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Section 3(10) of the Finance Act, 2026: tax to be deducted from, or paid on, salary under section 392 (other than sub-section (7)) is computed at the rate or rates specified in Part III of the First Schedule, increased by surcharge as provided there.
Income-tax Act, 2025, section 202(1), Table
Rates in Force: Section 202(1) Slabs
Section 202(1) applies to an individual unless the option under section 202(4) is exercised. Its marginal heading is "New tax regime for individuals, Hindu undivided family and others".
| Sl. No. | Total income | Rate of tax |
|---|---|---|
| 1 | Up to ₹4,00,000 | Nil |
| 2 | From ₹4,00,001 to ₹8,00,000 | 5% |
| 3 | From ₹8,00,001 to ₹12,00,000 | 10% |
| 4 | From ₹12,00,001 to ₹16,00,000 | 15% |
| 5 | From ₹16,00,001 to ₹20,00,000 | 20% |
| 6 | From ₹20,00,001 to ₹24,00,000 | 25% |
| 7 | Above ₹24,00,000 | 30% |
Finance Act, 2026, First Schedule, Part III, Paragraph A
Rates in Force: Finance Act, 2026, Part III, Paragraph A
Part III of the First Schedule gives the rates for deducting income-tax from salaries and for computing advance tax for the tax year commencing on 1 April 2026. These apply where section 202(1) does not.
| Assessee | Total income | Income-tax |
|---|---|---|
| Individual (item I) | Does not exceed ₹2,50,000 | Nil |
| Individual (item I) | Exceeds ₹2,50,000 but does not exceed ₹5,00,000 | 5% of the amount by which the total income exceeds ₹2,50,000 |
| Individual (item I) | Exceeds ₹5,00,000 but does not exceed ₹10,00,000 | ₹12,500 plus 20% of the amount by which the total income exceeds ₹5,00,000 |
| Individual (item I) | Exceeds ₹10,00,000 | ₹1,12,500 plus 30% of the amount by which the total income exceeds ₹10,00,000 |
| Resident individual of sixty years or more but less than eighty years (item II) | Does not exceed ₹3,00,000 | Nil |
| Resident individual of sixty years or more but less than eighty years (item II) | Exceeds ₹3,00,000 but does not exceed ₹5,00,000 | 5% of the amount by which the total income exceeds ₹3,00,000 |
| Resident individual of sixty years or more but less than eighty years (item II) | Exceeds ₹5,00,000 but does not exceed ₹10,00,000 | ₹10,000 plus 20% of the amount by which the total income exceeds ₹5,00,000 |
| Resident individual of sixty years or more but less than eighty years (item II) | Exceeds ₹10,00,000 | ₹1,10,000 plus 30% of the amount by which the total income exceeds ₹10,00,000 |
| Resident individual of eighty years or more (item III) | Does not exceed ₹5,00,000 | Nil |
| Resident individual of eighty years or more (item III) | Exceeds ₹5,00,000 but does not exceed ₹10,00,000 | 20% of the amount by which the total income exceeds ₹5,00,000 |
| Resident individual of eighty years or more (item III) | Exceeds ₹10,00,000 | ₹1,00,000 plus 30% of the amount by which the total income exceeds ₹10,00,000 |
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Finance Act, 2026 and sections 393(6), 397(2)
Surcharge, Cess, Missing PAN and Nil Declaration
| Point | Rule | Source |
|---|---|---|
| Surcharge | For an individual: 10% where total income exceeds ₹50,00,000 but not ₹1,00,00,000; 15% above ₹1,00,00,000 up to ₹2,00,00,000; 25% above ₹2,00,00,000 up to ₹5,00,00,000; 37% above ₹5,00,00,000. The 25% and 37% tiers are tested on total income excluding dividend income and capital gains under sections 196, 197 and 198. | FA 2026, First Schedule, Part III, Paragraph F, Table 1, Sl. No. 1 |
| Surcharge where income is chargeable under section 202 | The Finance Act Tables for section 202 stop at 25% for total income exceeding ₹2,00,00,000: there is no 37% tier. | FA 2026, s. 3(4)(b) Table Sl. No. 10 and s. 3(12)(b) Table Sl. No. 10 |
| Health and Education Cess | 4% of the income-tax and surcharge. The exclusion for resident payees in section 3(17)(i) covers deductions under sub-sections (7), (8) and (9) only, not salary under sub-section (10). | FA 2026, s. 3(16) and 3(17) |
| Employee does not furnish a valid PAN | Tax is deducted at the higher of the rate in the relevant provision, the rates in force, or 20%. | ITA 2025, s. 397(2)(b)(i) |
| Provident fund withdrawal under section 392(7) | A resident individual may furnish the written declaration that tax on his estimated total income is nil, and no tax is then deducted, subject to the Note under the Table in section 393(6). | ITA 2025, s. 393(6), Table, Sl. No. 1(a) |
Practical
How to Use This Chart
- Section 2(16) defines the average rate of income-tax as the rate arrived at by dividing the amount of income-tax calculated on the total income by such total income. So the employer estimates the income for the whole tax year, computes the tax on it at the slab rates and applies the resulting rate to each payment.
- Other income, house property loss and tax already deducted or collected elsewhere are considered only if the employee furnishes the particulars under section 392(4).
- Apart from house property loss and tax already deducted or collected, nothing the employee declares can reduce the tax deductible from salary.
Not shown on this page
- How the employer finds out whether the employee is taxed under section 202(1) or has exercised the option under section 202(4) is not in section 392. It is a matter for the Income-tax Rules, 2026 and Board instructions, which are not covered here.
- Valuation of perquisites, exemptions and deductions that go into the estimated salary income are not shown.
- The rebate under section 156 is in the income-tax slabs chart.
- Paragraphs 7, 8, 9 and 10 of Schedule XI, which decide when a provident fund or superannuation payment is taxable and how much is deducted, are not reproduced.
- Forms for the employee declaration and the salary TDS certificate, and due dates, are prescribed by the Income-tax Rules, 2026 and are not covered.
- Marginal relief on surcharge is not shown.
Official documents behind this page
- Income-tax Act, 2025 (30 of 2025), as enacted, Gazette of India ExtraordinarySection 392(1) to (8); section 202(1), Table, Sl. No. 1 to 7; section 393(6), Table, Sl. No. 1(a); section 397(2)(b)(i); section 2(16) and 2(90)(a)(ii).
- Finance Act, 2026 (4 of 2026), Gazette of India Extraordinary, 30 March 2026Section 3(10), 3(12), 3(16) and 3(17); section 3(4)(b) Table Sl. No. 10; First Schedule, Part III, Paragraph A items (I), (II) and (III) and Paragraph F, Table 1, Sl. No. 1. The Act has no section amending section 392.
- Income-tax Act, 2025 as amended by the Finance Act, 2026 (consolidated copy)Used as a second reading of section 392 and section 202(1). It carries no amendment footnote against section 392 or the section 202(1) Table.
Disclaimer: This guide is general information based on the law and notifications in force when it was last updated. It is not professional advice for your case — rates, thresholds and due dates change, so check the current position or speak to our CA team before you act on it.