On what basis does an employer work out the tax to deduct from ordinary salary under section 392(1) of the Income-tax Act, 2025?
Question and options
On what basis does an employer work out the tax to deduct from ordinary salary under section 392(1) of the Income-tax Act, 2025?
A flat 10% of each month's salary
The average rate on the employee's estimated salary for the year
The highest slab rate on each month's salary
The preceding year's average rate on each month's salary
Answer and explanation
Section 392(1) requires tax to be deducted at the average rate of income-tax, computed using the rates in force for the tax year of payment, on the employee's estimated salary income for that year. No flat rate applies, and the preceding year's rates or income are not the basis.
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