INCOME TAX

Use of Form No. 16 for pensioners--Regarding.

Circular 761

Dated 13/1/1998

To

All Chief Commissioners of Income-tax

All Director-Generals of Income-tax.

Subject : Use of Form No. 16 for pensioners--Regarding.

The attention of the Board has been drawn to certain difficulties being faced by pensioners drawing their pensions through the banks where the tax deduction at source certificate in the prescribed Form No. 16 is sometime denied to them on the ground that no employee-employer relationship exists between the banks and the pensioner. At times, objections have also been raised by the banks on the premise that Form No. 16 relates to deductions from salaries and not from pensions. In other cases, the certificates have been denied on the ground that the bank was not aware of any other income which the pensioner may have had.

2. The matter has been considered by the Board. It is hereby clarified that :_

(a) As per section 17(1)(ii) of the Income-tax Act, 1961, the term "salary" includes pension ;

(b) Once tax has been deducted under section 192 of the Income-tax Act, 1961, the tax-deductor is bound by section 203 to issue the certificate of tax deducted in Form No. 16. No employee-employer relationship is necessary for this purpose ;

(c) The certificate in Form No. 16 cannot be denied on the ground that the tax-deductor is unaware of the payee's other income.

3. These clarifications may be brought to the notice of all concerned, especially the banks in your region.

(Sd.) (Jamna Dass),

Under Secretary to the Government of India.