Tax has to be deducted on the basis of the estimated income of the employees during the relevant financial year. The income payable to an employee during a financial year is computed and deduction is allowed on the basis of declaration made by the employee regarding the investments to be made by him in the year and any other exemption and deductions which he is entitled to receive. After that, his taxable income is computed and the tax is deducted monthly on the average basis.

The law allows an employee in receipt of any other taxable income other than salary to get the tax deduction thereon by his employer. Where the employee chooses to pay an additional tax under these provisions, he is required to file information in the prescribed form 12C read with Rule 26B. Where tax hasbeen deducted at source on such other income like rent, interest, etc tax deduction certificate is required to be enclosed with form 12C to arrive at the additional tax liability.

Till now, the facility was available only in respect of taxable income other than the salary, and the employee was not allowed to adjust his loss under any other head against the salary income so as to reduce his tax deductible on salary and he had to claim refund by filing his return of income, as excess tax was deducted, than what was due on his total taxable income.

Following a new amendment, an employee can get loss under the head `income from house property' adjusted against his salary income to reduce his tax liability on salary income.

The Notification is reproduced below:

Income Tax (Fourteenth Amendment) Rules, 1998 -- Substitution of certain words in rule 26B and amendments in the Form No 12C in Appendix II to the Income Tax Rules, 1962.

Notification No 10692 (F. No 142/51-98-TPL), dated 14.9.1998In exercise ofthe powers conferred by Section 295 of the Income Tax Act, 196 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income Tax Rules, 1962, namely:

1 (i) These rules may be called the Income Tax (Fourteenth Amendment) Rules, 1998.

(ii) They have to come into force on the date of their publication in the official gazette.

2 In the Income Tax Rules, 1962, in rule 26B, for the brackets and words ``(not being a loss under any such head)'', the brackets and `(not being a lose under any such head other than the loss under the head ``Income from house property'')' shall be substituted.

3 In Appendix II to the Income Tax Rules, 1962, in Form No 12C -- (A) for item 4 and entries relating thereto, the following item and entries relating thereto shall be substituted, namely:

4 Particulars of income under any head of income other than ``salaries'' (not being a loss under such head other than the loss under the head ``Income from house property'') received in thefinancial year.

(i) Income from house property (in case of loss, enclose computation thereof)

(ii) Profits and gains of business or profession

(iii) Capital gains

(iv) Income from other sources

(a) Dividends

(b) Interest

(C) Other incomes (specify) and then total all these heads.

(B) In item 5, for brackets, figures and word `` (i) to (v)'', the brackets, figures and words ``(i) to (iv) shall be substituted.''

Loss under the house property could be on account of interest on the borrowed capital in excess of rent receipt or in case of self-occupied property, interest due payable to the lender for construction of house property etc.

Now with this new amendment, the department has done justification to the various employees who uptil now could not get their loss from house property adjusted against salary income and had to claim the same in the return of income and wait endlessly for their refund.

The Jindals are Delhi-based chartered accountants.