Whether Employer is legally bound to deduct tax at source from income / receipts which are prima – facie exempt from tax:
S.10 deals with certain receipts which enjoy exemption from income-tax. In other words, the receipts falling u/s 10, do not form part of “total income“. Therefore, if certain allowances / payments by the employer, are prima facie exempt u/s 10, they will not form part of “ total income“ and hence there will be no obligation on the employer to deduct tax at source u/s 192(1).
Some of the examples of such allowances / payments, may be as follow: