Payment of income and deduction of tax.
196. (1) For the purposes of section 195, the specified payment shall be deemed to 40 have been made, if the payment has been made—
(a) in cash;
(b) by issue of a cheque or draft;
(c) by credit to any account, whether called suspense account or by any other name; or
(d) by any other mode as may be prescribed, whichever is earlier.
(2) If the payment is wholly or partly in kind, the deductor shall ensure that the tax deductible in respect of such payment has been paid before making the payment.
(3) The deductor may, at the time of making any deduction of tax from the payment liable to be taxed under the head "Income from employment" or from the payment in the nature of interest, increase or reduce the amount to be deducted from any payment to be made to a deductee for the purposes of adjusting any deficiency, or excess, arising out of any previous deduction or non-deduction during the financial year in respect of such deductee.
(4) For the purposes of making any deduction of tax from the payment liable to be taxed under the head "Income from employment", the deductor shall take into account the following particulars, if any, furnished by the deductee in such form and manner as may be prescribed, namely:—
(i) details of payment liable to be taxed under the head "Income from employment" due to or received by the deductee from any other employer during the year and any tax deducted therefrom;
(ii) tax relief for arrears or advance receipts under section 206.
(5) If the tax payable on any payment is to be borne by the deductor in pursuance of an agreement or arrangement, then, for the purposes of deduction of tax, the payment shall be grossed up to such amount as would, after deduction of tax thereon at the rate referred to in sub-section (1) of section 195, be equal to the net amount payable under such agreement or arrangement.
