Income tax at source would be deducted only on 40 per cent of salary arrears to central government employees in the current fiscal on implementation of Sixth Pay Commission recommendations, government said on Tuesday.

The government has decided to pay 40 per cent of arrears to its employees this fiscal and 60 per cent next fiscal.

"It is clarified that income tax at source would be deducted only from the arrears of salary actually paid during 2008-09. On the balance, tax would be deducted during the financial year in which these pay arrears are paid," a statement by the Central Board of Direct Taxes said.

The CBDT issued the statement after it received a number of representations seeking clarification as to whether TDS needs to be deducted on 40 per cent of arrear to be paid during 2008-09 or on the entire arrear payable to the government servant.