9911796707
TMI BlogINCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2006-07 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment Year 2007-08) at the following rates: RATES OF INCOME-TAX A. Normal Rates of tax: 1. Where the total income does not exceed Rs. 1,00,000 Nil 2. Where the total income exceeds Rs. 1,00,000 but does not exceed Rs. 1,50,000 10 per cent of the amount by which the total income exceeds Rs. 1,00,000 3. Where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000 Rs. 5,000 plus 20 per cent of the amount by which the total income exceeds Rs.1,50,000 4. Where the total income exceeds Rs. 2,50,000 Rs. 25,000 plus 30 per cent of the amount by which the total income exceeds Rs.2,50,000 B. Rates of tax for a woman, resident in India and below sixty-five years of age: 1. Where the total income does not exceed Rs. 1,35,000 Nil 2. Where the total income exceeds Rs. 1,35,000 but does not exceed Rs. 1,50,000 10 per cent of the amount by which the total income exceeds Rs. 1,35,000 3. Where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000 Rs. 1,500 plus 20 per cent of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnexure-I ). Payment of Tax on Non-monetary Perquisites by Employer: 3.2 An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at his option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. The employer will have to pay such tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head salaries to the employee. Computation of Average Income-tax: 3.3 For the purpose of making the payment of tax mentioned in para 3.2 above, tax is to be determined at the average of Income-tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself. ILLUSTRATION: Suppose that the income chargeable under the head 'salary' of a male employee below sixty-five years of age for the year inclusive of all perquisites is Rs. 2,40,000, out of which, Rs. 40,000 is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (2B) of section 192 enables a taxpayer to furnish particulars of income under any head other than "Salaries" and of any tax deducted at source thereon. Form No. 12C, which was earlier prescribed for furnishing such particulars ( Annexure-II ), has since been omitted from the Income-tax Rules. However, the particulars may now be furnished in a simple statement, which is properly verified by the taxpayer in the same manner as was required to be done in Form 12C. (ii) Such income should not be a loss under any such head other than the loss under the head "Income from House Property" for the same financial year. The person responsible for making payment (DDO) shall take such other income and tax, if any, deducted at source from such income, and the loss, if any, under the head "Income from House Property" into account for the purpose of computing tax deductible under section 192 of the Income-tax Act. However, this sub-section shall not in any case have the effect of reducing the tax deductible (except where the loss under the head "Income from House Property" has been taken into account) from income under the head "Salaries" below the amount that would be so deductible if the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of a self-occupied residential house are that the amount of capital must have been borrowed on or after 1-4-1999 and the acquisition or construction of residential house must have been completed within three years from the end of the financial year in which capital was borrowed. There is no stipulation regarding the date of commencement of construction. Consequently, the construction of the residential house could have commenced before 1-4-1999 but, as long as its construction/acquisition is completed within three years, from the end of the financial year in which capital was borrowed the higher deduction would be available in respect of the capital borrowed after 1-4-1999. It may also be noted that there is no stipulation regarding the construction/ acquisition of the residential unit being entirely financed by capital borrowed on or after 1-4-1999.The loan taken prior to 1-4-1999 will carry deduction of interest up to Rs.30,000 only. However, in any case the total amount of deduction of interest on borrowed capital will not exceed Rs. 1,50,000 in a year. Adjustment for Excess or Shortfall of Deduction: 3.8 The provisions of sub-section (3) of section 192 allow the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 192 or paying tax on non-monetary perquisites on behalf of the employee under section 192(1A), shall pay the sum so deducted or tax so calculated on the said non-monetary perquisites, as the case may be, to the credit of the Central Government in prescribed manner (vide Rule 30 of the Income-tax Rules, 1962). In the case of deductions made by, or, on behalf of the Government, the payment has to be made on the day of the tax-deduction itself. In other cases, the payment has to be made within one week from the last day of month in which deduction is made. Penalty for Failure to Deposit Tax Deducted: 4.5 If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201. Sub-section (1A) of section 201 lays down that such person shall be liable to pay simple interest at twelve per cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which the tax is actually paid. Such interest, if chargeable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin a period of one month from the end of relevant financial year. An employer, who has paid the tax on perquisites on behalf of the employee as per the provisions discussed in paras 3.2 and 3.3, shall furnish to the employee concerned a certificate to the effect that tax has been paid to the Central Government and specify the amount so paid, the rate at which tax has been paid and certain other particulars in the amended Form 16. The obligation cast on the employer under section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a serious responsibility of the employer, which is expected to be discharged in accordance with law and rules of valuation framed thereunder. Any false information, fabricated documentation or suppression of requisite information will entail consequences therefore provided under the law. The certificates in Form No.12BA and Form No. 16 are to be issued on tax-deductor's own stationery within one month from the close of the financial year i.e. by April 30 of every year. If he fails to issue these certificates to the person concerned, as required by section 203, he will be liable to pay, by way of penalty, und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars of which are available at www.incometaxindia.gov.in and at http://tin.nsdl.com . If a person fails to furnish the quarterly statements in due time, he shall be liable to pay by way of penalty under section 272A(2)(k), a sum which shall be Rs.100 for every day during which the failure continues. However, this sum shall not exceed the amount of tax which was deductible at source. The Quarterly Statements are be filed on computer media only in accordance with rule 31A of the Income-tax Rules, 1962. These Quarterly Statements compulsorily require quoting of the Tax Deduction Account Number (TAN) of the tax-deductor and the Permanent Account Number(PAN) of the employees whose tax has been deducted. Therefore, all Drawing and Disbursing Officers of the Central and State Governments/Departments, who have not yet obtained TAN, must immediately apply for and obtain TAN. Similarly, all employees (including non-resident employees) from whose Income-tax is to be deducted may be advised to obtain PAN, if not already obtained, and to quote the same correctly, as otherwise the credit for the tax deducted cannot be given. A penalty under section 272B of Rs. 10,000 has been prescribed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment Departments which are making payments by book adjustment, should be accepted by the Assessing Officers if they indicate that credit has been effected to the Income-tax Department by book adjustment and the date of such adjustment is given therein. In such cases, the Assessing Officers may not insist on details like challan numbers, dates of payment into Government Account etc., but they should in any case satisfy themselves regarding the genuineness of the certificates produced before them : Circular No. 747, dated 27-12-1996. 4.14 There is a specific procedure laid down for refund of payments made by the deductor in excess of taxes deducted at source, vide Circular No. 285, dated 21-10-1980. 4.15 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India. 5. ESTIMATION OF INCOME UNDER THE HEAD "SALARIES" 5.1 Income chargeable under the head "Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efines the terms "salary", "perquisite" and "profits in lieu of salary". Perquisite includes: (a) The value of rent free accommodation provided to the employee by his employer; (b) The value of any concession in the matter of rent in respect of any accommodation provided to the employee by his employer; (c) The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases: (i) By a company to an employee who is a director of such company; (ii) By a company to an employee who has a substantial interest in the company; (iii) By an employer (including a company) to an employee, who is not covered by (i) or (ii) above and whose income under the head Salaries (whether due from or paid or allowed by one or more employers), exclusive of the value of all benefits and amenities not provided by way of monetary payment, exceeds Rs.50,000. The rules relating to valuation of such benefits and amenities have been prescribed in Rule 3. It is further provided that 'profits in lieu of salary' shall include amounts received in lump sum or otherwise, prior to employment or after cessation of employment for the purposes of taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te area" means an area located at least 40 kilometres away from a town having a population not exceeding 20,000 as per the latest published all-India census. Off-shore sites of similar nature do not have to meet any requirement of distance. If an accommodation is provided by an employer in a hotel the value of the benefit in such a case shall be 24% of the annual salary or the actual charges paid or payable to such hotel, whichever is lower, for the period during which such accommodation is provided as reduced by any rent actually paid or payable by the employee. However, where in cases the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on transfer from one place to another, no perquisite value for such accommodation provided in a hotel shall be charged. It may be clarified that while services provided as an integral part of the accommodation, need not be valued separately as perquisite, any other services over and above that for which the employer makes payment or reimburses the employee shall be valued as a perquisite as per the residual clause. In other words, composite tariff for accommodation will be valued as per these Rules and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of such education or such benefit per child exceeds Rs.1000 p.m. V. Interest free or concessional loans : It is common practice, particularly in financial institutions, to provide interest free or concessional loans to employees or any member of his household. The value of perquisite arising from such loans would be the excess of interest payable at prescribed interest rate over interest, if any, actually paid by the employee or any member of his household. The prescribed interest rate would now be the rate charged per annum by the State Bank of India as on the 1st day of the relevant financial year in respect of loans of same type and for the same purpose advanced by it to the general public. Perquisite value would be calculated on the basis of the maximum outstanding monthly balance method. For valuing perquisites under this rule, any other method of calculation and adjustment otherwise adopted by the employer shall not be relevant. However, small loans up to Rs. 20,000 in the aggregate are exempt. Loans for medical treatment specified in Rule 3A are also exempt, provided the amount of loan for medical reimbursement is not reimbursed under any medical insurance sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisite has been assessed with reference to exercise of the option by the employee under section 17(2), the fair market value at the time of exercise of the option shall be the cost of acquisition of share for working out the capital gains. The relevant guidelines of the Central Government have been issued vide Notification No. 1021(E), dated 11-10-2001. Stock options not in conformity with the above guidelines (non-qualified stock options) shall continue to be taxed at both the stages. It is pertinent to mention that benefits specifically exempt under sections 10(13A), 10(5), 10(14), 17 etc. would continue to be exempt. These include benefits like travel on tour and transfer, leave travel, daily allowance to meet tour expenses as prescribed, medical facilities subject to conditions. 5.2 Incomes not included in the Head "Salaries"(Exemptions) Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act :- (1) The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 10(10B), the retrenchment compensation received by a workman is exempt from income-tax subject to certain limits. The maximum amount of retrenchment compensation exempt is the sum calculated on the basis provided in section 25F(b) of the Industrial Disputes Act, 1947 or any amount not less than Rs.50,000 as the Central Government may by notification specify in the official gazette, whichever is less. These limits shall not apply in the case where the compensation is paid under any scheme which is approved in this behalf by the Central Government, having regard to the need for extending special protection to the workmen in the undertaking to which the scheme applies and other relevant circumstances. The maximum limit of such payment is Rs. 5,00,000 where retrenchment is on or after 1-1-1997. (6)Under section 10(10C), any payment received or receivable (even if received in instalments) by an employee of the following bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempted from income-tax to the extent th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1962, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be: (a) The actual amount of such allowance received by an employer in respect of the relevant period; or (b) The actual expenditure incurred in payment of rent in excess of 1/10 of the salary due for the relevant period; or (c) Where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or (d) Where such accommodation is situated in any other place, 40% of the salary due to the employee for the relevant period, whichever is the least. For this purpose, "Salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from Income-tax. The disbursing authorities should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a State Government or a public sector company out of his retirement benefits, in accordance with such scheme framed in this behalf by the Central Government and notified in the Official Gazette is exempt from Income-tax. By notification No. F. 2/14/89-NS-II, dated 7-6-89, as amended by Notification No. F. 2/14/89-NS- II, dated 12-10-89, the Central Government has notified a scheme called Deposit Scheme for Retiring Government Employees, 1989 for the purpose of the said clause. (12)Clause (18) of section 10 provides for exemption of any income by way of pension received by an individual or family pension received by any member of the family of an individual who has been in the service of the Central Government or State Government and has been awarded "Param Vir Chakra" or "Maha Vir Chakra" or "Vir Chakra" or such other gallantry award as may be specifically notified by the Central Government. Such notification has been made vide Notification Nos. S.O. 1948(E), dated 24-11-2000 and 81 (E), dated 29-1-2001 which are enclosed as per Annexure- VIA VIB (13)Under section 17 of the Act, exemption from tax will also be available in respect of:- (a) the value of any med ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the individual. Family also includes parents, brothers and sisters of the individual if they are wholly or mainly dependent on the individual. 5.3 Deductions under section 16 of the Act Entertainment Allowance: A deduction is also allowed under clause (ii) of section 16 in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees whichever is less. No deduction on account of entertainment allowance is available to non-government employees. Tax On Employment: The tax on employment (Professional Tax) within the meaning of clause (2) of Article 276 of the Constitution of India, leviable by or under any law, shall also be allowed as a deduction in computing the income under the head "Salaries". It may be clarified that "Standard Deduction" from gross salary income, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards. 5.4 Deductions under chapter VI-A of the Act In computing the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (VIIIth Issue) vide Notification S. O. No. 1560(E) dated 3-11-2005.] (6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child, (a) for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India; (b) for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to in clause (23D) of section 10 and as notified by the Central Government. [The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E,) dated 3-11-2005.] (7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify; [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S. O. No. 1562(E) dated 3-11-2005 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006] (8) Any subscription made to any units of any Mutual Fund, referred to in clause(23D) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self-financing or other scheme of any Development Authority, Housing Board etc. The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act. The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied that the amount of premium or other payment made on an insurance policy [other than a contract for deferred annuity mentioned in sub-para (2)] shall be eligible for deduction only to the extent of 20 per cent of the actual capital sum assured. In calculating any such actual capital sum, the following shall not be taken into account: (i) the value of any premiums agreed to be returned, or (ii) any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy. B. As per section 80CCC, where an assessee being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the Fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee's account, if any) as does not exceed the amount of one lakh rup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed for a sum not exceeding Rs.10,000 per annum to the extent payment is made by cheque out of their income chargeable to tax to keep in force an insurance on the health of the categories of persons mentioned below provided that such insurance shall be in accordance with a scheme framed in this behalf by - (a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization)Act, 1972 and approved by the Central Government in this behalf; or (b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of Section 3 of the Insurance Regulatory and Development Authority Act, 1999. The categories of persons are : (i) where the assessee is an individual, any sum paid to effect or to keep in force an insurance on the health of the assessee or on the health of the wife or husband, dependent parents or dependent children of the assessee. (ii) where the assessee is a Hindu Undivided Family, any sum paid to effect or to keep in force an insurance on the health of any member of the family. However, the deduction can be allowed for a sum not exceeding Rs. 15,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year for which the deduction is claimed: In cases where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority in the prescribed form and manner and a copy thereof is furnished along with the return of income. For the purposes of section 80DD, (a) "Administrator" means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002); (b) "dependant" means (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them; (ii) in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year; (c) "disability" shall have the meaning assigned to it in clause (i) of section 2 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education. (ii) The deduction specified above shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to above is paid in full by the assessee , whichever is earlier. For this purpose - (a) "approved charitable institution" means an institution established for charitable purposes and notified by the Central Government under clause (2C) of section 10, or, an institution referred to in clause (a) of sub-section (2) of section 80G. (b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is entitled to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :- (a) the assessee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act; (b) the assessee files the declaration in Form No. 10BA. (Annexure-VII ) (c) He will be entitled to a deduction in respect of house rent paid by him in excess of 10 per cent of his total income, subject to a ceiling of 25 per cent thereof or Rs. 2,000 per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG. (d) The assessee does not own: (i) any residential accommodation himself or by his spouse or minor child or where such assessee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or (ii) at any other place, any residential accommodation being accommodation in the occupation of the assessee, the value of which is to be determined under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. CALCULATION OF INCOME-TAX TO BE DEDUCTED: 6.1 Salary income for the purpose of section 192 shall be computed as follow:- (a) First compute the gross salary as mentioned in para 5.1 excluding all the incomes mentioned in para 5.2; (b) Allow deductions mentioned in para 5.3 from the figure arrived at (a) above. (c) Allow deductions mentioned in para 5.4 from the figure arrived at (b) above ensuring that aggregate of the deductions mentioned in para 5.4 does not exceed the figure of (b) and if it exceeds, it should be restricted to that amount. This will be the amount of income from salaries on which income tax would be required to be deducted. This income should be rounded off to the nearest multiple of ten rupees. 6.2 Income-tax on such income shall be calculated at the rates given in para 2 of this Circular keeping in view the age and gender of the employee. 6.3 The amount of tax payable so arrived at shall be increased by surcharge (if applicable) and additional surcharge (Education Cess) at the prescribed rate to arrive at the total tax payable. 6.4 The amount of tax as arrived at para 6.3 should be deducted every month in equal installments. Any excess or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a handicapped dependent. Particulars: Rs. 1. Gross Salary 3,20,000 2. Amount spent on treatmentof a dependant, being person with disability (but not severe disability) Rs. 7,000 3. Amount paid to LIC with regard to annuity for the maintenance of a dependant, being person with disability (but not severe disability) Rs. 50,000 4. GPF Contribution Rs. 25,000 5. LIP Paid Rs. 10,000 Computation of Tax Gross Salary Rs.3,20,000 Less: Deduction under section 80DD (Restricted to Rs.50, 000 only) Rs. 50,000 Taxable Income Rs. 2,70,000 Less: Deduction under section 80C: GPF25,000 LIP10,000 Total35,000 Total Income Rs. 2,35,000 Income-tax thereon Rs. 22,000 Add: Surcharge Nil Add: Education Cess @2%: Rs. 440 Total tax Payable Rs. 22,400 Example 3 For Assessment Year 2007-2008 Calculation of Income-tax in the case of a male employee where medical treatment expenditure was borne by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g D.A. presuming that D.A. is taken for retirement benefit) (1,44,000-30,000) =1,14,000 c. 50% of Salary(Basic+ DA) Rs.1,50,000 Rs. 1,14,000 Gross Total Income : Rs.3,12,000 Less : Deduction under section 80C GPF 36,000 LIC 4,500 Subscription to Infrastructure Bonds 20,000 Total: 60,000 Rs. 60,000 Total Income: Rs. 2,52,000 Tax on total income Rs. 22,100 Surcharge: Nil Education Cess @ 2% Rs. 442 Total Tax Payable Rs. 22,542 EXAMPLE-5 For Assessment Year 2007-2008 Illustrating valuation of perquisite and calculation of tax in the case of a male employee of a private company in Mumbai who was provided accommodation in a flat at concessional rate for ten months and in a hotel for twomonths. 1. Salary Rs. 5,00,000 2. Bonus Rs. 76,000 3. Free gas, electricity, water etc. (Actual bills paid by company) Rs. 24,000 4(a) Furnished flat provided to the employee for which actual rent paid by the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the employee for house hired by her Rs. 1,20,000 9.Repayment of House Building Loan (Principal) Rs. 60,000 10. Tuition Fees for three children (Rs. 10,000 per child) Rs. 30,000 Computation of total income and tax payable thereon 1.Gross salary Rs.5,92,000 (Basic+DA+HRA+SDA) Less: House rent allowance exempt under section 10 (13A) Least of: a.Actual amount of HRA received 1,80,000 b.Expenditure on rent in excess of 10% of salary (Including D.A.) assuming D.A. is including for retirement benefits (1,20,000-40,000) 80,000 c.50% of salary (including D.A) 2,00,000 (-) 80,000 Gross Total Taxable Income Rs.5,12,000 Less : Deduction under section 88 C i.Provident Fund 60,000 ii.LIP 10,000 iii.NSC VIII Issue 30,000 iv.Repayment of HBA 60,000 v.Tution Fees (Restricted to two children) 20,000 Total 1,80,000 Restricte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Interest payable on housing loan (Loan taken before 1-4-1999) Rs. 1,00,000 4. Donation paid to National Children's Fund Rs. 6,000 5. N.S.C. purchased Rs. 10,000 6. G.P.F. Rs. 20,000 Computation of Taxable Income and tax thereon 1. Salary Income Rs. 4,00,000 2. Income from House Property Annual value: Nil Interest payable on loan under section 24 30,000 (Maximum allowable for loans taken before 1-4-99) (-) Rs. 30,000 Gross total income Rs. 3,70,000 Less : Deduction under section 80G 50% of Rs.6,000 Rs.3,000 Less: Deduction under section 80C: GPF 20,000 NSC 10,000 Housing Loan repaid 30,000 Total Rs. 60,000 Total Deductions under Chapter VI-A Rs. 63,000 Total Income Rs.3,07,000 Tax Payable Rs. 42,100 Add: surcharge Nil Add: Education Cess @ 2% Rs. 842 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ______________, Place _________________ Date _________________ ___________________________________ Signature of the employee [F. No.142/47/98-TPL] ANNEXURE-III Form No. 12BA [(See Rule 26A(2)(b)] Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof (1) Name and address of employer: (2) TAN (3) TDS Assessment Range of the employer: (4) Name, designation and PAN of employee : (5) Is the employee a director or a person with : substantial interest in the company (where the employer is a company) (6) Income under the head "Salaries" of the employee : (other than from perquisites) (7) Financial Year: (8) Valuation of Perquisites Sl. Nature of perquisite Value of Amount, if Amount of taxable No. (See Rule 3) perquisite any recovered perquisite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amed thereunder and that such information is true and correct. Signature of the person responsible for deduction of tax Place. Full Name Date.. Designation...; ANNNEXURE-IV FORM NO. 16AA [See third proviso to rule 12(1)(b) and rule 31(1)(a)] Certificate for tax deducted at source from income chargeable under the head "Salaries"-cum- Return of income For an individual, resident in India, where- (a) his total income includes income chargeable to income-tax under the head 'Salaries'; (b) the income from salaries before allowing deductions under section 16 of the Income-tax Act, 1961 does not exceed rupees one lakh fifty thousand; (c) his total income does not include income chargeable to income-tax under the head 'Profits and gains of business or profession' or 'Capital gains' or agricultural income; and (d) he is not in receipt of any other income from which tax has been deducted at source by any person other than the employer Name and address of the Employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAL INCOME (8-10) 12. TAX ON TOTAL INCOME 13. REBATE UNDER CHAPTER VIII I. Under section 88 (please specify) GROSS QUALIFYING TAX AMOUNT AMOUNT REBATE (a) Rs. .. Rs. .. (b) Rs. .. Rs. .. I _______________________ <?xml:namespace prefix = w ns = "urn:schemas-microsoft-com:office:word" /> son of Shri _____________________________ working in the capacity of _________________________________________________ (designation) do hereby certify that a sum of Rupees __________________ (in words) has been deducted at source and paid to the credit of the Central Government. I further certify that the information given above is true and correct based on the books of account, documents and other available records. (c) Rs. Rs. (d) Rs. Rs. (e) Rs. Rs. (f) Rs. Rs. (g) Total [(a) to (f)] Rs. Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Account Number verification by the assessee I, _____________________________________________________________ (Name in full and in block) letters), son/daughter of Shri _______________________________ solemnly declare that to the best of my knowledge and belief, the information given in this return is correct, complete and truly stated and in accordance with the provisions of the Income-tax Act, 1961, in respect of income chargeable to Income-tax for the previous year relevant to the assessment year ______________. Receipt No Date Signature of the assessee SEAL Date:_____________ Place:_____________ Signature of the receiving official ANNNEXURE-V Notification no. S.O. 974 (E), dated 26-9-2006 In exercise of the powers conferred by sub-section (2) of section 206 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby specifies the following Scheme for electronic filing of return of tax deducted at source, namely:- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rn for tax deduction at source, prescribed under the Rules, are duly and correctly filled in. (5) Each computer media used for preparation of the e-TDS Return shall be affixed with a label indicating name, permanent account number, tax deduction account number and address of the e-deductor, the period to which the return pertains, the Form Number of the return and the volume number of the said media in case more than one volume of such media is used. (6) Separate computer media shall be used for each Form of e-TDS Return by the e-deductor. 4. Furnishing of e-TDS Return.- (1) The e-deductor shall furnish e-TDS Return on computer media to the e-TDS Intermediary duly supported by a declaration in Form No.27A, as prescribed in the Rules, in paper format: Provided that in case any compression software has been used by the e-deductor for preparing the e-TDS Return, he shall also furnish such compression software alongwith the e-TDS Return on the same computer media. (2) In case the e-deductor has on-line connectivity with the server of the e-TDS Intermediary, as may be designated by e-filing Administrator for this purpose, he may transmit the electronic data of the e-TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the e-filing Administrator and transmit the data to the e-filing Administrator whereupon Assessing Officer may take action for declaring the return as an invalid return after giving due opportunity to the deductor as required under sub-section (4) of section 206 of the Act. (9) In case the defects intimated by the Assessing Officer are rectified within the period of fifteen days or such further period as may be allowed by the Assessing Officer, the date of issue of provisional receipt shall be deemed to be the date of filing of e-TDS Return. 6.General responsibilities of e-TDS Intermediary. - (1) The e-TDS Intermediary shall ensure accurate transmission of the e-TDS Return to the e-filing Administrator: Provided that the e-TDS Intermediary shall not be responsible for any errors or omissions in the return of tax deducted at source prepared by the e-deductor. (2) The e-TDS Intermediary shall retain for a period of one year from the end of the relevant financial year in which the return is required to be filed, the electronic data of the TDS Return in the format as specified by the e-filing Administrator. (3) The e-TDS Intermediary shall retain for a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited in a non-withdrawable pension tier-I account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service. (ii) In addition to the above pension account, each individual may also have a voluntary tier-II withdrawable account at his option. This option is given as GPF will be withdrawn for new recruits in Central government service. Government will make no contribution into this account. These assets would be managed through exactly the above procedures. However, the employee would be free to withdraw part or all of the 'second tier' of his money anytime. This withdrawable account does not constitute pension investment, and would attract no special tax treatment. (iii) Individuals can normally exit at or after age 60 years for tier-I of the pension system. At the exit the individual would be mandatorily required to invest 40 percent of pension wealth to purchase an annuity (from an IRDA-regulated life insurance company). In case of Government employees the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirment. The ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Gallantry When awarded for acts of courage or conspicuous gallantry and supported by certificate issued to this effect by the last Head of Department. 13. President's Police Fire Services Medal for Gallantry -do- 14. President's Fire Services Medal for Gallantry -do- 15. President's Home Guards and Civil Defence Medalfor Gallantry -do- 16. Home Guard and Civil Defence Medal for Gallantry -do- [F. No. 142/29/99-TPL] ANNEXURE-VIB NOTIFICATION NO. S.O. 81(E), DATED 29-1-2001 In exercise of the powers conferred by sub-clause (i) of clause (18) of Section 10 of the Income-tax Act, 1961 (43 of 1961)), the Central Government, hereby specifies the gallanty awards for the purposes of the said Section and for that purpose makes the following amendment in the notification of the Government of India in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number S.O. 1048(E), dated the 24th November 2000, namely:- In the said notification, in the Table, against serial numbers 1,2 and 3 under cloumn (3) relating to "Circumstances for eligibility" the wor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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