9911796707
TMI BlogInstruction for deduction of tax at source from salaries during the Financial year 2001-2002 under section 192X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 50,000. Nil 2. Where the total income exceeds Rs. 50,000 but does not exceed Rs. 60,000. 10 per cent, of the amount by which the total income exceeds Rs. 50,000. 3. Where the total income exceeds Rs. 60,000 but does not exceed Rs. 1,50,000. Rs. 1,000 plus 20 per cent of the amount by which the total income exceeds Rs. 60,000. 4. Where the total income exceeds Rs. 1,50,000. Rs. 19,000 plus 30 per cent Rs. 1,50,000. of the amount by which the total income exceeds Surcharge on income-tax The amount of income-tax computed in accordance with the preceding provisions of this paragraph shall be reduced by the amount of rebate of income-tax calculated under Chapter VIIIA and the income tax so reduced shall be increased by a surcharge at the rate of two per cent of such income-tax where the total income exceeds sixty thousand rupees. However, the total amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax on a total income of Rs. 60,000 by more than the amount of income that exceeds Rs. 60,000. Surcharge is payable by both resident and non-resident assessees. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2B) of section 192 enables a tax payer to furnish particulars of income under any head other than Salaries and of any tax deducted at source thereon, in the prescribed Form (No. 12C) vide Annexure 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 deducible under section 192 of the Income-tax Act. It is, however, provided that 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 other income and the tax deducted thereon had not been taken into account. In other words, the DDO can take into account the loss from house property only for working out the amount of total tax to be deducted. While taking into the account the loss from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial year, in subsequent deductions during that financial year itself. 3.6 The trustees of a Recognised Provident Fund or any person authorised by the regulations of the fund to make payment of accumulated balances due to employees, shall, in cases where sub-rule (1) of rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in rule 10 of Part A of the Fourth Schedule. 3.7 Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in rule 6 of Part B of the Fourth Schedule to the Act. 3.8 For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the prescribed rate of exchange. Persons responsible for deducting tax and their duties 4.1 Under clause (i) of section 204 of the Act the persons responsible for paying for the purpose of section 192 means the employer himself or if the employer is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g tax at source is required to furnish a certificate to the payee to the effect that tax has been deducted and to specify therein the amount deducted and certain other particulars. This certificate, usually called the TDS certificate, has to be furnished within a period of one month from the end of the relevant financial year. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. In the case of employees receiving salary income including pension, the certificate has to be issued in Form No. 16 which has been prescribed under Boards Notification No. S.O. 940(E), dated 25-9-2001. It is, however, clarified that there is no obligation to issue the TDS certificate (Form 16) in case tax at source is not deductible/deducted by virtue of claims of exemptions and deductions. As per the amended section 192, the responsibility of providing correct and complete particulars of perquisites or profits in lieu of salary given to an employee is placed on the person responsible for paying such income i.e., the person responsible for deducting tax at source. The form and manner of such particulars are prescribed in rule 26A, Form 12BA and Form 16 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed person in the case of every office of Government, the principal officer in the case of every company, the prescribed person in the case of every local authority or other pubic body or association, every private employer and every other person responsible for deducting tax under section 192, from Salaries shall, after the end of each financial year, prepare and deliver, by 31st May following the financial year, an annual return of deduction of tax to the designated/concerned Assessing Officer. This return has to be furnished in Form No. 24. It may be noted that a copy of each of the TDS certificates issued during the financial year should be enclosed with the annual return. If a person fails to furnish in due time the annual return, he shall be liable to pay by way of penalty under section 272A, a sum which shall be Rs. 100 for every day during which the failure continues, so, however that this sum shall not exceed the amount of tax which was deductible at source. 4.9 A return filed on a floppy, diskette, magnetic cartridge tape, CD-ROM or any other computer readable media as may be specified by the Board shall be deemed to be a return for the purposes of section 206 and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, the refund can be issued to the employer as the tax has been borne by it : Circular No. 707, dated 11-7-1995. 4.13 TDS certificates issued by Central Government 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D) of section 10. It may be noted that, since salary includes pensions, tax at source would have to be deducted from pension also, if otherwise called for. However, no tax is required to be deducted from the commuted portion of pension as explained in clause (3) of para 5.2 of this Circular. (4) Section 17 defines the terms salary, perquisite and profits in lieu of salary. Perquisite, includes the value of any benefit or amenity granted or provided free of cost or at concessional rate, in specified cases. Perquisites are charged to tax under the existing provisions for employees who are directors of companies or have substantial interest in a company, or have an income from salaries, excluding the value of all benefits or amenities, exceeding Rs. 24,000. The Finance Act, 2001 amends the provision to raise the monetary limit to Rs. 50,000. The definition of perquisite has also been amended to include the value of any other fringe benefit or amenity as may be prescribed. The details of fringe benefits are to be calculated in the manner prescribed in the Income-tax Rules. It is further provided that profits in lieu of salary shall include amounts received in lump sum or otherwise, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and furniture at 10 per cent of original cost per annum or actual hire charges is continued. If an accommodation is provided by an employer in a hotel the value of the benefit in such a case shall be 24 per cent 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 any other changes for other facilities provided by the hotel will be separately valued under the residual clause. Also, if on account of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer, the amount reasonably attributable to business use is not to be charged as perquisite. For this, user details in the form of log books, odometer reading, etc. should be maintained. Where the car is used partly for purposes of official duties and partly for private or personal use and such details are not available or not properly maintained, the amount paid for or reimbursed less Rs. 1,200 per month for small car or Rs. 1,600 per month for large car would be valued as a perquisite. A higher amount may be deducted on the basis of proper maintenance of details of official use. For claiming higher amount of official use in respect of reimbursement of car expenses or wholly official use of car provided by an employer, the following details and documents need to be maintained: (i) the employer has maintained complete details of journeys undertaken for official purpose which may include date of journey, destination, mileage and the amount of expenditure incurred thereon; (ii) the employee gives a certificate that the expenditure was incurred wholly and exclusively for the performance of his official duty; (iii) the supervising authority of the employee, wherever applicable, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly or indirectly financing the educational institution. Any amount paid by the employee for such facilities or services shall be reduced from the above amount. However, where such educational institution itself is maintained and owned by the employer or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, the sub-rule shall not apply if the cost of such education or such benefit per child does not exceed Rs. 1,000 p.m. VI. Free or concessional journeys - Under the old rules where an employee avails of free or concessional journeys in conveyance owned by the undertaking for the purpose of transport of passengers or goods, the value of perquisite was taken as Nil. However, under the new rules the value at which such benefit or amenity is offered by such undertaking to the public, the value of perquisite shall now be taken as such value as reduced by any amount actually paid by the employee. The conveyance may be owned, leased or made available by any other arrangement by the undertaking. Journey tickets for leave travel, tours and transfers which are already exempt under sections 10(5) and 10(14) would co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The new rule does not treat as perquisite free meals if the cost per meal does not exceed Rs. 50. Where any amount is recovered from the employer, such amount shall be reduced from the value of perquisite. Such free or subsidised meal should, however, be provided at office premises or through non-transferable vouchers meant for only meals during working hours. These vouchers should be provided by employers encashable only at an eatery, a restaurant or a cafe. Tea or similar non-alcoholic beverages and snacks - in the form of light refreshments during working hours are not charged as perquisite. Also, arrangements for meals in remote areas as prescribed in para 5.1 and similar off-shore sites as specified, shall be exempt. However, expenditure on provision of free meals by the employer in excess of Rs. 50 should be treated as perquisite, as reduced by recoveries made from the employee. X. Gift, voucher or token in lieu of gift - It is customary in India, as it is in other parts of the world, to provide presents directly or indirectly in the form of vouchers or tokens to employees on social and religious occasions like Diwali, Christmas, New Year, the anniversary of the organiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re and purpose of entertainment and persons entertained. XII. Use of assets - It is common practice for an asset owned by the employer to be used by the assessee. This perquisite is to be charged at the rate of 10% of the original cost of the asset as reduced by any charges paid for such use. However, Computers and laptops are exempt. Further, the value of perquisite for an asset used for income for more than ten years would be taken as Nil. XIII. Transfer of assets - Often an employee or member of his household benefits from the transfer of movable asset (not being shares or securities) at no cost or at a cost less than its market value from the employer. The difference between the original cost of the movable asset (not being shares or securities) and the sum, if any, paid by the employee, shall be taken as the value of perquisite. In case of a movable asset, which has already been put to use, the original cost shall be reduced by a sum of 10% of such original cost for every completed year of use of the asset. Owing to a higher degree of obsolescence, in case of computers and electronic gadgets, however, the value of perquisite shall be worked out by reducing 50% of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, be desirable for the employer to obtain a declaration from each employee as to the option he wants to follow for purposes of tax deduction at source. However, it should be noted that the option to the taxpayer of using the old or new rules for the period specified above shall be applied uniformly in respect of all perquisites, in case of a particular taxpayer. In other words, one cannot selectively value a particular perquisite by the old rule and another one by the new rule. 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. However, administrative circulars and instructions relating to perquisites falling under the purview of Rule 3 issued before the adoption of the new rules, shall stand superseded or modified, as the case may be. Income not included in the head Salaries (Exemptions) 5.2 Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government of India Notification No. S.O. 1015(E) dated 27-11-1997 at Rs. 2,40,000. (5) Under section 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. (6) Under section 10(10C), any payment received 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 that such a mount does not exceed five lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance or any portion thereof from the total income of the employee. Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto Rs. 3,000 per month will be exempted from producti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osit 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 Notifications No. SO 1948(E), dated 24-11-2000 and 81(E), dated 29-1-2001 which are enclosed as per Annexure VII. (13) Under section 17 of the Act, exemption from tax will also be available in respect of : (a) the value of any medical treatment provided to an employee or any member of his family, in any hospital maintained by the employer; (b) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or of any member of his family : (i) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , where salary is due from, or paid or allowed by, more than one employer, the deduction under this clause shall be computed with reference to the aggregate salary due, paid or allowed to the assessee and shall in no case exceed the amount specified under this clause. 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 to the assessee by his employer, 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. The deduction hitherto available to non-Government employees has been withdrawn. The tax on employment 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. Deductions under Chapter VI-A of the Act 5.4 The following deductions under Chapter VI-A of the Act are available : (1) As per section 80CCC, where an assessee being an individual has in the previous year paid or deposited any amount out of hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, who is a resident in India being an individual or a Hindu Undivided Family has during the previous year (a) incurred any expenditure for the medical treatment (including Nursing), training and rehabilitation of a handicapped dependent; or (b) paid or deposited any amount under a Scheme framed in this behalf by the Life Insurance Corporation or any other insurer or Unit Trust of India subject to the conditions specified in sub-section (2) and approved by the Board in this behalf for the maintenance of handicapped dependent shall in accordance with and subject to the provisions of this section be allowed a deduction of a sum of forty thousand rupees in the previous year. The handicapped dependent means a person who is a relative of the individual or a member of HUF and is not dependent on any person other than such individual or HUF for his support and maintenance and is suffering from permanent physical disability (including blindness or mental retardation, specified in rule 11A of the Income-tax Rules, 1962). The deduction will be available to individuals without any restriction with regard to their total income. The permanent physical disability or mental retardati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the prescribed authority is any doctor registered with the Indian Medical Association and holding Post-graduate qualifications. For the purposes of this section, dependant means a person who is not dependant for his support or maintenance on any person other than the assessee. (5) Under section 80E of the Act a deduction will be allowed in respect of repayment of loan taken for higher education, subject to the following conditions : (i) In computing the total 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 repayment of loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education, or interest on such loan : Provided that the amount which may be so deducted shall not exceed forty thousand rupees. (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 loan ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief Fund or Lieutenant Governors Relief Fund, in respect of any State or Union Territory as the case may be, subject to certain conditions. xiv. The university or educational institution of national eminence approved by the prescribed authority. xv. The National Sports Fund to be set up by Central Government. xvi. The National Cultural Fund Set up by the Central Government. xvii.The Fund for Technology Development and Application set by the Central Government. xviii. The National Trust for Welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities. (7) Under section 80GG of the Act, an 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium to effect or to keep in force an insurance on the life of the individual, the wife or husband or any child of the individual. (2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (8) herein below on the life of the individual, the wife or husband or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; (3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his wife or children, insofar as the sum deducted does not exceed 1/5th of the salary; (4) Any contribution made : (a) by an individual to any provident fund to which the Provident Fund Act, 1925 applies; (b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf; (12) Any subscription made to any such deposit scheme (not being a scheme the interest on deposits whereunder qualifies for deduction under section 80L), as the Central Government may, by notification in the Official Gazette, specify of the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both. (13) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head Income from house property (or which would, if it has not been used for assessees own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not get completed by the end of the financial year 2000-2001, no tax rebate in respect of these items shall be admissible to the employees. (14) Subscription to equity shares or debentures forming part of any eligible issue of capital approved by the Board on an application made by a public company or as subscription to any eligible issue of capital by any public finance institution in the prescribed form : Provided that where a deduction is claimed and allowed under this clause with reference to the cost of any equity shares or debentures, the cost of such shares or debentures shall not be taken into account for the purposes of sections 54EA and 54EB. Explanation : For the purposes of this clause (i) eligible issue of capital means an issue made by a public company formed and registered in India or a public financial institution and the entire proceeds of the purposes of developing, maintaining and operating an infrastructure facility or for generating, or for generating and distributing, power or for providing telecommunication services whether basic or cellular ; (ii) infrastructure facility shall have the meaning assigned to it in the Explanation to sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who is of the age of sixty five years or more at any time during the previous years shall be entitled to a deduction from the amount of income tax (as computed before allowing the deductions under Chapter VIII) on his total income, with which he is chargeable for any assessment year, of an amount equal to one hundred per cent of such income-tax or an amount of fifteen thousand rupees, whichever is less. (18) Under section 88C, as inserted by Finance Act, 2000, an assessee, being a woman resident in India, and below the age of sixty-five years, at any time during the previous year, shall be entitled to a deduction from the amount of income-tax (as computed before allowing the deductions under Chapter VIII) her total income, with which she is chargeable for any assessment year, of an amount equal to hundred per cent, of such income tax or an amount of five thousand rupees, whichever is less. (19) The Drawing and Disbursing Officers should satisfy themselves about the actual deposits/subscriptions/payments made by the employees, by calling for such particulars/information as they deem necessary before allowing the aforesaid rebate. In case the DDO is not satisfied about the genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8.2 In case any assistance is required, the Assessing Officer/the local Public Relation Officer of the Income-tax Department may be contacted. 8.3 These instructions may please be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/State Governments. 8.4 Copies of this Circular are available with the Director of Income-tax (Research, Statistics and Publications and Public Relations), 6th Floor, Mayur Bhavan, Indira Chowk, New Delhi-110 001. Circular : No. 15/2001, dated 12-12-2001. Annexure I For Assessment year 2002-03 Example - 1 Calculation of Income-tax in the case of an employee having gross salary income. (i) up to Rs. 1,00,000. (ii) More than Rs. 1,00,000 but less than Rs. 5,00,000 and (iii) Exceeding Rs. 5,00,000 Particulars (Rupees) (Rupees) (Rupees) (i) (ii) (iii) Gross Salary Income (including allowances) 1,00,000 5,00,000 6,00,000 Contribution to G.P.F. 10,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LIP 20,000 5. Repayment of House Building Advance 25,000 6. Investment in infrastructure Bond u/s 88 (xvi) 20,000 Computation of Tax Gross Salary 3,00,000 Add : Perquisite in respect of reimbursement of Medical Expenses in excess of Rs. 15,000 in view of Sec. 17(2)(v) 15,000 3,15,000 Less: Standard deduction 20,000 Taxable Income 2,95,000 Tax thereon 62,500 Rebate u/s 88 GPF 20,000 LIC 20,000 Repayment of House Building 20,000 Advance (Maximum) Investment in Infrastructural Bonds u/s 88 (xvi) 20,000 Total 80,000 Rebate @ 20% on Rs. 80,000 16,000 Tax payable 46,500 Add: Surcharge @ 2% 930 Total Tax payable 47,430 For Assessment year 2002-03 Example - 4 Illustrating calculation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (Rupees) 1. Salary 1,08,000 2. Bonus 12,000 3. Free gas, electricity, water etc. (actual bills paid by Company) 6,000 4. (a) Furnished flat provided to the employee for which actual rent paid by the Company per annum 78,000 (b) Hotel rent paid by employer (for two months) 30,000 (c) Rent recovered from the employee 5,000 5. Car expenses reimbursed 40,200 6. Furniture at cost 50,000 7. Subscription of Mutual Fund u/s 88 (xvii) 12,000 8. Life Insurance Premium 3,000 9. Subscription to NSC VIII Issue 18,000 10. Contribution to Recognised PF 24,000 11. Contribution to infrastructure bonds u/s 88 (xvi) 15,000 Computation of total income and tax payable thereon 1. Salary 1,08,000 2. Bonus 12,000 3. Total Salary for valuation of perquisite @ 10,000 p.m. 1,20,000 4. Valuation of perquisites: (a) Perquisite for flat Less of (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le thereon 1. Gross Salary 1,68,400 Less House rent allowance exempt u/s 10(13A) (a) Actual amount of HRA received 12,000 (b) Expenditure on rent in excess of 10% of salary (including D.A.) as personal D.A. is included for retirement benefits) 8,600 (c) 50% of salary (including D.A.) 77,000 (-) 8,600 Total Salary Income 1,59,800 Less: Standard deduction 25,000 Total Taxable Income 1,34,800 Tax on total income 15,960 Tax rebate u/s 88 (i) Provident Fund 20,000 (ii) LIP 10,000 (iii) NSC VIII Issue 20,000 (iv) Repayment of HBA 12,000 (v) Subscription to eligible issue of capital of a Co. approved u/s 88(xvi) 5,000 (vi) Subscription of units of mutual fund (u/s 88(xvii) 15,000 82,000 limited to 80,000 @20% 15,960 (r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -4-1999) 2,00,000 4. Donation paid to National Childrens Fund 5,000 5. N.S.C. purchased 10,000 6. G.P.F. 20,000 Computation of Taxable Income and Tax thereon 1. Salary Income Gross Salary 4,00,000 Less : Standard deduction 20,000 Taxable Salary 3,80,000 2. Income from House Property Annual value Nil Interest payable on loan under section 24 2,00,000 Loss from House Property (maximum allowable for loans taken before 1-4-1999) 30,000 Gross Total Income 3,50,000 Less : Deduction under section 80G 50% of Rs. 5,000 2,500 Net Taxable Income 3,47,500 Tax thereon 78,250 Less : Rebate under section 88 G.P.F. 20,000 N.S.C. 10,000 Housing Loan repaid (maximum) 20,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............................... 5. Aggregate of sub-items (i) to (iv) of item 4 6. Tax deducted at source (enclose certificates) issued under section 203 Place : .................................. Date : .................................. .......................................................... Signature of the employee Verification I, ..................................., do hereby declare that what is stated above is true to the best of my knowledge and belief. Verified today, the...................day of..............2002. Place : .................................. Date : .................................. .......................................................... Signature of the employee Annexure III-A Form No. 12BA : Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof - See [2001] 118 Taxman 257 (St.) Annexure III-B Form No. 16 : Cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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