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TMI BlogInstructions for Deduction of Tax at Source From SalaryX X X X Extracts X X X X X X X X Extracts X X X X ..... tes : Rates of Income-tax 1. Where the total income does not exceed 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 of the amount by which the total income exceeds Rs. 1,50,000. 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 VIII and the income-tax so reduced shall be increased by a surcharge at the rate of five 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-tax that exceeds Rs. 60,000. Surcharge is payable by both resident and non-resident assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employer - Sub-section (2) of section 192 deals with situations where an individual is working under more than one employer or has changed from one employer to another. It provides for deduction of tax at source by such employer (as the taxpayer may choose) from the aggregate salary of the employee who is or has been in receipt of salary from more than one employer. The employee is now required to furnish to the present/chosen employer details of the income under the head Salary due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer. The present employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer). 3.5 Relief when salary paid in arrear or advance - Under sub-section (2A) of section 192 where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body is entitled to the relief under sub-section (1) of section 89, he may furnish to the person responsible for making the payment referred to in Para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the Return of Income for the relevant year. 3.7 Conditions for claim of deduction of interest on borrowed capital for computation of income from house property - (i) For the purpose of computing income/loss under the head income from house property in respect of a self-occupied residential house, a normal deduction of Rs. 30,000 is allowable in respect of interest on borrowed capital. However, a deduction on account of interest up to a maximum limit of Rs. 1,50,000 is available if such loan has been taken on or after 1-4-1999 for constructing or acquiring the residential house and the construction or acquisition of the residential unit out of such loan has been completed within three years from the end of the financial year in which capital was borrowed. Such higher deduction is not allowable in respect of interest on capital borrowed for the purposes of repairs or renovation of an existing residential house. To claim the higher deduction in respect of interest upto Rs. 1,50,000, a further condition has been added by the Finance Act, 2002. It is now required that the employee should furnish a certificate from the person to whom any interest is payable on the capital borrowed, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent provided in rule 6 of Part B of the Fourth Schedule to the Act. 3.11 Salary paid in foreign currency - 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 Company, the Company itself including the Principal Officer thereof. 4.2 The tax determined as per para 7 should be deducted from the salary under section 192 of the Act. 4.3 Deduction of tax at lower rate - Section 197 enables the taxpayer to make an application in Form No. 13 to his Assessing Officer, and, if the Assessing Officer is satisfied that the total income of the taxpayer justifies the deduction of income-tax at any lower rate or no deduction of income-tax, he may issue an appropriate certificate to that effect which should be taken into account by the Drawing and Disbursing Officer while deducting tax at source. In the absence of such a certificate furnished by the emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. No. 1062(E), dated 4-10-2002. 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 the Income-tax Rules as amended by notification No. S.O. No. 1062(E), dated 4-10-2002 (copy enclosed as Annexures IIIA and IIIB). A new form (Form 12BA) stating the nature and value of perquisites is to be provided by the employer in case of salary above Rs. 1,50,000. In other cases, the information would have to be provided by the employer in the amended Form 16 itself. In either case, Form 16 with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax Act, read with rules 36A and 37 of the Income-tax Rules, the prescribed 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 public 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 Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax deducted in Form 16 to the pensioners also vide. CBDT Circular No. 761, dated 13-1-1998. Important circulars 4.12 Where Non-Residents 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 Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a Keyman insurance policy including the sum allocated by way of bonus on such policy. For the purposes of this sub-clause, the expression Keyman insurance policy shall have the meaning assigned to it in clause (10D) 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: (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) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distance. The definition of salary for calculating perquisite value is the same as per earlier Rules. The only change is that medical allowances and reimbursement for treatment of serious illness as prescribed in the proviso below section 17(2)(vi) have now been excluded from the definition of salary for this purpose. For furnished accommodation, the provision of valuation of perquisite of furnishings, fittings and furniture at 10% of original cost per annum or actual hire charges is continued. In case of employer other than Central and State Govt., where accommodation is taken on lease or rent by employer, actual amount of lease rental paid or payable by the employer or 10% of salary whichever is lower, as reduced by the rent, if any, actually paid by the employee, is taken as perquisite. 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 is reduced by any rent actually paid or payable by the employee. However, where in cases the employee is provided such accommodatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual running and maintenance charges (including remuneration of the chauffeur, if any) are reimbursed to him by the employer and such reimbursement is for the use of the vehicle partly for official and partly for personal or private purposes, the value of perquisite shall be the actual amount of expenditure incurred by the employer as redued by the amounts specified in column (I) of the Table below. (d) Where the motor car is owned or hired by the employer and is used partly in the performance of his duties and partly for personal or private purposes, the value of perquisite shall be determined as per the Table below: Small car (upto 1.6 ltrs engine capacity) Large car (above 1.6 ltrs engine capacity) If Chauffeur provided by employer to run the motor car, an additional amount as below is also charged (i) Car owned/hired by employer and expenses on maintenance and running are met or reimbursed by the employer. Rs. 1200 per month Rs. 1600 per month Rs. 600 per month (ii) Car owned/hired by employer but the expenses on running and maintenance for such private or personal use are fully met by the employee. Rs. 400 per month Rs. 600 per month Rs. 600 per month (e) However ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee education facility would be the expenditure incurred by the employer. Under the new rules free or concessional education shall be valued in a manner assuming that such expenses are borne by the employee, and would cover cases where an employer may be running, maintaining or directly 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 value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality if the cost of such education or such benefit per child exceeds Rs. 1,000 p.m. VI. Free or concessional journeys - The perquisite value of free or concessional journeys provided by an employer engaged in carriage of passengers or goods shall be taken as the value at which such benefit or amenity is offered by such undertaking to the public, as reduced by any amount actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to all classes of employees would remain exempt. IX. Free meals - The provision of free meals varies widely from uniform canteen food, coupons etc. to lavish hotel meals. The scheme of free meals as a staff welfare measure had been recognized and was admissible upto Rs. 35 for each meal. 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 employee, such amount shall be reduced from the value of perquisite. Such free or subsidized 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(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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employee for such use. However, the user of Computers and Laptops would not give rise to any perquisite. 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 per cent 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 per cent of the actual cost by the reducing balance method for each completed year of use. Electronic gadgets in this case means data storage and handling devices like computer, digital diaries and printers. They do not include household appliance (i.e., white goods) like washing machines, microwave ovens, mixers, hot plates, ovens etc. Similarly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or, after termination of service to any place in India is exempt under clause (5) of section 10 subject, however, to the conditions prescribed in rule 2B of the Income-tax Rules, 1962. For the purpose of this clause, family in relation to an individual means: (i) the spouse and children of the individual; and (ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual. It may also be noted that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel. (2) Death-cum-retirement gratuity or any other gratuity which is exempt to the extent specified from inclusion in computing the total income under clause (10) of section 10. (3) Any payment in commutation of pension received under the Civil Pension (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union, or holders of civil posts/posts connected with defence, under the Union, or civil posts under a State, or to the members of the All India Services/Defence Services, or, to the employees of a local authority or a corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d under a Central, State or Provincial Act; (d) A Local Authority; (e) A Cooperative Society; (f) A university established or incorporated or under a Central, State or Provincial Act, or, an institution declared to be a University under section 3 of the University Grants Commission Act, 1956; (g) Any Indian Institute of Technology within the meaning of clause (g) of section 3 of the Institute of Technology Act, 1961; (h) Such Institute of Management as the Central Government may by Notification in the Official Gazette, specify in this behalf. It may also be noted that where this exemption has been allowed to any employee for any assessment year, it shall not be allowed to him for any other assessment year. The exemption of amount received under VRS is extended to employees of the Central Government and State Government employees. (7) Any sum received under a Life Insurance Policy, including the sum allotted by way of bonus on such policy other than any sum received under sub-section (3) of section 80DDA. (8) Any payment from a Provident Fund to which the Provident Funds Act, 1925 (19 of 1925), applies (or from any other provident fund set up by the Central Government and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent. (10) Clause (14) of section 10 provides for exemption of the following allowances : (i) Any special allowance or benefit granted to an employee to meet the expenses incurred in the performance of his duties as prescribed under Rule 2BB subject to the extent to which such expenses are actually incurred for that purpose. (ii) Any allowance granted to an employee either to meet his personal expenses at the place of his posting or at the place he ordinarily resides or to compensate him for the increased cost of living, which may be prescribed and to the extent as may be prescribed. However, the allowance referred to in (ii) above should not be in the nature of a personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to his place of posting or residence. The CBDT has prescribed guidelines for the purpose of clauses (i) and (ii) of section 10(14) vide Notification No. SO 617(E), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(A)(1) of Income-tax Rules, 1962: In a case falling in sub-clause (ii) above, the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital. (c) premium paid by the employer in respect of medical insurance taken for his employees (under any scheme approved by the Central Government) or reimbursement of insurance premium to the employees who take medical insurance for themselves or for their family members (under any scheme approved by the Central Government); (d) reimbursement, by the employer, of the amount spent by an employee in obtaining medical treatment for himself or any member of his family from any doctor, not exceeding in the aggregate Rs. 15,000 in an year. (e) as regards medical treatment abroad, the actual expenditure on stay and treatment abroad of the employee or any member of his family, or, on stay abroad of one attendant who accompanies the patient, in connection with such treatment, will be excluded from perquisites to the extent permitted by the Reserve Bank of India. It may be noted that the expenditure incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns under Chapter VI-A of the Act - 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 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 assessees account, if any) as does not exceed the amount of ten thousand rupees in the previous year. Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section, rebate with reference to such amount shall not be allowed under section 88. (2) Under section 80D, in the case of the following categories of persons, a deduction can be allowed for a sum not exceeding Rs. 10,000 per annum to the extent payment is made by cheque out of their income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 retardation of the dependent relative has to be certified by a physician, surgeon, oculist or a psychiatrist as the case may be, working in a Government hospital, including a Departmental dispensary or a hospital maintained by a local authority as per Explanation given below section 80DD. It would be sufficient if the employee furnishes a medical certificate from a Government Hospital and a declaration in writing duly signed by the claimant certifying the actual amount of expenditure on account of medical treatment (including nursing) training and rehabilitation of the handicapped dependent and receipt/acknowledgement for the amount paid or deposited in the specified schemes of LIC or UTI. Therefore, DDOs may not insist on production of vouchers/bills by the employees for having incurred expenditure on medical treatment of their handicapped dependents for allowing the deduction under section 80DD for the purpose of computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted 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 referred to above together with interest thereon is paid by the assessee in full, 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 Central Government may, by notification in the Official Gazette, specify in this behalf; (c) higher education means full-time studies for any graduate or post-graduate course in engineering medicine, management, or, for post-graduate course in applied sciences or pure sciences, including mathematics and statistics; (d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 10(13A) of the Act; (b) the assessee files the declaration in Form No. 10BA. (Annexure-V); (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 sub-clause (i) of clause (a), or as the case may be, clause (b) of sub-section (2) of section 23 : The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the assessee. They should also satisfy themselves in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, or a minor, or of whom he is a guardian; (c) by an employee to a Recognized Provident Fund; (d) by an employee to an Approved Superannuation Fund; It may be noted that contribution to any Fund shall not include any sums in repayment of loan. (5) Any deposit in a ten year account or a fifteen year account under the Post Office Savings Bank (Cumulative Time Deposit) Rules, 1959, as amended from time to time, where such sums are deposited in an account standing in the name of an individual, or a minor, or of whom he is the guardian. (6) Any subscription: (a) to any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf; (b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. Interest on NSC (VI Issue) and NSC (VIII Issue) which is deemed investment also qualifies for the rebate. (7) Any sum p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any 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, public sector company or a university established by law or a college affiliated to such university, or a local authority or a co-operative society. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have the meaning assigned to it in section 4A of the Companies Act, 1956. (15) Subscription to any units of any mutual fund referred to in clause (23D) of section 10 and approved by the Board on an application made by such mutual fund in the prescribed form: Provided that where a deduction is claimed and allowed under this clause with reference to the cost of units, the cost of such units shall not be taken into account for the purposes of sections 54EA and 54EB: Provided further that this clause shall apply if the amount of subscription to such units is subscribed only in the eligible issue of capital of any company. Explanation : For the purposes of this clause - eligible issue of capital means an issue referred to in clause (i) of Explanation to clause (xvi) in sub-section (2) of section 88. Total amount qualifying for rebate under section 88 (16) There is an overall limit of Rs. 1,00,000 invested in various items mentioned in sub-paras (1) to (15) of para 6, which qualifies for rebate under section 88. Out of this, amounts invested in items mentioned in sub-paras (1) to (13) can be up to a maximum of Rs. 70,000. Further, instalments paid towards purchase or construction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 genuineness of the employees claim regarding any deposit/subscription/payment made by the employee, he should not allow the same, and the employee would be free to claim the rebate on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer. Calculation of income-tax to be deducted 7.1 Salary income for the purpose of section 192 shall be estimated as follows : (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 under the head Salar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax thereon 3,000 1,18,000 1,54,000 Less : tax rebate u/s 88 3,000 (30%) 3,000 (15%) Nil Income-tax payable NIL 1,15,000 1,54,000 Add: Surcharge @ 5% 5,750 7,700 Total Tax Payable 1,20,750 1,61,700 Example 2 Calculation of Income-tax in the case of assessee having handicapped dependent. Particulars (Rupees) 1. Gross Salary 3,20,000 2. Amount Spent on treatment of dependent who is handicapped 7,000 3. Amount paid to LIC with regard to annuity for the maintenance of handicapped dependent 40,000 4. G.P.F. contribution 25,000 5. LIP paid 10,000 Computation of Tax 1. Gross Salary 3,20,000 2. Less : Standard deduction 20,000 3,00,000 Less: Deduction u/s 80DD(1) 40,000 (Restricted to Rs. 40,000 only) Taxable Income 2,60,000 Income-tax thereon 52,000 Rebate u/s 88 GPF 25,000 LIP 10,000 Total 35,000 Rebate @ 15% on Rs. 35,000 5,250 Tax payable 46,750 Add: Surcharge @ 5% 2,338 Total Tax payable 49,088 Example 3 Calculation of Income-tax in the case of an employee where Medical Treatment expenditure was borne by the employer. Particulars (Rupees) 1. Gross Salary 3,00,000 2. Medical Reimbursement by employer on the treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bic capacity of engine exceeds 1.61) used partly for personal and partly for official work and actual running and maintenance charges including chauffeurs salary are reimbursed by employer, but no documents are maintained regarding details of journeys Particulars (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 4. (b) Hotel rent paid by employer (for two months) 30,000 4. (c) Rent recovered from the employee 5,000 5. Car expenses reimbursed 40,200 6. Furniture at cost 50,000 7. Subscription Infrastructure Bond under section 88(2)(xvi) 30,000 8. Life Insurance Premium 3,000 9. Subscription to NSC (VIII) Issue 18,000 10. Contribution to Recognised PF 24,000 Computation of total income and tax payable thereon 1. Salary 1,08,000 2. Bonus 12,000 3. Total Salary for valuation of perquisite i.e. Rs. 10,000 per month 1,20,000 Valuation of perquisites: (a) Perquisite for flat Lower of (10% of salary for ten months=Rs. 10,000 actual rent paid=Rs. 65,000) 10,000 (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Salary 4,00,000 2. Housing Loan repaid (principal) 30,000 3. Interest payable on housing loan (Loan taken after 1-4-1999) 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) 1,50,000 Gross Total Income 2,30,000 Less : Deduction under section 80G 50% of Rs. 5,000 2,500 Net Taxable Income 2,27,500 Tax thereon 42,250 Less : Rebate under section 88 G.P.F. 20,000 N.S.C. 10,000 Housing Loan repaid (maximum) 20,000 Total 50,000 Rebate @ 15% of Rs. 50,000 7,500 Tax payable 34,750 Add : Surcharge @ 5% 1,738 Total Tax payable 43,988 Example 8 Income-tax calculation in the case of an employee who claims loss under the head income from house property, loan taken before 1-4-1999 Particulars (Rupees) 1. Gross Salary 4,00,000 2. Housing Loan repaid (principal) 30,000 3. Interest payable on housi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ................................ (iii) Capital gains ..................................... (iv) Income from other sources (a) Dividends ..................................... (b) Interest ..................................... (c) Other incomes (specify) Total ..................................... 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 I.T. (Twenty-fifth Amendment) Rules, 2002 - See [2002] 124 Taxman 63. Annexure III-A Form No. 12BA : Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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