9911796707
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 ..... sment year 2003-04) at the following rates : 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000) 8,050 Amount required to be deposited each month: (8,050/12) 671 The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee 3.4 Salary from more than one 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof in such form and manner as may be prescribed. (Annexures-IIIA IIIB). These Forms are required to be filed by the employee along with 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourth Schedule. 3.10 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. 3.11 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein 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. 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een deducted in the statement furnished under section 192(2C), certificates furnished under section 203 and all returns prepared and delivered as per the provisions of section 206 of the Income-tax Act, 1961. Annual return of TDS 4.8 According to the provisions of section 206 of the Income-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .D.R./1992 (Ref. CO:DGBA:GA(NBS) No. 60/GA.64 (11CVL)-91/92), dated the 27th April, 1992, and, these instructions should be followed by all the branches of the Banks, which have been entrusted with the task of payment of pensions. Further all branches of the banks are bound under section 203 to issue certificate 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable, shall be included in the income of the assessee for the previous year. Other items included in salary, profits in lieu of salary and perquisites are described in section 17 of the Income-tax Act. The scope of the term profit in lieu of salary has been amended so as not to include interest on contributions or any sum received under 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 bene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perquisite. A project site for the purposes of this sub-rule means a site of project upto the stage of its commissioning. A remote 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curred by the employer on the running and maintenance of the motor car (including remuneration of the chauffeur, if any), as increased by the amount representing 10% of the actual cost of the motor car on account of normal wear and tear and as reduced by any amount charged from the employee for such use. (c) Where the motor car is owned by the employee but the actual 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provision in the old rules for valuation at 6.25% of salary of the taxpayer for part official use. This has been discontinued. Under the new rules even where the supply is made from the employers own resources, the manufacturing cost per unit incurred by the employer would be the value of perquisite. Any amount paid by the employee for such facilities or services shall be reduced from the above amount. V. Free or concessional education - The old rules already provide that value of free 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 employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically for this purpose. VIII. Travelling, touring, accommodation and other holiday expenses - It is increasingly common for employees to be provided with vacation and holiday facilities. The value of such perquisite shall be the expenditure incurred by the employer. This would also apply to official tours extended as a vacation and family members accompanying taxpayers on official tours. However, leave travel as per section 10(5) and enjoyment of holiday home facilities available uniformly 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 em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) complete details in respect of such expenditure including the date of expenditure and the nature of expenditure; (b) a certificate by employer to the employee to the effect that the same was incurred wholly and exclusively for the performance of official duties. XII. Use of assets - It is common practice for an asset owned by the employer to be used by the employee. This perquisite is to be charged at the rate of 10 per cent of the original cost of the asset as reduced by any charges recovered from the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed, medical facilities subject to conditions. Incomes 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 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 proceeding (a) on leave to any place in India or (b) on retirement from service, 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment is Rs. 5,00,000 where retrenchment is on or after 1-1-1977. (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 amount does not exceed five lakh rupees : (a) A public sector company; (b) Any other company; (c) An Authority established 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 production of rent receipt. It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the 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 ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 medical treatment of its employees; (ii) in respect of the prescribed diseases or ailments as provided in Rule 3A(2) of Income-tax Rules, 1962, in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines as provided in Rule 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); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtainment 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. Tax on Employment - 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. 5.4 Deductions 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 inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surer 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 (as defined in section 2(41) of the Income-tax Act, 1961) 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 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 e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 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 inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be set up by the 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-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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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, 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 Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gazette, specify for 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 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes 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 for 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 cell; (ii) infrastructure facility shall have the meaning assigned to it in the Explanation to sub-section (4) of section 80-IA; (iii) Public Company shall have the meaning assigned to it in section 3 of the Companies Act, 1956 (1 of 1956); (iv) Public Financial Institution shall 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 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore 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. Rebate to woman residents (19) Under section 88C, as inserted by Finance Act, 2000, an assessee, being a women 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) on 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. DDOs to satisfy themselves of the genuineness of claim (20) 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 genuineness of the employees claim regarding any deposit/subscription/payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocal 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. Annexure I For Assessment Year 2003-04 Example 1 Calculation of Income-tax in the case of an employee having gross salary income : (i) upto 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 20,000 30,000 Computation of Total Income and tax Payable thereon 1. Gross Salary 1,00,000 5,00,000 6,00,000 2. Less : Standard deduction u/s-16 (i) 30,000 20,000 Nil Taxable Income 70,000 4,80,000 6,00,000 Tax thereon 3,000 1,18,000 1,54,000 Less : tax rebate u/s 88 3,000 (30%) 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62,500 Rebate under section 88 GPF 20,000 LIP 20,000 Repayment of House Building Advance (Maximum) 20,000 Investment in infrastructural Bonds under section 88(2)(xvi) 20,000 Total 80,000 Rebate @ 15% on Rs. 80,000 12,000 Tax payable 50,500 Add : Surcharge @ 5% 2,525 Total Tax payable 53,025 Example 4 Illustrating calculation of House Rent Allowance under section 10(13A) in respect of residential accommodation situated in Delhi Particulars (Rupees) 1. Salary 49,500 2. Dearness Allowances 43,680 3. House Rent allowance 9,600 4. C.C.A. 1,200 5. House rent paid 18,000 6. General Provident Fund 24,000 7. Life Insurance Premium 2,500 8. Cumulative Time Deposit 2,400 9. Subscription to Infrastructure Bonds 10,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) Perquisite for hotel Less of (24% of salary of 2 months= Rs. 4,800, actual payment= Rs. 30,000) 4,800 (c) Perquisite for furniture @ 10% 5,000 19,800 Less : Rent recovered from employee 5,000 14,500 (d) Add : Perquisite for free gas, electricity, water 6,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 1,59,800 Less : Standard deduction 25,000 Total Taxable Income 1,34,800 Tax on total income 15,960 Tax rebate under section 88 (i)Provident Fund 20,000 (ii) LIP 10,000 (iii) NSC VIII Issue 20,000 (iv) Repayment of HRA 12,000 (v)Subscription to eligible issue of company approved under section 88(2)(xvi) 20,000 Total 82,000 Rebate @ 20% 16,200 15,960 (restricted) Net Tax Payable Nil Example 7 Income-tax calculation in the case of an employee who claims loss under the head income from house property Particulars (Rupees) 1. Gross Salary 4,00,000 2. Housing Loan repaid (principal) 30,000 3. Interest payable on housing loan (Loan taken after 1-4-1999) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Total 50,000 Rebate @ 15% of Rs. 50,000 7,500 Tax payable 70,750 Add : Surcharge @ 5% 3,538 Total Tax payable 74,288 Example 9 Income-tax calculation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gate 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 ameniti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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