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 ..... re the total income does not Nil exceed Rs. 50,000. 2. Where the total income exceeds 10 per cent, of the amount by Rs. 50,000 but does not exceed which the total income exceeds Rs. 60,000. Rs. 50,000 3. Where the total income exceeds Rs. 1,000 plus 20 per cent of the Rs. 60,000 but does not exceed amount by which the total income Rs. 1,50,000 exceeds Rs. 60,000 4. Where the total income exceeds Rs. 19,000 plus 30 per cent of Rs. 1,50,000 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be University for the purpose of the Act. 3.4 Sub-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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.5 The provisions of sub-section (3) of section 192 allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with rigorous imprisonment for a term which shall be between 3 months and 7 years and with fine. 4.6 According to the provisions of section 203, every person responsible for deducting 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 206 of the Income-tax Act, 1961. 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 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as prescribed in 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 furnishing, fittings 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 word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but run month month month at employees cost However, where a second and additional cars are provided, such other cars shall be deemed to be for personal use and the value of perquisite shall be computed accordingly. Where fuel and upkeep cost of the employees car is borne or reimbursed by the employer, 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 jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 recognised 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 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 treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herever applicable, gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties; ( d ) where an employee incurs expenditure on entertainment and claims the same to have been incurred wholly and exclusively in the performance of his duties, details of such entertainment expenses including the nature 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, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Rule shall come into force with effect from the 1st day of April, 2001 it has been provided that the employee may, at his option, compute the value of perquisites made available to him or any member of his household for the period beginning on 1st day of April, 2001 and ending on 30th day of September, 2001 in accordance with the Rules, as they stood prior to this amendment. It may, therefore, 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 section 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve at his credit at the time of his retirement on superannuation or otherwise, is exempt under sub-clause ( i ) of clause ( 10AA ) of section 10. In the case of other employees, this exemption will be determined with reference to the leave to their credit at the time of retirement on superannuation, or otherwise, subject to a maximum of ten months leave. This exemption will be further limited to the maximum amount specified by the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be : ( a ) The actual amount of such allowance received by an employer in respect of the relevant period; or ( b ) The actual expenditure incurred in payment of rent in excess of 1/10 of the salary due for the relevant period; or ( c ) Where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or ( d ) Where such accommodation is situated in any other place, 40% of the salary due to the employee for the relevant period. whichever is the least. For this purpose, Salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Income-tax Act, interest payable by the Government on deposits made by an employee of the Central Government or a State Government or a public sector company from out of his retirement benefits, in accordance with such scheme framed in this behalf by the Central Government and notified in the Official Gazette is exempt from income-tax. By Notification No. F. 2/14/89-NS-II, dated 7-6-1989, as amended by Notification No. F. 2/14/89-NS-II, dated 12-10-1989, the Central Government has notified a scheme called Deposit Scheme for Retiring Government Employees, 1989 for the purpose of the said clause. (12) Clause ( 18 ) of section 10 provides for exemption of any income by way of pension received by an individual or family pension received by any member of the family of an individual who has been in the service of the Central Government or State Government and has been awarded Param Vir Chakra or Maha Vir Chakra or Vir Chakra or such other gallantry award as may be specifically notified by the Central Government. Such notification has been made vide 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed one lakh fifty thousand rupees, a deduction of a sum equal to thirty-three and one-third per cent of the salary or thirty thousand rupees, whichever is less : ( b ) exceeds one lakh fifty thousand rupees but does not exceed three lakh rupees, a deduction of a sum of twenty five thousand rupees. ( c ) exceeds three lakh rupees but does not exceed five lakh rupees, a deduction of a sum of twenty thousand rupees; No standard deduction is available to an assessee whose income from salary exceeds 5 lakh rupees. Explanation. For the purposes of this clause, 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dren of the assessee. ( b ) where the assessee is a Hindu Undivided Family, any sum paid to effect or to keep in force an insurance on the health of any member of the family. However, the deduction can be allowed for a sum not exceeding Rs. 15,000 per annum where the assessee or his wife or husband, or dependent parents or any member of the family (in case the assessee is a Hindu Undivided Family) is a senior citizen which means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year. (3) Under section 80DD an assessee, 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 provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of that previous year in which such expenditure was actually incurred. Such deduction shall be reduced by the amount received, if any, under an insurance from an insurer on the medical treatment of the person referred to above. The listed diseases as per the relevant Rule 11DD are specified neurological diseases, and 40% and above disability caused by cancer, full-blown AIDS, Chronic Renal Failure, Nemophiha and Thalassaemia : Provided that no such deduction shall be allowed unless the assessee furnishes a certificate in such form and from such authority as may be prescribed. The form is Form 10-1, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of 100% of the contribution : i. National Defence Fund or The Prime Ministers National Relief Fund. ii. The Prime Ministers Armenia Earthquake Relief Fund. iii. The Africa (Public Contributions-India) Fund. iv. The National Foundation for Communal Harmony. v. Chief Ministers Earthquake Relief Fund, Maharashtra. vi. National Blood Transfusion Council. vii. State Blood Transfusion Council. viii. Army Central Welfare Fund. ix. Indian Naval Benevolent Fund. x. Air Force Central Welfare Fund. xi. The Andhra Pradesh Chief Ministers Cyclone Relief Fund - 1996. xii. The National Illness Assistance Fund. xiii. The Chief Ministers Relief 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 G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sability (including blindness) or is subject to mental retardation, being a permanent physical disability, or mental retardation, specified in rule 11D of the Income-tax Rules, 1962, which is certified by a physician, surgeon, occulist or psychiatrist as the case may be, working in a Government hospital and which has the effect of reducing considerably such individuals capacity for normal work or engaging in a gainful employment or occupation. The expression Government hospital will include a departmental dispensary or a hospital maintained by a local authority as specified in section 80DD(4). Tax Rebate 6. An assessee, being an individual, will be entitled to tax rebates under Chapter VIII of the Act as given below : (1) Payment of insurance premium 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cify; (9) Any subscription not exceeding rupees ten thousand, made to any units of any Mutual Fund, notified under clause ( 23D ) of section 10, by the Unit Trust of India established under the Unit Trust of India Act, 1963, under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf; (10) Any contribution made by an individual to any pension fund set up by any Mutual Fund notified under clause ( 23D ) of section 10, or, by the Unit Trust of India established under the Unit Trust of India Act, 1963, as the Central Government may, by notification in the Official Gazette, specify in this behalf; (11) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund 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 bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he received back, by way of refund or otherwise, any sum specified in section 88(2)( xv ), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deduction of income-tax so allowed in the earlier years shall be added to the tax on the total income of the assessee with which he is chargeable for such assessment year. It may be noted that the amount which will qualify for tax rebate in respect of this item will not exceed Rs. 20,000. In respect of repayment of loans taken for the purchase or construction of a new residential house property, the construction of which does 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 instituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16,000 generally, and Rs. 17,500 in the case of authors, playwrights, artists, musicians, actors, sportsmen and athletes. There will, therefore, be an overall limit for savings which will qualify for tax-rebate. In the case of individuals, the limit on investments made as above, excluding that mentioned in paras 14 15, will be Rs. 60,000 and in the case of authors, sportsmen etc. Rs. 70,000. Further, in the case of a taxpayer having a gross salary of upto Rs. 1.00 lakh where atleast 90% of such income is from salary income, the amount of rebate under section 88 in such cases would be thirty per cent. This will, however, be effective from 1st April. 2002 and will, therefore, apply in relation to the assessment year 2002-2003 and onwards. (17) Under section 88B, and assessee, being an individual resident in India, 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 fiftee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrive at the total tax payable. 7.4 It is also to be noted that deductions under Chapter VIA of the Act as mentioned in para 5.4 and the tax rebates as mentioned in para 6 are allowed only if the investments or the payments have been made out of the income chargeable to tax during the financial year 2001-2002. 7.5 The amount of tax as arrived at para 7.3 should be deducted every month in equal instalments. The net amount of tax deductible should be rounded off to the nearest rupee. Miscellaneous : 8.1 These instructions are not exhaustive and are issued only with a view to helping the employers to understand the various provisions relating to deduction of tax from salaries. Wherever there is any doubt, reference may be made to the provisions of the Income-tax Act, 1961, the Income-tax Rules, 1962 and the Finance Act, 2001. 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 Circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 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 @ 20% on Rs. 35,000 7,000 Tax payable 45,000 Add: Surcharge @ 2% 900 Total Tax payable 45,900 For Assessment year 2002-03 Example 3 2. Calculation of Income-tax in the case of an employee where Medical Treatment expenditure was borne by the employer. Particulars (Rupees) 1. Gross Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t allowance exempt u/s 10(13A) : Least of ( a ) Actual amount of HRA received = 9,600 ( b ) Expenditure of rent in excess of 10% of salary (including D.A. as presumed that D.A. is taken for retirement benefit (18,0009,318 = 8,682) 8,682 ( c ) 50% of Salary (+Basic) - Rs. 46,590 95,298 Less : Standard deduction u/s 16( i ) @ 33.33% or 30,000 whichever is less 30,000 Total Income (rounded off) 65,300 Tax on Total Income 2,060 Rebate u/s 88 GPF 24,000 LIP 2,500 CTD 2,400 Contribution to Mutual Fund 10,000 U/s 88( xiiib ) 38,900 @ 20% 7,780 Tax on Total Income 2,060 Less Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,000 ( d ) Add perquisite of free gas, electricity, water 6,000 ( e ) Add perquisite for car expenses reimbursement (40,200 12(1600 + 600) 13,800 Gross total Income 1,54,600 Less Standard deduction u/s 16( i ) 25,000 Total income 1,29,600 Tax on Total Income 14,920 Tax Rebate u/s 88 Provident Fund 24,000 Subscription to NSC VIII Issue 18,000 LIP 3,000 Subscription to Mutual Fund approved by the Board 12,000 Contribution to Infrastructural Bond 15,000 72,000 Tax Rebate @ 20% 14,400 Tax on Total Income 14,920 Tax rebate (restricted) 14,400 Tax Payable 520 Surcharge @ 2% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( vi ) Subscription of units of mutual fund (u/s 88( xvii ) 15,000 82,000 limited to 80,000 @20% 15,960 (restricted) Net Tax Payable Nil For Assessment year 2002-03 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) 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. Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income 3,50,000 Less : Deduction u/s 80G 50% of Rs. 5,000 2,500 Net Taxable Income 3,47,500 Tax thereon 78,250 Less: Rebate u/s 88 G.P.F. 20,000 N.S.C. 10,000 Housing Loan repaid (maximum) 20,000 Total 50,000 Rebate @ 20% of Rs. 50,000 10,000 Tax payable 68,250 Add: Surcharge @ 2% 1,365 Total tax payable 69,615 For assessment year 2002-03 Example - 9 Income-tax calculation in the case of a women assessee who is less than age of 65 years. Particulars (Rupees) Gross Salary 1,20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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..............2001. 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 : Certificate under section 203 of the Income-tax Act, 1961 for tax deducted as source from income chargeable under the head Salaries - See [1991] 55 Taxman 21 (St.) Annexure IV Rule 2BB : Amendment in rule 2BB - Income-tax (Eighth Amendment) Rules, 1995 - See [1995] 81 Taxman 18 (St.) Annexure V Table of sub-rule (2) of Rule 2BB : Income-tax (Third Amendment) Rules, 2000 - See [2000] 109 Taxman 421 (St.) Annexure VI Rule 2BB : Amendment i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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