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TMI BlogDeduction of tax at source — Income–Tax deduction from salaries under section 192 of the income–tax act, 1961 - during the financial year 2007-2008X X X X Extracts X X X X X X X X Extracts X X X X ..... r the financial year 2007-08 (i.e., assessment year 2008-09) at the following rates: Rates of income-tax A. Normal Rates of tax : 1. Where the total income does not exceed Rs. 1,10,000. Nil 2. Where the total income exceeds Rs. 1,10,000 but does not exceed Rs. 1,50,000. 10 per cent of the amount by which the total income exceeds Rs. 1,10,000 3. Where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000. Rs. 4,000 plus 20 per cent of the amount by which the total income exceeds Rs. 1,50,000. 4. Where the total income exceeds Rs. 2,50,000. Rs. 24,000 plus 30 per cent of the amount by which the total income exceeds Rs. 2,50,000. B. Rates of tax for a woman, resident in India and below sixty-five years of age at any time during the financial year : 1. Where the total income does not exceed Rs. 1,45,000. Nil 2. Where the total income exceeds Rs. 1,45,000 but does not exceed Rs. 1,50,000. 10 per cent of the amount by which the total income exceeds Rs. 1,45,000 3. Where the total income exceeds Rs. 1,50,000 but doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the basis of the rates given above and shall be deducted on average at the time of each payment. No tax will, however, be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds Rs. 1,10,000 or Rs. 1,45,000 or Rs. 1,95,000, as the case may be, depending upon the age and gender of the employee. (Some typical examples of computation of tax are given at Annexure-I ). 3.2 Payment of Tax on Non-monetary Perquisites by Employer - An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at his option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. The employer will have to pay such tax at the time when such tax was otherwise deductible, i.e., at the time of payment of income chargeable under the head Salaries to the employee. 3.3 Computation of Average Income-tax - For the purpose of making the payment of tax mentioned in para 3.2 above, tax is to be determined at the average of income-tax computed on the basis of rate in force for the financial year, on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of such particulars and take the same into account in making the deduction under Para (3.1) above. Explanation . For this purpose University means a University established or incorporated by or under a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 (3 of 1956), to be University for the purposes of the Act. 3.6 Form 12C has been omitted by the IT (24th Amendment) Rules, 2003 w.e.f. 1-10-2003 - (i) Sub-section (2B) of section 192 enables a taxpayer to furnish particulars of income under any head other than Salaries and of any tax deducted at source thereon. Form No. 12C, which was earlier prescribed for furnishing such particulars ( Annexure-II ) , has since been omitted from the Income-tax Rules. However, the particulars may now be furnished in a simple statement, which is properly verified by the taxpayer in the same manner as was required to be done in Form No. 12C. (ii) Such income should not be a loss under any such head other than the loss under the head Income from house property for the same financial year. The person responsible for making payment (DDO) shall take s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To claim the higher deduction in respect of interest up to Rs. 1,50,000, the employee should furnish a certificate from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by such employee for the purpose of construction or acquisition of the residential house or for conversion of a part or whole of the capital borrowed, which remains to be repaid as a new loan. (ii) The essential conditions for availing higher deduction of interest of Rs. 1,50,000 in respect of a self-occupied residential house are that the amount of capital must have been borrowed on or after 1-4-1999 and the acquisition or construction of residential house must have been completed within three years from the end of the financial year in which capital was borrowed. There is no stipulation regarding the date of commencement of construction. Consequently, the construction of the residential house could have commenced before 1-4-1999 but, as long as its construction/acquisition is completed within three years, from the end of the financial year in which capital was borrowed the higher deduction would be available in respect of the capital borrowed after 1- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-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 employee, the employer should deduct income-tax on the salary payable at the normal rates: (Circular No. 147, dated 28-10-1974). 4.4 Deposit of Tax Deducted : According to the provisions of section 200, any person deducting any sum in accordance with the provisions of section 192 or paying tax on non-monetary perquisites on behalf of the employee under section 192(1A), shall pay the sum so deducted or tax so calculated on the said non-monetary perquisites, as the case may be, to the credit of the Central Government in prescribed manner (vide Rule 30 of the Income-tax Rules, 1962 ). In the case of deductions made by, or, on behalf of the Government, the payment has to be made on the day of the tax-deduction itself. In other cases, the payment has to be made within one week from the last day of month in which deduction is made. 4.5 Penalty for Failure to Deposit Tax Deducted : If a person fails t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 No. 12BA, Form No. 16 and Form No. 16AA of the Income-tax Rules. Information relating to the nature and value of perquisites is to be provided by the employer in Form No. 12BA in case of salary above Rs. 1,50,000. In other cases, the information would have to be provided by the employer in Form No. 16 itself. In either case, Form No. 16 with Form No. 12BA or Form No. 16 by itself will have to be furnished within a period of one month from the end of relevant financial year. An employer, who has paid the tax on perquisites on behalf of the employee as per the provisions discussed in paras 3.2 and 3.3, shall furnish to the employee concerned a certificate to the effect that tax has been paid to the Central Government and specify the amount so paid, the rate at which tax has been paid and certain other particulars in the amended Form No. 16. The obligation cast on the employer under section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a serious respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 1962. ( Circular No. 2/2007, dated 21-5-2007 ). 4.8 Mandatory Quoting of PAN and TAN : According to the provisions of section 203A of the Income-tax Act, it is obligatory for all persons responsible for deducting tax at source to obtain and quote the Tax-deduction Account No. (TAN) in the challans, TDS- certificates, statements and other documents. Detailed instructions in this regard are available in this Departments Circular No. 497 [F.No. 275/118/87-IT(B), dated 9-10-1987]. If a person fails to comply with the provisions of section 203A, he will be liable to pay, by way of penalty, under section 272BB, a sum of ten thousand rupees. Similarly, as per section 139A(5B), it is obligatory for persons deducting tax at source to quote PAN of the persons from whose income-tax has been 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 200(3) of the Income-tax Act, 1961. 4.9 All tax deductors/collectors are required to file the TDS returns in Form No. 24Q (for tax deducted from salaries). As the requirement of filing TDS/TCS certificates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exceed the amount of tax which was deductible at source. The Quarterly Statements are be filed on computer media only in accordance with rule 31A of the Income-tax Rules, 1962. These Quarterly Statements compulsorily require quoting of the Tax Deduction Account Number (TAN) of the tax-deductor and the Permanent Account Number (PAN) of the employees whose tax has been deducted. Therefore, all Drawing and Disbursing Officers of the Central and State Governments/Departments, who have not yet obtained TAN, must immediately apply for and obtain TAN. Similarly, all employees (including non-resident employees) from whose income, tax is to be deducted may be advised to obtain PAN, if not already obtained, and to quote the same correctly, as otherwise the credit for the tax deducted cannot be given. A penalty under section 272B of Rs. 10,000 has been prescribed for wilfully intimating a false PAN. For and from the quarter ending 30-9-2007, filing of TDS returns in electronic form is also mandatory for deductors required to get their accounts audited under section 44AB of the Income-tax Act in the immediately preceding financial year or where the number of deductees records in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.15. 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. 4.16 There is a specific procedure laid down for refund of payments made by the deductor in excess of taxes deducted at source, vide Circular No. 285, dated 21-10-1980. 4.17 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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) above and whose income under the head Salaries (whether due from or paid or allowed by one or more employers), exclusive of the value of all benefits and amenities not provided by way of monetary payment, exceeds Rs. 50,000. The valuation of such benefits and amenities have been prescribed in Explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld either be located in a remote area or where it is not located in a remote area, the accommodation should be of a temporary nature having plinth area of not more than 800 square feet and should not be located within 8 kilometers of the local limits of any municipality or cantonment board. A project execution site for the purposes of this sub-rule means a site of project up to the stage of its commissioning. A remote area means an area located at least 40 kilometers away from a town having a population not exceeding 20,000 as per the latest published all-India census. 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self 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. V. Interest free or concessional loans - It is common practice, particularly in financial institutions, to provide interest free or concessional loans to employees or any member of his household. The value of perquisite arising from such loans would be the excess of interest payable at prescribed interest rate over interest, if any, actually paid by the employee or any member of his household. The prescribed interest rate would now be the rate charged per annum by the State Bank of India as on the 1st day of the relevant financial year in respect of loans of same type and for the same purpose advanced by it to the general public. Perquisite value would be calculated on the basis of the maximum outstanding monthly balance method. For valuing perquisites under this rule, any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts like travel on tour and transfer, leave travel, daily allowance to meet tour expenses as prescribed, medical facilities subject to conditions. 5.2 Incomes not included in the head Salaries (Exemptions) - Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act : (1) The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his 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 exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficial gazette, whichever is less. These limits shall not apply in the case where the compensation is paid under any scheme which is approved in this behalf by the Central Government, having regard to the need for extending special protection to the workmen in the undertaking to which the scheme applies and other relevant circumstances. The maximum limit of such payment is Rs. 5,00,000 where retrenchment is on or after 1-1-1997. (6) Under section 10(10C), any payment received or receivable (even if received in instalments) by an employee of the following bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempted from income-tax to the extent 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) Local Authority; (e) A Cooperative Society;\ (f) A university established or incorporated or under a Central, State or Provincial Act, or, an Institu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 per cent of the salary due to the employee for the relevant period; or (d) Where such accommodation is situated in any other place, 40 per cent of the salary due to the employee for the relevant period, whichever is the least. For this purpose, Salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee. Though incurring actual expenditure on payment of rent is a pre-requisite f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1989, as amended by notification No. F.2/14/S9-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 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 or family pension received by any member of the family of such individual. Family for this purpose shall have the meaning assigned to it in section 10(5) of the Act. Such notification has been made vide Notifications No. S.O. 1948(E) dated 24-11-2000 and 81(E) dated 29-1-2001, which are enclosed as per Annexure VIA VIB. (13) Under section 17 of the Act, exemption from tax will also be available in respect of: (a) the value of any medical treatment provided to an employee or any member of his family, in any hospital maintained by the employer; (b) any sum paid by the employer in respect of any expenditure actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees whichever is less. No deduction or account of entertainment allowance is available to non-government employees. Tax On Employment The tax on employment (Professional Tax) within the meaning of clause (2) of Article 276 of the Constitution of India, leviable by or under any law, shall also be allowed as a deduction in computing the income under the head Salaries. It may be clarified that Standard Deduction from gross salary income, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards. 5.4 Deductions under chapter VI-A of the Act - In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income: A. As per section 80C, an employee will be entitled to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs. 1,00,000: (1) Payment of insurance premium to effect or to keep in force an insurance on the life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government. [The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989 of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3-11-05.] (7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify; [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3-11-05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1-6-2006] (8) Any subscription made to any units of any Mutual Fund, referred to in clause (23D) of section 10, or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf; [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act. The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28-7-2006]. (17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf. It may be clarified that the amount of premium or other payment made on an insurance policy [other than a contract for deferred annuity mentioned in sub-para (2)] shall be eligible for deduction only to the extent of 20 percent of the actual capital sum assured. In calculating any such actual capital sum, the following shall not be taken into account: (i) the value of any premiums agreed to be returned, or (ii) any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy. B. As per section 80CCC, where an assessee being individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment so provide, but excludes all ether allowances and perquisites. The aggregate amount of deduction under sections 80C, 80CCC and 80CCD shall not exceed Rs. 1,00,000 (Section 80CCE) D. Under section 80D, in the case of the following categories of persons, a deduction can be allowed for a sum not exceeding Rs. 15,000 per annum to the extent payment is made by any mode of payment other than cash out of their income chargeable to tax to keep in force an insurance on the health of the categories of persons mentioned below provided that such insurance shall be in accordance with a scheme framed in this behalf by (a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 and approved by the Central Government in this behalf; or (b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999. The categories of persons are : (i) where the assessee is an individual, any sum paid to effect or to keep in force an insurance on the health of the assessee or on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and shall accordingly be chargeable to tax as the income of that previous year. B. The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139, in respect of the assessment year for which the deduction is claimed: In cases where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority in the prescribed form and manner and a copy thereof is furnished along with the return of income. For the purposes of section 80DD, (a) Administrator means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002); (b) dependant means (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them; (ii) in the case of a Hindu Undivided Family, a member of the Hindu Undivided Fam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (5 of 2002).] F. Under section 80E of the Act a deduction will be allowed in respect of repayment of interest on loan taken for higher education, subject to the following conditions: (i) In computing the total income of an assesses, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or children. (ii) The deduction specified above shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to above is paid in full by the assessee , whichever is earlier. For this purpose (a) approved charitable institution means an institution established for charitable purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Institution of national eminence approved by the Prescribed Authority. (xv) The National Sports Fund to be set up by Central Government. (xvi) The National Cultural Fund Set up by the Central Government. (xvii) The Fund for Technology Development and Application set by the Central Government. (xviii) The National Trust for Welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple disabilities. H. 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 1.0(13A) of the Act; (b) the assessee files the declaration in Form No. 10BA. ( Annexure-VII ) (c) He will be entitled to a deduction in respect of house rent paid by him in excess of 10 per cent of his total income, subject to a ceiling of 25 per cent thereof or Rs. 2,000 per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars/information as they deem necessary before allowing the aforesaid deductions. 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 deduction/rebate on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer. 6. Calculation of income-tax to be deducted 6.1 Salary income for the purpose of section 192 shall be computed as follow : (a) First compute the gross salary as mentioned in para 5.1 excluding all the incomes mentioned in para 5.2; (b) Allow deductions mentioned in para 5.3 from the figure arrived at (a) above. (c) Allow deductions mentioned in para 5.4 from the figure arrived at (b) above ensuring that aggregate of the deductions mentioned in para 5.4 does not exceed the figure of (b) and if it exceeds, it should be restricted to that amount. This will be the amount of income from salaries on which income tax would be required to be deducted. This income should be rounded off to the nearest multip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,80,000 4,50,000 9,00,000 Tax thereon 10,000 84,000 2,19,000 Add: Surcharge Nil Nil Nil Education Cess @2% 200 1,680 4,380 Secondary and Higher Education Cess @1% 100 840 2,190 Total tax payable 10,300 84,000 2,25,570 Note 1 : Surcharge at the rate of 10 per cent of the tax payable is to be charged, only if taxable income exceeds Rs. 10,00,000. Note 2 : Additional surcharge (Education Cess on Income-tax) is to be charged at the rate of 2 per cent of the Income-tax and surcharge, if any. Note 3 : Additional surcharge (Secondary and Higher Education Cess on Income-tax) is to be charged at the rate of one percent of the Income-tax and surcharge, if any (not including the Education Cess on Income-tax). Note 4 : Surcharge, Education Cess, and Secondary and Higher Education Cess are payable by both resident and non-resident assessees. For assessment year 2008-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GPF 20,000 LIC 20,000 Repayment of HBA 25,000 Tuition Fees 30,000 Investment in infrastructural Bonds 20,000 Total 1,15,000 Restricted to Rs. 1,00,000 Rs . 1,00,000 Total Income Rs. 2,15,000 Tax Payable Rs. 17,000 Add: Surcharge Nil Education Cess @2% 340 Secondary and Higher Education Cess @1% 170 Total Income-tax payable Rs. 17,510 For assessment year 2008-2009 Example 4 Illustrative calculation of House Rent respect of residential accommodation situated female employee: Allowance under section 10(13A) in in Delhi in case of a female employee: Particulars 1 Salary Rs. 2,00,000 2. Dearness Allowance Rs. 1,00,000 3. House Rent Allowance Rs. 1,20,000 4. CCA Rs. 6,000 5. House rent paid Rs. 1,44, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnum : Rs. 1,20,000 (b) Hotel rent paid by employer (for two months) : Rs. 50,000 (c) Rent recovered from employee : Rs. 10,000 (d) Cost of furniture : Rs. 1,00,000 5. Subscription to infrastructure bonds : Rs. 30,000 6. Life Insurance Premium : Rs. 5,000 7. Subscription to NSC (VIII) Issue : Rs. 20,000 10. Contribution to recognized P.F. : Rs. 36,000 Computation of total income and tax paid thereon 1. Salary : Rs. 5,00,000 2. Bonus : Rs. 76,000 Total Salary for Valuation of Rs. 5,76,000 Perquisite i.e. Rs. 48,000 per month Valuation of perquisites (a) Perq. for flat: Lower of (15% of salary for ten months=Rs.72,000) and (actual rent paid=1,00,000) : (b) Perq. for hotel Lower of (24% of salary of 2 mths=23,040) and (actual payment=50,000) : Rs. 72,000 (c) Perq. for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... salary : 5,92,000 (Basic+DA+HRA+SDA) Less: House rent allowance exempt U/s 10 (13A) Least of: (a) Actual amount of HRA received : 1,80,000 (b) Expenditure on rent in excess of 10% of salary (Including D.A.) assuming D.A. is including for retirement benefits (1,20,000-40,000) : 80,000 (c) 50% of salary (including D.A) : 2,00,000 (-) 80,000 Gross Total Taxable Income : 5, 12,000 Less: Deduction under section 80C: (i) Provident Fund : 60,000 (ii) LIP : 10,000 (iii) NSC VIII Issue : 30,000 (iv) Repayment of HBA : 60,000 (v) Tution Fees (Restricted to two children) : 20,000 Total : 1,80,000 Restricted to 1,00,000 Total Income : 4, 12,000 Tax Payable : 69,10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Education Cess @2% 110 Secondary and Higher Education Cess @1% 55 Total Income-tax payable Rs. 5,665 Rounded off to Rs. 5,670 For Assessment Year 2008-2009 Example - 8 Income Tax calculation in the case of a male employee who claims loss under the head Income from self-occupied house property, and has taken house building loan before 1-4-1999. Particulars 1. Gross Salary 4,00,000 2. Housing Loan repaid (Principal) 30,000 2. Interest payable on housing loan (Loan taken before 1-4-1999) 1,00,000 4. Donation paid to National Childrens Fund 6,000 5. N.S.C. purchased 10,000 6. G.P.F. 20,000 Computation of Taxable Income and tax thereon 1. Salary Income Rs. 4,00,000 2. Income from House Property Annual value Nil Interest payable on loan under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ............................ 4. Particulars of income under any head of income other than salaries (not being a loss under any such head other than the loss under the head Income from house property) received in the financial year (i) Income from house property ............................ (in case of loss, enclose computation thereof) (ii) Profits and gains of business or profession ............................ (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, ........................................... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. Other benefits or amenities 18. Total value of perquisites 19. Total value of Profits in lieu of salary as per 17(3) (9) Details of tax, (a) Tax deducted from salary of the employee under section 192(1) ........................................ (b) Tax paid by employer on behalf of the employee under section 192(1A) ........................................ (c) Total tax paid ........................................ (d) Date of payment into Government treasury ........................................ Declaration by employer I, ...................... s/o.................... working as ........................ (designation) do hereby declare on behalf of........................ (name of the employer) that the information given above is based on the books of account, documents and other relevant records or information available with us and the details of value of each such perquisite are in accordance with section 17 and rules framed thereunder and that such information is true and correct. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DETAILS OF SALARY PAID AND ANY OTHER INCOME AND TAX DEDUCTED 1. Gross salary (a) Salary as per provisions contained in section 17(1) Rs. ..... (b) Value of perquisites under section 17(2) (as per Form No. 12BA, wherever applicable) Rs. .... (c) Profits in lieu of salary under section 17(3) (as per Form No. 12BA, wherever applicable) Rs. .... (d) Total Rs. ..... 2. Less : Allowance to the extent exempt under section 10 Rs. ..... Rs. ..... Rs. ..... Rs. ... 3. Balance (1-2) Rs. ...... 4. Deductions under section 16 : (a) Standard deduction Rs. ..... (b) Entertainment allowance Rs. ..... (c) Tax on Employment Rs. ..... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (e) Rs. ..... Rs. ..... .............. (f) Rs. ..... Rs. ..... .............. (g) Total [(a) to (f)] Rs. ..... Rs. ..... 812 ___ II. (a) Under section 88B 813 ___ (b) Under section 88C 814 ___ 14. Aggregate of tax rebates at 13 above [I(g)+II(a)+II(b)] 820 ___ 15. Tax payable on total income (12-14) and surcharge thereon 832 ___ 16. Less : Relief under section 89 (attach details) 837 ___ 17. Balance tax payable (15-16) 841 ___ 18. Less: (a) Tax deducted at source u/s 192(1) 868 ___ (b) Tax paid by the employer on behalf of the employee u/s 192(1A) on perquisites u/s 17(2) 872 ___ 19. Tax payable/refundab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umber Verification by the assessee I, .................................... (Name in full and in block letters), son/daughter of Shri .................................... solemnly declare that to the best of my knowledge and belief, the information given in this return is correct, complete and truly stated and in accordance with the provisions of the Income-tax Act, 1961, in respect of income chargeable to income-tax for the previous year relevant to the assessment year .................................... . Receipt No. ..................... Date ........................... SEAL Signature of the assessee Signature of the receiving official Date .................. ................................................... Place .................. Annexure-V Notification No. 205/2003 [F.No. 142/31/2003 TPL], dated 26-8-2003 Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003 In exercise of the powers conferred by sub-section (2) of section 206 of the Income-tax Act, 1961 (43 of 1961), the Central Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viso to sub-section (5B) of section 139A of the Act applies. (4) The e-deductor shall ensure that all columns of the Forms of the return for tax deduction at source, prescribed under the Rules, are duly and correctly filled in. (5) Each computer media used for preparation of the e-TDS Return shall be affixed with a label indicating name, permanent account number, tax deduction account number and address of the e-deductor, the period to which the return pertains, the Form Number of the return and the volume number of the said media in case more than one volume of such media is used. (6) Separate computer media shall be used for each Form of e-TDS Return by the e-deductor. Furnishing of e-TDS Return 4. (1) The e-deductor shall furnish e-TDS Return on computer media to the e-TDS Intermediary duly supported by a declaration in Form No. 27A, as prescribed in the Rules, in paper format : Provided that in case any compression software has been used by the e-deductor for preparing the e-TDS Return, he shall also furnish such compression software along with the e-TDS Return on the same computer media. (2) In case the e-deductor has on-line connectivity with the server of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciencies indicated in the deficiency memo are not removed by the e-deductor within seven days, the e-TDS Intermediary shall communicate the same to the e-filing Administrator and transmit the data to the e-filing Administrator whereupon Assessing Officer may take action for declaring the return as an invalid return after giving due opportunity to the deductor as required under sub-section (4) of section 206 of the Act. (9) In case the defects intimated by the Assessing Officer are rectified within the period of fifteen days or such further period as may be allowed by the Assessing Officer, the date of issue of provisional receipt shall be deemed to be the date of filing of e-TDS Return. General responsibilities of e-TDS Intermediary 6. (1) The e-TDS Intermediary shall ensure accurate transmission of the e-TDS Return to the e-filing Administrator : Provided that the e-TDS Intermediary shall not be responsible for any errors or omissions in the return of tax deducted at source prepared by the e-deductor. (2) The e-TDS Intermediary shall retain for a period of one year from the end of the relevant financial year in which the return is required to be filed, the electron ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be no contribution from the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a non-withdrawable pension tier-I account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service. (ii) In addition to the above pension account, each individual may also have a voluntary tier-II withdrawable account at his option. This option is given as GPF will be withdrawn for new recruits in Central Government service. The Government will make no contribution into this account. These assets would be managed through exactly the above procedures. However, the employee would be free to withdraw part or all of the second tier of his money any time. This withdrawable account does not constitute pension investment, and would attract no special tax treatment. (iii) Individuals can normally exit at or after age 60 years for tier-I of the pension system. At the exit the individual would be mandatorily required to invest 40 per cent of pension wealth to purchase an annuity (from an IRDA- regulated life insurance company). In case of Govern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant service headquarters. 10. Nao Sena Medal - do - 11 Vayu Sena Medal - do - 12. Fire Services Medal for Gallantry When awarded for acts of courage or conspicuous gallantry and supported by certificate issued to this effect by the last Head of Department. 13. Presidents Police and Fire Services Medal for Gallantry - do - 14. Presidents Fire Services Medal for Gallantry - do - 15. Presidents Home Guards and Civil Defence Medal for Gallantry - do - 16. Home Guards and Civil Defence Medal for Gallantry - do - Annexure VIB Notification No. 22/2001 [F. No. 142/29/99-TPL], dated 29-1-2001 In exercise of the powers conferred by sub-clause (i) of clause (18) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, hereby specifies the gallantry awards for the purposes of the said section and for that purpose makes the following amendment in the notification of the Government of India in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number S.O. 1048(E), dated 24th November, 2000, namely : ..... 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