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TMI BlogInstructions for deduction of tax at source from salary during financial year 1974-75 at the rates specified in Part III of First Schedule to Finance Bill, 1974X X X X Extracts X X X X X X X X Extracts X X X X ..... ribes the rates at which income-tax has to be deducted during the financial year 1974-75 from income chargeable under the head "Salaries". These rates will be applicable to deduction of tax from salaries paid or payable on or after April 1, 1974. An extract of Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Finance Bill, 1974, insofar as it relates to levy of income-tax on "salaries" is enclosed [ Annex I ]. It is requested that pending the passing of the Finance Bill, 1974, deduction of tax from "salaries" may be made during the financial year 1974-75 according to the rates in the said Schedule. Three typical exam ples of calculations are given in Annex II. 2. The substance of the main provisions in the law in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under clauses ( 10 ), ( 10A ), ( 11 ), ( 12 ) and ( 13A ) of section 10. Thus, house rent allowance which is exempt under section 10( 13A ) of the Income-tax Act will not be taken into account for the purposes of computing the amount of the standard deduction. It may be noted that the standard deduc tion on the above basis is to be allowed irrespective of whether any expenditure incidental to employment is actually incurred by the employee or not. This deduction will, however, not be admis sible in the case of retired pensioners who have not been in employment at any time during the financial year 1974-75. In the case of persons who retire from service in the course of the financial year 1974-75, the standard deduction will be calculated on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Cumulative Time Deposits) Rules, 1959. The qualifying amount of these items taken together will be limited to 30 per cent of the estimated "salary" [after the deduction in respect of expenditure incidental to the employment of the assessee referred to in item (3) above] or Rs. 20,000, whichever is less. ( 5 ) The total income computed in accordance with the provisions of the Act should be rounded off to the nearest multiple of ten rupees by ignoring the fraction which is less than five rupees and increasing the fraction which amounts to five rupees or more, to ten rupees. The net amount of tax deductible should be similarly rounded off to the nearest rupees. ( 6 ) No deduction should be made from the salary income in respect of any don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical persons referred to in sub-clause ( vii ) of clause ( 31 ) of section 2 of the Income-tax Act, not being a case to which Sub-Paragraph II of this Paragraph or any other Paragraph of this Part applies — Rates of income-tax ( 1 ) where the total income does not exceed Rs. 6,000 Nil ; ( 2 ) where the total income exceeds Rs. 6,000 but does not exceed Rs. 10,000 12 per cent of the amount by which the total income exceeds Rs. 6,000; ( 3 ) where the total income exceeds Rs. 10,000 but does not exceed Rs. 15,000 Rs. 480 plus 15 per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax. ANNEX II - TYPICAL EXAMPLES OF INCOME-TAX CALCULATION Example I Rs. 1. Total salary income 9,500 2. Contributions to general provident fund 720 3. Payment towards life insurance premium 500 1,220 4. Total salary income 9,500 5. Deduct : Standard deduction of 20 per cent of salary in respect of of expenditure incidental to the employment 1,900 7,600 6. Deduct : Whole of the qualifying contributions towards general provident fund and life insurance premia 1,220 7. Taxable income 6,380 8. Income-tax pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards life insurance premium. [The employee is in receipt of a conveyance allowance of Rs. 200 per month from his employer] 6,275 9,775 4. Total salary income 28,588 5. Deduct : Standard deduction in respect of expenditure incidental to employment restricted to Rs. 1,000 1,000 27,588 6. Deduction on account of contributions towards general provident fund and life insurance premia paid, Rs. 9,775 in all but limited to 30 per cent of Rs. 27,588, i.e., Rs. 8,276.40 - on the first Rs. 2000 (full) Rs. 2,000.00 - on the next Rs. 3000 at 50 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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