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TMI BlogDeduction of tax at source-Income-tax deductions from salaries during 1977-78X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1977, introduced in Parliament on the 17th June, 1977, inter alia, prescribes the rates at which income-tax has to be deducted during the financial year 1977-78 from income chargeable under the head "Salaries". An extract of Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Finance (No.2) Bill, 1977, is enclosed as Annexure I. It will be observed that while the basic rates of income-tax laid down in the said Sub-Paragraph are the same as the rates in force for deduction of tax at source during the financial year 1976-77, the rate of surcharge on income-tax has been raised from 10% to 15% of the income-tax. Further, no income-tax will be payable in cases where the total income of the person does not exceed Rs.10,000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Additional Emoluments (Compulsory Deposit) Act, 1974, shall not be included in his total income of the previous year in which it is so credited but so much of the amount as is repaid to him shall be liable to be included in his total income of the previous year in which it is repaid as already explained in this Ministry's Circular No.182+ (F.No.275/12/75-ITJ) dated October 28, 1975. The amount repaid will include an element of interest also. While the repayment of principal sum will be regarded as salary paid during the relevant financial year and assessed to tax accordingly, the interest element will qualify for exemption u/s. 80L of the Income-tax Act, 1961. (iv) The amount of deposit made by a taxpayer under the Compulsory Deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial year 1977-78, the standard deduction will be calculated only with reference to the salary derived from employment during the financial year without taking into account the pension received by the employee. Further, the standard deduction will be limited to Rs.1,000 only in cases, (a) where the employee is in receipt of a conveyance allowance, or (b) where he is provided with any motor car, motor cycle, scooter or other moped by his employer (for use otherwise than wholly or exclusively in the performance of his duties) or where he is allowed the use of any one or more motor cars (otherwise than wholly or exclusively in the performance of his duties) out of a pool of motor cars owned or hired by the employer. In this connection, it may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of the expenditure incurred by a person on higher education of his dependent children, brother or sister. The deduction is admissible only in the case of Indian citizens whose "gross total income" does not exceed Rs.12,000. Where the said dependent of the taxpayer is studying for a degree or post-graduate course in medicine (including surgery and obstetrics), architecture, engineering, technology or business management, a deduction of Rs.1,000 and where the dependent is studying for a diploma course in these subjects or for any other degree or post-graduate course, a deduction of Rs.500 for each dependent is to be allowed. In cases where the taxpayer has incurred expenditure on the education of more than two dependants, the deduction un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esidential 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 from the taxable income of the employee. (ix) No deduction should be made from the salary income in respect of any donations for charitable purposes. The tax relief on such donations admissible under section 80G of the Income-tax Act will have to be claimed by the taxpayer separately at the time of the finalis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for a term which shall not be less than three months but which may extend to three years and with fine. 3. If any changes are made in the Finance (No.2) Bill, 1977, before it is passed into law, the same will be communicated to you in due course. 4. While making the payment of tax deducted at source to the credit of the Central Government, it may kindly be ensured that the correct amount of income-tax and surcharge is recorded in the relevant challan. Wherever the amount of tax deducted at source is credited to the Central Government through book adjustment, proper care should be taken to ensure that the correct amount of income-tax and surcharge is reflected there. 5. These instructions may please be brought to the notice of all disb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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