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TMI BlogDeduction of tax at source--Income-tax deduction from salaries during the financial year 1980-81 u/s. 192 of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... the First Schedule to the Finance (No. 2) Act, 1980, is at Annex.I. 3. The substance of the main provisions in the law so far as they relate to income chargeable under the head "Salaries", on which tax is to be deducted at source during the financial year 1980-81, is given hereunder: (i) No tax will be deductible at source in any case unless the estimated salary income for the financial year exceeds Rs. 12,000. Where such income exceeds Rs.12,000 by a small margin, the person will be entitled to marginal relief as provided in the Sub-Paragraph reproduced at Annex. I. A few typical examples of calculations are given in Annex. II. (Example II illustrates the calculation of the marginal relief). (ii) The value of perquisites by way of free or concessional residential accommodation, or motor cars provided by employers to their employees shall be determined under rule 3 of the Income-tax Rules, 1962. Further, the value of other benefits or amenities provided free of cost or at concessional rates to the employees like supply of gas, electric energy, water for household consumption, educational facilities, etc., should also be taken into account for the purpose of computing the estima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 1,000 only in cases, (a) where the employee is in receipt of a conveyance allowance at any time during the financial year, or (b) where he is provided with any motor car, motor cycle, scooter or other moped by his employer (for use otherwise than wholly and exclusively in the performance of his duties), or where he is allowed the use of any one or more motor cars (otherwise than wholly and exclusively in the performance of his duties) out of a pool of motor cars owned or hired by the employer at any time during the financial year. In this connection it may be noted that the use of a motor car by the employee for the purposes of going from his residence to the place where the duties of the employment are to be performed, or from such place back to his residence will not be regarded as use of the motor car in the performance of his duties. (vi)(a) Under section 80C of the Act, while computing the taxable income, the disbursing officers should allow for the current financial year, i.e., 1980-81, a deduction of the whole of the first Rs. 5,000; 50% of the next Rs.5,000, and 40% of the balance of the qualifying amount of payments towards life insurance premia, contributions to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the increase in the exemption limit to Rs. 12,000. No deduction is, therefore, to be given under this section. (viii) Under section 80U, in the case of every resident individual who is blind or suffers from permanent physical disability, which substantially reduces his capacity to engage in gainful employment, a deduction of Rs.5,000 from the total income is allowable by the employer, vide this Ministry's Circular No. 272 dated May 27, 1980**. The Finance (No. 2) Act, 1980, has raised this limit to Rs. 10,000. Subject to fulfilment of the conditions prescribed in the above referred circular, deduction up to the increased limit of Rs. 10,000 may be allowed from salary for the purposes of deducting tax at source. (ix) Under section 10(13A) of the Income-tax Act, 1961, any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whichever name called) in respect of residential accommodation occupied by the assessee is exempt from income-tax to the extent (not exceeding Rs.400 p.m.) as may be prescribed, having regard to the area or place in which such accommodation is situated, and other relevant consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. However, in cases where contributions to the National Defence Fund, Jawaharlal Nehru Memorial Fund, the Prime Minister's Drought Relief Fund, or the Prime Minister's National Relief Fund are made, 50% of such contributions may be deducted in computing the taxable income of the employee. Deduction will not be admissible where the aggregate of all contributions for the year is less than Rs. 250. (xi) 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 at the places specified under rule 11B of the Income-tax Rules, 1962. 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) 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 15 per cent. thereof, or Rs. 300 per month, whichever is less. The total income or working out these percentages will be computed before making any deduction under section 80GG; (c) the assessee does not own any ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, shall not be regarded for the purposes of that clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties. This may be kept in view while deciding whether any expenditure from the special allowance has been actually incurred and, if so, the extent to which it has been incurred, to meet the expenses wholly, necessarily and exclusively in the performance of duties of an office or employment of profit. (xiii) Section 80RRA provides that where the gross total income of an individual, who is a citizen of India, includes any remuneration received by him in foreign currency from any employer (i.e., a foreign employer or an Indian concern) for any services rendered by him outside India, 50% of such remuneration will be deducted in computing the taxable income. It also provides that where the assessee renders continuous service abroad for more than 36 months, the remuneration received by him for any period of service after the expiry of the said 36 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or excuse fails to deduct or after deducting fails to pay the tax as required under the provisions of Chapter XVIIB of the Income-tax Act, 1961, he shall be punishable: (i) in a case where the amount of tax which he has failed to deduct or pay exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; and (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. 3. 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 chalan. It may also be ensured that the right type of chalan is used. New colour band chalans are being introduced with separate numbers. The relevant chalan for making payment of tax deducted at source from salaries is No.9 with "Blue Colour Band". Along with this colour band chalan, old chalan forms will also continue to be used. The old chalan form number is I.T.N.S. 39. Wherever the amount of tax deducted at source is cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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