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TMI BlogDeduction of tax at source--Income-tax deduction from salaries during the financial year 1981-82, under section 192 of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of Paragraph A of Part III of the First Schedule to the Finance Bill, 1981, is at Annex. I. 3. The substance of the main provisions in the law in 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 1981-82, 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. 15,000. Some typical examples of calculations are at Annex. II). (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 estimated salary income of the employees during the current financial year. (Example II at Annex. II illustrates computation of some such perquisites). (iii) The amount on account of the encashment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawing pension during the current financial year at the same rates and subject to the same ceiling as the employees in actual service. Further, the standard deduction will be limited to Rs. 1,000 only in cases where the employee 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) 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 his 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. (vii) (a) Under section 80C of the Act, while computing the taxable income, the disbursing officers should allow 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 provident fund (including contribution to Public Provident Fund constituted under the Public Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 considerations. Rule 2A of the Income-tax Rules, 1962, prescribes the limits in respect of the amount which is not to be included in the total income of the assessee for the purpose of section 10(13A) of the Act. 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 from the taxable income of the employee. However, the hon'ble Punjab and Haryana High Court has held in the case of Commissioner of Income-tax v.Justice S.C. Mittal [1980] 121 ITR 503, that even in the case of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 for working out these percentages will be computed before making any deduction under section 80GG; (c) the assessee does not own any house property himself anywhere, nor does his spouse, minor child, or the Hindu undivided family of which he is a member, owns any house property anywhere; and (d) the accommodation occupied by him for the purpose of his own residence is situated in any of the following places, namely: (i) Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Calcutta, Coimbatore, Delhi, Faridabad, Gwalior (Lakshar), Hyderabad, Indore, Jabalpur, Jaipur, Kanpur, Lucknow, Ludhiana City, Madras, Madurai, Nagpur, Patna, Pune (Poona), Srinagar, Surat, Vadodara (Baroda) or Varanasi (Banaras) or the urban agglomeration of each of such places; and (ii) Bombay, Calicut, Cochin, Ghaziabad, Hubli-Dharwar, Madras, Sholapur, Trivandrum or Vishakhapatnam. Explanation: "Urban agglomeration", in relation to a place, means the area for the time being included in the urban agglomeration of such place for the purpose of grant of house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowance 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. (xii) 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 months will not qualify for any deduction. In the case of employees of the Central Government or any State Government, or person who was, immediately before taking up service outside India, in the employment of the Central Government or any State Government, the deduction will be allowed, only if the service of the employee is sponsored by the Central Government. In the case of other individuals the deduction will be allowed only if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... off to the nearest rupee. (xv) Attention is also invited to section 276B, where it is provided that if a person without reasonable cause or excuse fails to deduct, or after deducting fails to pay the tax as required under the provisions of Chapter XVII-B 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. 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. It may also be ensured that the right type of challan is used. New colour band challans are being introduced with separate numbers. The relevant challan for making payment of tax deducted at source from salaries is No. 9 with "Blue Colour Band". Along with this colour band ..... X X X X Extracts X X X X X X X X Extracts X X X X
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