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TMI BlogIncome-tax deduction from salaries during the financial year 2005-06 under section 192X X X X Extracts X X X X X X X X Extracts X X X X ..... COME-TAX A.Normal Rates of tax : 1. Where the total income does not exceed Rs.1,00,000. Nil 2. Where the total income exceeds Rs. 1,00,000 but does not exceed Rs. 1,50,000. 10 per cent of the amount by which the total income exceeds Rs. 1,00,000. 3. Where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000. Rs. 5,000 plus 20 per cent of the amount by which the total income exceeds Rs.1,50,000. 4. Where the total income exceeds of Rs. 2,50,000. Rs. 25,000 plus 30 per cent 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 : 1. Where the total income does not exceed Rs. 1,35,000. Nil 2. Where the total income exceeds Rs. 1,35,000 but does not exceed Rs.1,50,000. 10 per cent of the amount by which the total income exceeds Rs. 1,35,000. 3. Where the total income exceeds Rs.1,50,000 but does not exceed Rs. 2,50,000. Rs. 1,500 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. 21,500 plus 30 per cent of the amount by which the total income exceeds Rs. 2,50,000. C.Rates of tax for an individual, resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the income chargeable under the head salaries , including the value of perquisites for which tax has been paid by the employer himself. ILLUSTRATION : Suppose that the income chargeable under the head 'salary' of a male employee below sixty-five years of age for the year inclusive of all perquisites is Rs. 2,40,000, out of which, Rs. 40,000 is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites as per the provisions discussed in para 3.2 above. STEPS : Income chargeable under the head Salaries inclusive of all perquisites : Rs. 2,40,000 Tax on total salaries : Rs. 23,000 Average rate of tax [(Rs. 23,000/Rs. 2,40,000) 100] 9.58% Tax payable on Rs.40,000 (9.58% of Rs. 40,000) Rs. 3,833 Amount required to be deposited each month (3,833/12) Rs. 319 Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such other income and tax, if any, deducted at source from such income, and the loss, if any, under the head Income from house property into account for the purpose of computing tax deductible under section 192 of the Income-tax Act. However, this sub-section shall not in any case have the effect of reducing the tax deductible (except where the loss under the head Income from house property has been taken into account) from income under the head Salaries below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account. In other words, the DDO can take into account any loss (negative income) only under the head Income from house property and no other head for working out the amount of total tax to be deducted. While taking into the account the loss from house property, the DDO shall ensure that the assessee files the declaration referred to above and encloses therewith a computation of such loss from house property. (iii) Sub-section (2C) lays down that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch capital was borrowed the higher deduction would be available in respect of the capital borrowed after 1-4-1999. It may also be noted that there is no stipulation regarding the construction/acquisition of the residential unit being entirely financed by capital borrowed on or after 1-4-1999.The loan taken prior to 1-4-1999 will carry deduction of interest up to Rs. 30,000 only. However, in any case the total amount of deduction of interest on borrowed capital will not exceed Rs.1,50,000 in a year. 3.8 Adjustment for excess or shortfall of deduction : The provisions of sub-section (3) of section 192 allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deductions for that employee within that financial year itself. 3.9 TDS on Payment of balance under provident fund and superannuation fund : The trustees of a recognized provident fund, or any person authorized by the regulations of the fund to make payment of accumulated balances due to employees, shall, in cases where sub-rule (1) of rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x deducted : If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201. Sub-section (1A) of section 201 lays down that such person shall be liable to pay simple interest at twelve per cent per annum with effect from 8-9-2003 on the amount of such tax from the date on which such tax was deductible to the date on which the tax is actually paid. Section 271C lays down that if any person fails to deduct tax at source, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted by him. Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time the tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, and with fine. 4.6 Furnishing of Certificate for Tax Deducted : According to the provisions of section 203, every person responsible for deducting tax at source is required to furnish a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be discharged in accordance with law and rules of valuation framed thereunder. Any false information, fabricated documentation or suppression of requisite information will entail consequences therefore provided under the law. The certificates in Form No.12BA and Form No. 16 are to be issued on tax-deductor's own stationery within one month from the close of the financial year i.e., by April 30 of every year. If he fails to issue these certificates to the person concerned, as required by section 203, he will be liable to pay, by way of penalty, under section 272A, a sum which shall be Rs.100 for every day during which the failure continues. 4.7 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, returns, etc. Detailed instructions in this regard are available in this Department's 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government, it may be ensured that the correct amount of income-tax is recorded in the relevant challan. It may also be ensured that the right type of challan is used. The relevant challan for making payment of tax deducted at source from salaries is challan No. ITNS-281. Where the amount of tax deducted at source is credited to the Central Government through book adjustment, care should be taken to ensure that the correct amount of income-tax is reflected therein. 4.11 TDS on Income from Pension : In the case of pensioners who receive their pension from a nationalized bank, the instructions contained in this circular shall apply in the same manner as they apply to salary income. The deductions from the amount of pension under section 80C on account of contribution to Life Insurance, Provident Fund, NSC etc., if the pensioners furnish the relevant details to the banks, may be allowed. Necessary instructions in this regard were issued by the Reserve Bank of India to the State Bank of India and other Nationalized Banks vide RBI's Pension Circular(Central Series) No.7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS) No.60/GA.64(11CVL)-/92) dated the 27th April, 1992, and, these instructions s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l year and on or before the 15th Junefollowing the last quarter of the financial year. (b) The Quarterly Statements are to be filed on computer media only in accordance with rule 31A of the Income-tax Rules, 1962. In case of failure in filing of the Quarterly Statement, the person deducting the tax shall be liable for a penalty under section 272A(2)(k) of Rs.100 for each day of default. 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. 5. Estimation of income under the head Salaries 5.1 Income chargeable under the head Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the meaning assigned to it in clause (10D) of section 10. It may be noted that, since salary includes pensions, tax at source would have to be deducted from pension 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Off-shore sites of similar nature do not have to meet any requirement of distance. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from the above amount. However, where such educational institution itself 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.1000 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 month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt representing the difference between the exercise price and the fair market value on the date of exercise), and as capital gains at the time of transfer of the same. With effect from 1-4-2001 (relevant to assessment year 2001-02) onward, stock options issued as per guidelines of the Central Government are to be taxed only once, at the time of sale, as capital gains. In cases, where perquisite has been assessed with reference to exercise of the option by the employee under section 17(2), the fair market value at the time of exercise of the option shall be the cost of acquisition of share for working out the capital gains. The relevant guidelines of the Central Government have been issued vide Notification No.1021(E), dated 11-10-2001. Stock options not in conformity with the above guidelines (non-qualified stock options) shall continue to be taxed at both the stages. It is pertinent to mention that benefits specifically exempt under sections 10(13A), 10(5), 10(14), 17 etc. would continue to be exempt. These include benefits 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent on superannuation, or otherwise, subject to a maximum of ten months' leave. This exemption will be further limited to the maximum amount specified by the Government of India Notification No. S.O. 588(E), dated 31-5-2002 at Rs. 3,00,000 in relation to such employees who retire, whether on superannuation or otherwise, after 1-4-1998. (5) Under section 10(10B), the retrenchment compensationreceived by a workman is exempt from income-tax subject to certain limits. The maximum amount of retrenchment compensation exempt is the sum calculated on the basis provided in section 25F(b) of the Industrial Disputes Act, 1947 or any amount not less than Rs.50,000 as the Central Government may by notification specify in the Official 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 1-1-1977. (6) Under section 10(10C), any payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from income-tax to the extent as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. According to rule 2A of the Income-tax Rules, 1962, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be: (a) The actual amount of such allowance received by an employer in respect of the relevant period; or (b) The actual expenditure incurred in payment of rent in excess 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... muting between the place of his residence and the place of duty is exempt to the extent of Rs. 800 per month vide Notification S.O. No. 395(E), dated 13-5-1998. (11) Under section 10(15)(iv)(i) of the Income-tax Act, interest payable by the Government on deposits made by an employee of the Central Government or a State Government or a public sector company from out of his retirement benefits, in accordance with such scheme framed in this behalf by the Central Government and notified in the Official Gazette is exempt from income-tax. By Notification No. F.2/14/89-NS-II, dated 7-6-1989, as amended by Notification No. F.2/14/89-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 or family pension received by any member of the family of 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure incurred on medical treatment, hospital includes a dispensary or clinic or nursing home, and family in relation to an individual means the spouse and children of the individual. Family also includes parents, brothers and sisters of the individual if they are wholly or mainly dependent on the individual. 5.3 Deductions under section 16 of the Act Entertainment allowance - A deduction is also allowed under clause (ii) of section 16 in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of 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. The deduction hitherto available to non-Government employees has been withdrawn. 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 of Rs. 30,000 or Rs. 20,000, dependi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government may, by notification in the Official Gazette, specify in this behalf. [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E), dated 3-11-2005.] (6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child, (a) for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India; (b) for participation in any unit-linked insurance plan of the LIC Mutual Fund notified by the Central Government under clause (23D) of section 10. [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 3-11-2005.] (7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation 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 3-11-2005.] (8) Any subscription made to any units of any Mutual Fund, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc. The deduction will also be allowable in respect of repayment of loans borrowed by an assessee from the Government, or any bank or 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 co-operative 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pensionfrom the fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee's account, if any) as does not exceed the amount of ten thousand rupees in the previous year. Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section, a rebate/deduction with reference to such amount shall not be allowed under section 88 up to assessment year 2005-06 and under section 80C from assessment year 2006-07 onwards. C.As per the provisions of section 80CCD, where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004, has in the previous year paid or deposited any amount in his account under a pension scheme as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the health of the wife or husband, dependent parents or dependent children of the assessee. (ii) where the assessee is a Hindu undivided family, any sum paid to effect or to keep in force an insurance on the health of any member of the family. However, the deduction can be allowed for a sum not exceeding Rs. 15,000 per annum where the assessee or his wife or husband, or dependent parents or any member of the family (in case the assessee is a Hindu undivided family) is a senior citizen which means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year. E. Under section 80DD, where an assessee, who is a resident in India, has, during the previous year, (a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or (b) paid or deposited any amount under a scheme framed in this behalf by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year; (c) disability shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) and includes autism , cerebral palsy and multiple disability referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); (d) Life Insurance Corporation shall have the same meaning as in clause (iii) of sub-section (8) of section 88; (e) medical authority means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose (a) approved charitable institution means an institution established for charitable purposes and notified by the Central Government under clause (2C) of section 10, or, an institution referred to in clause (a) of sub-section (2) of section 80G. (b) financial institution means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf; (c) higher education means full-time studies for any graduate or post-graduate courses in engineering, medicine, management, or, for post-graduate course in applied sciences or pure sciences, including mathematics and statistics; (d) initial assessment year means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan. G. No deduction should be allowed by the D.D.O. from the salary income in respect of any donations made for charitable purposes. The tax relief on such donations as admissible under section 80G of the Act, will have to be claimed by the taxpay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80GG. (d) The assessee does not own : (i) any residential accommodation himself or by his spouse or minor child or where such assessee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or (ii) at any other place, any residential accommodation being accommodation in the occupation of the assessee, the value of which is to be determined under clause (a) of sub-section (2) or, as the case may be, clause (a) of sub-section (4) of section 23: The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the assessee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent. I. Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of fifty thousand rupees. However, where such individual is a person with severe disabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e calculated at the rates given in para 2 of this Circular keeping in view the age and gender of the employee. 6.3 The amount of tax payable so arrived at shall be increased by surcharge (if applicable) and additional surcharge (Education Cess) at the prescribed rate to arrive at the total tax payable. 6.4 The amount of tax as arrived at para 6.3 should be deducted every month in equal instalments. Any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deductions during the same financial year. 7. Miscellaneous 7.1 These instructions are not exhaustive and are issued only with a view to helping the employers to understand the various provisions relating to deduction of tax from salaries. Wherever there is any doubt, reference may be made to the provisions of the Income-tax Act, 1961, the Income-tax Rules, 1962 and the Finance Act, 2005. ANNEXURE I Assessment Year 2006-07 Example 1 Calculation of Income-tax in the case of a male employee having gross salary income of : (i) Rs. 2,00,000, (ii) Rs. 5,00,000, and (iii) Rs. 10,00,000 Particulars (Rs.) (Rs.) (Rs.) (i) (ii) (iii) Gross Salary Income 2,00,000 5,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (13A)in respect of residential accommodation situated 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. C.C.A. Rs. 6,000 5. House rent paid Rs. 1,44,000 6. General Provident Fund Rs. 36,000 7. Life Insurance Premium Rs. 4,000 8. Subscription to Infrastructure Bonds Rs. 20,000 Computation of total income and tax payable thereon 1. Salary + D.A. + C.C.A. Rs. 3,06,000 House Rent Allowance Rs. 1,20,000 2. Total Salary income Rs. 4,26,000 3. Less: House Rent allowance exempt u/s 10(13A): Least of: a. Actual amount of HRA received = Rs. 1,20,000 b. Expenditure of rent in excess of 10% of salary (including D.A. presuming that D.A. is taken for retirement benefit) (Rs. 1,44,000-Rs. 30,000) = Rs. 1,14,000 c. 50% of Salary(Basic+ DA)= Rs.1,50,000 Rs. 1,14,000 Gross Total Income : Rs. 3,12,000 Less : Deduction u/s 80C: Rs. GPF : 36,000 LIC : 4,500 Subscription to : infrastructure Rs. bonds : 20,000 Total : 60,000 Rs. 60,000 Total Income: Rs. 2,52,000 Tax on total income Rs. 21,900 Surcharge : Nil Education Cess @ 2% Rs. 438 Total Tax Payable Rs. 22,338 Example 5 Illustrating valuation of per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hildren : Rs. 30,000 (Rs.10,000 per child) Computation of total income and tax payable thereon 1. Gross salary : Rs. 5,92,000 (Basic+DA+HRA+SDA) Less : House rent allowance exempt u/s 10 (13A) Least of : a. Actual amount of HRA received : Rs. 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) : Rs. 80,000 c. 50% of salary (including D.A.) : Rs. 2,00,000 Rs. (-) 80,000 Gross Total Taxable Income : Rs. 5,12,000 Less : Deduction u/s 80C i. Provident Fund : Rs. 60,000 ii. LIP : Rs. 10,000 iii. NSC VIII Issue : Rs. 30,000 iv. Repayment of HBA : Rs. 60,000 v. Tuition Fees (Restricted to two children) : Rs. 20,000 Total : Rs. 1,80,000 Restricted to Rs. 1,00,000 Total Income : Rs. 4,12,000 Tax Payable Rs. 70,100 Surcharge : Nil Education Cess @ 2% Rs. 1,402 Total Tax Payable Rs. 71,502 Note : Part of the dearness allowance merged with the basic pay and shown as 'Dearness Pay' is also included in the definition of 'salary' for working out the amount of exemption under section 10(13A). Example 7 Income-tax calculation in the case of a male employee who claims loss under the head &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove do not have to pay tax up to a total income of Rs.1,85,000. Annexure II Form for sending particulars of income under section 192(2B) for the year ending 31st March, 2002 [Not reproduced] Annexure III Form No. 12BA [See rule 26A(2)(b)] Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof [Not reproduced] Annexure IV Form No. 16AA [See third proviso to rule 12(1)(b) and rule 31(1)(a)] Certificate for tax deducted at source from Income chargeable under the head Salaries -cum-Return of Income [Not reproduced] Annexure V [TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART-II SECTION 3, SUB-SECTION (ii)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) (CENTRAL BOARD OF DIRECT TAXES) ****** New Delhi, the 26th August, 2003 NOTIFICATION INCOME-TAX S.O. 974 (E)- In exercise of the powers conferred by sub-section (2) of section 206 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby specifies the following Scheme for electronic filing of return of tax deducted at source, namely:- 1. Short title, commencement and application. - (1) This Scheme may be called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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. 4. Furnishing of e-TDS Return.- (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 alongwith the e-TDS Return on the same computer media. (2) In case the e-deductor has on-line connectivity with the server of the e-TDS Intermediary, as may be designated by e-filing Administrator for this purpose, he may transmit the electronic data of the e-TDS Return directly to such server and send Form No. 27A on paper format separately to the e-TDS Intermediary. 5. Procedure to be followed by e-TDS inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 6. General responsibilities of e-TDS Intermediary. (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 electronic data of the TDS Return in the format as specified by the e-filing Administrator. (3) 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 information relating to deficiency memo and provisional receipts issued in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Government employees the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirement. The individual would receive a lump sum of the remaining pension wealth, which he wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Defence Medal for gallantry -do- 16. Home Guards and Civil Defence Medal for gallantry -do- [Notification No. 11561/F. No. 142/29/99-TPL] T.K. SHAH Director Annexure VIB MINISTRY OF FINANCE Department of Revenue Central Board of Direct Taxes New Delhi, the 29 th January, 2001 S.O. 81(E)- 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 the 24th November, 2000, namely :--- In the said notification, in the Table, against serial numbers 1, 2 and 3 under column (3) relating to 'circumstances for eligibility', the words 'to civilians' shall be omitted. (Notification No. 22/F. No. 142/29/99-TPL) T.K. SHAH Director Annexure VII FORM No. 10BA (See rule 11B) DECLARATION TO BE FILED BY THE ASSESSEE CLAIMING DEDUCTION UNDER SECTION 80GG I/We ----------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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