9911796707
TMI BlogTax Deduction at Source – Income Tax deduction from Salaries under section 192 during the Financial Year 2008-2009X X X X Extracts X X X X X X X X Extracts X X X X ..... 59-63 V. Boards s Notification dated 26.8.2003 64-66 VA. Deptt. Of Eco. Affairs Notification dated 22.12.2003 67 VIA. Boards s Notification dated 24.11.2000 68 VIB. Boards s Notification dated 29.1.2001 69 VII. Form No. 10BA 70 CIRCULAR NO. 9/2008, DATED 29-9-2008 [F.No. 275/192/2008-IT(B)] SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2008-2009 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961. Reference is invited to Circular No. 08/2007, dated 5-12-2007 whereby the rates of deduction of income-tax from the payment of income under the head Salaries under section 192 of the Income-tax Act, 1961, during the financial year 2007-08, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head Salaries during the financial year 2008-09 and explains certain related provisions of the Income-tax Act. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income-tax Department - 2. Finance Act, 2008 As per the Finance Act, 2008, income-tax is required to be deducted under section 192 of the Income-tax Act, 1961 from income chargeable under the head Salaries for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 10,00,000. Additional surcharge on Income-tax (Education Cess on Income-tax): The amount of income-tax as increased by surcharge, if any, mentioned above shall be further increased by an additional surcharge (Education Cess on Income-tax) at the rate of two per cent of the income-tax and surcharge. Additional surcharge on Income-tax (Secondary and Higher Education Cess on Income-tax): From Financial year 2007-08 onwards, an additional surcharge is chargeable at the rate of one per cent of income-tax and surcharge (not including the Education Cess on income-tax). Surcharge, Education Cess, and Secondary and Higher Education Cess are payable by both resident and non-resident assessees. 3. Section 192 of the Income-tax Act, 1961: Broad Scheme of Tax Deduction at Source from Salaries . Method of Tax Calculation: 3.1 Every person who is responsible for paying any income chargeable under the head Salaries shall deduct income-tax on the estimated income of the assessee under the head Salaries for the financial year 2008-09. The income- tax is required to be calculated on the basis of the rates given above and shall be deducted on average at the time of each payment. No tax will, howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the present/chosen employer details of the income under the head Salaries due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer. The present/chosen employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer). Relief when salary paid in arrear or advance: 3.5 Under sub-section (2A) of section 192 where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body is entitled to the relief under sub-section (1) of section 89, he may furnish to the person responsible for making the payment referred to in Para (3.1), such particulars in Form No. 10E duly verified by him, and thereupon the person responsible as aforesaid shall compute the relief on the basis of such particulars and take the same into account in making the deduction under Para (3.1) above. Explanation . For this purpose University means a University established or incorporated by or under a Central, State or Provincial Act, and includes an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Act. Conditions for claim of deduction of interest on borrowed capital for computation of income from house property 3.7 (i) For the purpose of computing income/loss under the head income from house property in respect of a self-occupied residential house, a normal deduction of Rs. 30,000 is allowable in respect of interest on borrowed capital. However, a deduction on account of interest up to a maximum limit of Rs. 1,50,000 is available if such loan has been taken on or after 1-4-1999 for constructing or acquiring the residential house and the construction or acquisition of the residential unit out of such loan has been completed within three years from the end of the financial year in which capital was borrowed. Such higher deduction is not allowable in respect of interest on capital borrowed for the purposes of repairs or renovation of an existing residential house. To claim the higher deduction in respect of interest up to Rs. 1,50,000, the employee should furnish a certificate from the person to whom any interest is payable on the capital borrowed, specifying the amount of interest payable by such employee for the purpose of construction or acquisition of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Salary paid in foreign currency: 3.11 For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the prescribed rate of exchange. 4. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES: 4.1 Under clause (i) of section 204 of the Act the persons responsible for paying for the purpose of section 192 means the employer himself or if the employer is a Company, the Company itself including the Principal Officer thereof. 4.2 The tax determined as per para 6 should be deducted from the salary under section 192 of the Act. Deduction of tax at lower rate: 4.3 Section 197 enables the taxpayer to make an application in Form No. 13 to his Assessing Officer, and, if the Assessing Officer is satisfied that the total income of the taxpayer justifies the deduction of income-tax at any lower rate or no deduction of income-tax, he may issue an appropriate certificate to that effect which should be taken into account by the Drawing and Disbursing Officer while deducting tax at source. In the absence of such a certificate furnished by the employee, the employer should deduct income-tax on the salary payable at the normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nks deducting tax at the time of payment of pension are required to issue such certificates. In the case of employees receiving salary income (including pension), the certificate has to be issued in Form No. 16. However, in the case of an employee who is resident in India and whose income from salaries does not exceed Rs. 1,50,000, the certificate of deduction of tax shall be issued in Form No. 16AA (Specimen Form 16AA enclosed as Annexure-IV). It is, however, clarified that there is no obligation to issue the TDS certificate (Form 16 or Form 16AA) in case tax at source is not deductible/deducted by virtue of claims of exemptions and deductions. As per section 192, the responsibility of providing correct and complete particulars of perquisites or profits in lieu of salary given to an employee is placed on the person responsible for paying such income, i.e., the person responsible for deducting tax at source. The form and manner of such particulars are prescribed in Rule 26A, Form 12BA, Form 16 and Form 16AA of the Income-tax Rules . Information relating to the nature and value of perquisites is to be provided by the employer in Form No. 12BA in case of salary above Rs. 1,50,000. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable under the head Salaries to use their digital signatures to authenticate the certificates of deduction of tax at source in Form No. 16. The deductors will have to ensure that TDS certificates in Form No. 16 bearing digital signatures have a control No. with log to be maintained by the employer (deductor). The deductor will ensure that its TAN and the PAN of the employee are correctly mentioned in such Form No. 16 issued with digital signatures. The deductors will also ensure that once the certificates are digitally signed, the contents of the certificates are not amenable to change by anyone. The income-tax authorities shall treat such certificate with digital signatures as a certificate issued in accordance with rule 31 of the Income-tax Rules, 1962. (Circular No. 2/2007, dated 21-5-2007). Mandatory quoting of PAN and TAN: 4.8 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, statements and other documents. Detailed instructions in this regard are available in this Department s Circular No. 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l companies to file quarterly statements of TDS on computer media only in accordance with the Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003 as notified vide Notification No. S.O. 974(E), dated 26-8-2003. (Annexure-V). The quarterly statements are to be filed by such deductors in electronic format with the e-TDS Intermediary at any of the TIN Facilitation Centres, particulars of which are available at www.incometaxindia.gov.in and at http://tin.nsdl.com. If a person fails to furnish the quarterly statements in due time, he shall be liable to pay by way of penalty under section 272A(2)(k), a sum which shall be Rs. 100 for every day during which the failure continues. However, this sum shall not exceed the amount of tax which was deductible at source. The Quarterly Statements are be filed on computer media only in accordance with rule 31A of the Income-tax Rules, 1962. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 should be followed by all the branches of the Banks, which have been entrusted with the task of payment of pensions. Further all branches of the banks are bound under section 203 to issue certificate of tax deducted in Form 16 to the pensioners also vide CBDT Circular No. 761, dated 13-1-1998. Important Circulars: 4.14 Where Non-Residents are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, the refund can be issued to the employer as the tax has been borne by it : Circular No. 707, dated 11-7-1995. 4.15 TDS certificates issued by Central Government departments which are making payments by book adjustment, should be accepted by the Assessing Officers if they indicate that credit has been effected to the Income-tax Department by book adjustment and the date of such adjustment is given therein. In such cases, the Assessing Officers may not insist on details like challan numbers, dates of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be included in the income of the assessee for the previous year. Any contribution made, in excess of 10 per cent, by the Central Government or any other employer to the account of the employee under the New Pension Scheme as notified vide Notification No. F.N. 5/7/2003-ECB PR, dated 22-12-2003 (enclosed as Annexure-VA) and referred to in section 80CCD [para 5.4(C) of this Circular] shall also be included in the salary income. Other items included in salary, profits in lieu of salary and perquisites are described in section 17 of the Income-tax Act. 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 which is exempt, 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 am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) where the furniture, appliances and equipments have been taken on hire, by the amount of actual hire charges payable. - as reduced by any charges paid by the employee himself. Accommodation includes a house, flat, farm house, hotel accommodation, motel, service apartment guest house, a caravan, mobile home, ship etc. However, the value of any accommodation provided to an employee working at a mining site or an onshore oil exploration site or a project execution site or a dam site or a power generation site or an off-shore site will not be treated as a perquisite. However, such accommodation should either be 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. If an accommodat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken for the valuation of perquisite. Any amount paid by the employee for such facilities or services shall be reduced from the above amount. IV. Free or concessional education : Perquisite on account of free or concessional education shall be valued in a manner assuming that such expenses are borne by the employee, and would cover cases where an employer is running, maintaining or directly or indirectly financing the educational institution. Any amount paid by the employee for such facilities or services shall be reduced 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. 1,000 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 househ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electronic gadgets in this case means data storage and handling devices like computer, digital diaries and printers. They do not include household appliance (i.e. white goods) like washing machines, microwave ovens, mixers, hot plates, ovens etc. Similarly, in case of cars, the value of perquisite shall be worked out by reducing 20 per cent of its actual cost by the reducing balance method for each completed year of use. VIII. Medical Reimbursement by the employer exceeding Rs. 15,000 p.a. under section 17(2)(v) is to be taken as perquisites It is pertinent to mention that benefits specifically exempt under section 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 included in the Head Salaries (Exemptions) Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act : (1) The value of any travel concession or assistance received by or due to an employee from his employer or former employer for hims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption 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 compensation received 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 1-1-1997. (6) Under section 10(10C), any payment received or receivable (even if received in instalments) by an employee of the following bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 payment of rent in respect of residential accommodation occupied by the assessee subject to the limits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 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 Central Government or family pension received by any member of the family of such individual. Family for this purpose shall have the meaning assigned to it in section 10(5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. No deduction on account of entertainment allowance is available to non-government employees. 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, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards. 5.4 Deductions under chapter VI-A of the Act In computing the taxable inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 referred to in clause (23D) of section 10 and as notified by the Central Government. [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 or any other insurer 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 and Jeevan Akshay-III vide Notification S.O. No. 847(E), dated 1-6-2006] (8) Any subscription made to any units of any Mutual Fund, referred to in clause (23D) of section 10, or from the Administrator or the specified company referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 cooperative 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 which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes. [The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E), dated 28-7-2006] (17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf. (18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004. (19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981. It may be clarified that the amount of premium or other payment made on an insurance policy [other than a contract for deferred annuity mentioned in sub-para (2)] shall be eligible for deduction only to the extent of 20 per cent of the actual capital sum assured. In calculating any such actual capital sum, the following shall not be taken into account : (i) the value of any premiums agreed to be returned, or (ii) any benefit by way of bonus or otherwise over and above the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount referred to in clause (a) or clause (b) above shall be deemed to be the income of the assessee or his nominee, as the case may be, in the financial year in which such amount is received, and shall accordingly be charged to tax as income of that financial year. For the purposes of deduction under section 80CCD, salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. The aggregate amount of deduction under sections 80C, 80CCC and 80CCD shall not exceed Rs. 1,00,000 (Section 80CCE). D. Section 80D of the Income-tax Act provides for a deduction of up to fifteen thousand rupees to an assessee, being an individual or a Hindu Undivided family. The deduction is allowed for making a payment to effect or keep in force an insurance on : (a) the health of the assessee or on the health of the wife or husband, dependent parents or dependent children of the assessee where the assessee is an individual; (b) the health of any member of the family where the assessee is a Hindu undivided family. In the case the assessee or any other member of the family, on whose health the insurance has been effected or kept in forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious 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 the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the assessee shall be allowed a deduction of a sum of fifty thousand rupees from his gross total income of that year. However, where such dependant is a person with severe disability, an amount of seventy-five thousand rupees shall be allowed as deduction subject to the specified conditions. The deduction under this section shall be allowed only if the following conditions are fulfilled : A. (i) the scheme referred to in clause (b) above provides for payment of annuity or lump sum amount for the benefit of a dependant, being a person with disability, in the event of the death of the individual in whose name subscription to the scheme has been made; (ii) the assessee nominates either the dependa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) 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 of Rights and Full Participation) Act, 1995 (1 of 1996) or such other medical authority as may, by notification, be specified by the Central Government for certifying autism , cerebral palsy , multiple disabilities , person with disability and severe disability referred to in clauses (a), (c) , (h) , (j) and (o) 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); (f) person with disability means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or clause (j) 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); (g) person with severe disability means (i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest 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 tax payer in the return of income. However, D.D.O. on due verification may allow donations to following bodies to the extent of 50 per cent of the contribution: (i) Jawaharlal Nehru Memorial Fund. (ii) The Prime Minister s Drought Relief Fund. (iii) The National Children s Fund. (iv) The Indira Gandhi Memorial Trust. (v) The Rajiv Gandhi Foundation. and to the following bodies to the extent of 100 per cent of the contribution: (i) National Defence Fund or The Prime Minister s National Relief Fund. (ii) The Prime Minister s Armenia Earthquake Relief Fund. (iii) The Africa (Public Contributions - India) Fund. (iv) The National Foundation for Communal Harmony. (v) Chief Minister s Earthquake Relief Fund, Maharashtra. (vi) National Blood Transfusion Council. (vii) State Blood Transfusion Council. (viii) Army Central Welfare Fund. (ix) Indian Naval Benevolent Fund. (x) Air Force Central Welfare Fund. (xi) The Andhra Pradesh Chief Minis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (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 disability, a higher deduction of seventy-five thousand rupees shall be allowable. Every individual claiming a deduction under this section shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner along with the return of income, in respect of the assessment year for which the deduction is claimed. In cases where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncreasing 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, 2008. 7.2 In case any assistance is required, the Assessing Officer/the local Public Relation Officer of the Income-tax Department may be contacted. 7.3 These instructions may be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/State Governments. 7.4 Copies of this Circular are available with the Director of Income-tax (Research, Statistics Publications and Public Relations), 6th Floor, Mayur Bhavan, Indira Chowk, New Delhi-110 001 and at the following websites: (A Pattnaik) Director (Budget) Central Board of Direct Taxes CLARIFICATION REGARDING TDS OF ARREARS OF SALARY PAID TO GOVERNMENT SERVANTS ON ACCOUNT OF THE IMPLEMENTATION OF THE RECOMMENDATIONS OF SIXTH PAY COMMISSION The Implementa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Vice-President s Secretariat 5. Prime Minister s Office 6. Lok Sabha Secretariat 7. Rajya Sabha Secretariat 8. Cabinet Secretariat 9. Secretary, U.P.S.C., Dholpur House, New Delhi 10. Secretary, Staff Selection Commission, Lodhi Complex, New Delhi 11. Supreme Court of India, New Delhi 12. Election Commission, New Delhi 13. Planning Commission, New Delhi 14. Secretariat at Governors/ Lt. Governors of all States / Union Territories 15. All Integrated Financial Advisor to Ministries/ Departments of Government of India 16. All Heads of Departments Offices subordinate to the Department of Revenue CBDT, CBEC etc. 17. Army Headquarters, New Delhi 18. Air Headquarters, New Delhi 19. Naval Headquarters, New Delhi 20. Director-General of Posts Telegraph, New Delhi (10 copies) 21. Comptroller Auditor General of India (50 copies) 22. Accountant General I Andhra Pradesh, Hyderabad 23. Accountant General II Andhra Pradesh, Hyderabad 24. Accountant General, Assam, Shillong 25. Accountant General-I, Bihar, Ranchi 26. Accountant General-II, Bihar, Patna 27. Accountant General-I, Gujrat, Ahmedabad 28. Accountant General-II, Gujrat, Rajkot 29. Accountant General, Kerala, Trivandrum 30. Accountant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Head Office:- (i) Jeevan Deep Building, 1 Middleton Street, Kolkata. (ii) Circle Top House, Rajai Salai, Chennai-600001. (iii) Lucknow Uttar Pradesh (iv) Bank Street, Hyderabad-500001 (v) Hamida Road, Bhopal-462001 (vi) Shop Nos. 101 to 105, Sector 17-B, Chandigarh (vii) New Amn. Building, Madam Cama Road, Mumbai-400021 (viii) 9, Parliament Street, New Delhi-110001 (ix) Bhedru, Ahmedabad-380001 (x) Judges Court Road, Post Box No. 103, Patna- 800001 (xi) 59, Forest Park, Bhubneshwar and Gauhati, Assam (xii) Gauhati, Assam 72. Chief Controller of Accounts, CBDT, Lok Nayak Bhawan, Khan Market, New Delhi 73. State Bank of Patiala, (Head Office), The Mall, Patiala 74. State Bank of Bikaner and Jaipur, Head Office, Tilak Marg, C Scheme Jaipur 75. State Bank of Hyderabad, Head Office, Gun Factory, Hyderabad 76. State Bank of Indore, 5 Yashwant Nivas Road, Indore. 77. State Bank of Mysore (Head Office), K.G. Road, Bangalore 78. State Bank of Saurashtra, Behind Satyanarayan Road, Bhavnagar, Gujrat 79. State Bank of Travancore, Post Box No. 34, Trivandrum 80. N.S. Branch, Department of Economic Affairs, New Delhi 81. The Editor, The Income-Tax Reporter Company Law Institute of India (P) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Cess on Income-tax). Note 4 : Surcharge, Education Cess, and Secondary and Higher Education Cess are payable by both resident and non-resident assessees. EXAMPLE 2 For Assessment Year 2009-10 Calculation of Income-tax in the case of a male employee having a handicapped dependent. Particulars : 1. Gross Salary Rs. 3,20,000 2. Amount spent on treatment of a dependant, being person with disability (but not severe disability) Rs. 7,000 3. Amount paid to LIC with regard to annuity for the maintenance of a dependant, being person with disability (but not severe disability) Rs. 50,000 4. GPF Contribution Rs. 25,000 Computation of Tax 5. LIP Paid Rs. 10,000 Gross Salary Rs. 3,20,000 Less : Deduction U/s 80DD (Restricted to Rs. 50,000 only) Rs. 50,000 Taxable Income Rs. 2,70,000 Less : Deduction u/s 80C : GPF Rs. 25,000 LIP Rs. 10,000 Total 35,000 Rs. 35,000 Total Income Rs. 2,35,000 Income-tax thereon/payable Rs. 8,500 Add : Surcharge Nil Education Cess @2% Rs. 170 Secondary and Higher Education Cess @1% Rs. 85 Total income-tax payable Rs. 8,755 Rounded off to Rs. 8,760 EXAMPLE 3 For Assessment Year 2009-10 Calculation of Income-tax in the case of a male employee where medical treatmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site and calculation of tax in the case of a male employee of a private company in Mumbai who was provided accommodation in a flat at concessional rate for ten months and in a hotel for two months. 1. Salary. Rs. 7,00,000 2. Bonus Rs. 1,40,000 3. Free gas, electricity, water etc. (Actual bills paid by company) 4( b ) Hotel rent paid by employer (for two months) Rs. 1,00,000 4( c ) Rent recovered from employee Rs. 60,000 4( d ) Cost of furniture Rs . 2,00,000 5. Subscription to Unit Linked Insurance Plan Rs. 50,000 6. Life Insurance Premium Rs. 10,000 7. Contribution to recognized P.F. Rs. 42,000 Computation of total income and tax paid thereon 1. Salary Rs. 7,00,000 2. Bonus Rs. 1,40,000 Total Salary for Valuation of Perquisite i.e. Rs. 70,000 per month Rs. 8,40,000 Valuation of perquisites ( a ) Perq. for flat: Lower of (15% of salary for ten months = Rs.1,05,000) and (actual rent paid = 3,60,000) Rs. 1,05,000 ( b ) Perq. for hotel Lower of (24% of salary of 2 Months = 33,600) and (actual payment = l,00,000) Rs. 33,600 ( c ) Perq. for furniture @ 10% of cost Rs. 20,000 Rs. 1,58,600 Less: Rent recovered from employee Rs. 60,000 Rs. 98,600 ( d ) Add : Perq. for free gas, elec., wate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loan taken after 1-4-1999) 1,60,000 4. Donation paid to National Children Fund 5,000 5. NSC Purchased 10,000 6. GPF 30,000 Computation of taxable income and tax thereon 1. Salary Income Rs. 4,00,000 2. Income from house property Annual value Nil Interest payable on loan u/s 24 1,50,000 (Maximum allowable) (-) Rs. 1,50,000 Gross total income Rs. 2,50,000 Less: Deduction u/s 80G 50% of Rs. 5,000 Rs. 2,500 Less: Deduction u/s 80C: GPF 30,000 NSC 10,000 Housing Loan repaid 50,000 Total Rs. 90,000 Total Deductions under Chapter VI-A Rs. 92,500 Total Income Rs. 1,57,500 Tax Payable Rs. 750 Add: Surcharge Nil Education Cess @ 2% 15 Secondary and Higher Education Cess @ 1% 8 Total Income-tax payable Rs. 773 Rounded off to Rs. 770 EXAMPLE - 8 For assessment year 2009-10 Income-tax calculation in the case of a male employee who claims loss under the head Income from self-occupied house property, and has taken house building loan before 1-4-1999. 1. Gross Salary 4,00,000 2. Housing Loan repaid (Principal) 30,000 3. Interest payable on housing loan (Loan taken before 1-4-1999) 1,00,000 4. Donation paid to National Children s Fund 6,000 5. N.S.C. purchased 10,000 6. G.P.F. 20,000 Computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the best of my knowledge and belief. Verified today, the ............................day of........................................ 2002. Place ............................ Date ............................ ............................................................ Signature of the employee F.No. 142/47/98-TPL NOTIFICATION NO. 10722 Sd/- (SUNITI SRIVASTAVA) Under Secretary to the Govt. of India The principal rules were published vide notification No. S.O. 969(E) dated 26.3.1962 and were last amended vide notification No. SO. 897 (E) dated 12.10.98. 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 1) Name and address of employer : 2) TAN 3) TDS Assessment Range of the employer : 4) Name, designation and PAN of employee : 5) Is the employee a director or a person with : substantial interest in the company (where the employer is a company) 6) Income under the head Salaries of the employee : (other than from perquisites) 7) Financial Year : 8) Valuation of Perquisites S.No Nature of perquisite (see rule 3) Value of perquisite as per rules (Rs.) Amount, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less the context otherwise requires,- (1) Act means the Income-tax Act, 1961 (43 of 1961); (2) Board means the Central Board of Direct Taxes constituted under the Central Board of Revenues Act, 1963 (54 of 1963); (3) computer media means a floppy (3 inch and 1.44 MB capacity) or CD-ROM, and includes on-line data transmission of electronic data to a server designated by e-filing Administrator for this purpose; (4) e-deductor means the person responsible for deduction of tax at source who is required to furnish e-TDS Return under this scheme; (5) e-filing Administrator means an officer not below the rank of Commissioner of Income-tax designated by the Board for the purpose of administration of this scheme; (6) e-TDS Intermediary means a person, being a company, authorised by the Board to act as e-TDS Intermediary under this scheme; (7) e-TDS Return means a return to be filed under section 206 of the Act duly supported by a declaration in Form No. 27A as prescribed under the Rules; (8) Rules means the Income-tax Rules, 1962; (9) All other words and expressions used herein but not defined and defined in the Act shall have the meanings respectively assigned to them in the Act. 3. Prepar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the e-deductor. (3) The e-TDS Intermediary shall upload the data on e-TDS Return on the server designated by the e-filing Administrator for the purpose of e-TDS Return and check whether the prescribed particulars relating to deposit of the tax deducted at source in bank and the permanent account number of the deductee have been given in the e-TDS Return. (4) On successful completion of the check, the data of e-TDS Return shall be transmitted by the e-TDS Intermediary to the e-filing Administrator together with the declaration in Form No.27A and the provisional receipt issued shall be deemed to be the acknowledgement of the e-TDS Return. (5) Where the details of deposit of tax deducted at source in bank, the permanent account number, tax deduction account number or any other relevant details are not given in the e- TDS Return, the e-filing Administrator shall forward a deficiency memo to the e-deductor with a request to remove the deficiencies within seven days of receipt of the same. (6) In case the deficiency indicated in the deficiency memo is removed within seven days, the data on e-TDS Return shall be transmitted by the e-TDS Intermediary to the e-filing Administrator and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhere to all provisions of this scheme as well as all directions issued by the e-filing Administrator. 7. Powers of e-filing Administrator. - Without affecting the generality of the foregoing provisions, the e-filing Administrator shall - (1) specify the procedures, data structures, formats and standards for ensuring secure capture and transmission of data, for the day to day administration of this scheme; (2) ensure compliance by e-TDS Intermediary with the technical requirements of this scheme, including review of the functioning of e-return Intermediary, verification of any complaints, scrutinising advertising material issued by them and such other matters as he deems fit. 8. Powers of the Board : The Board may revoke the authorisation of an e-filing Intermediary on grounds of improper conduct, misrepresentation, unethical practices, fraud or established lack of service to the e-deductors or such other ground as it may deem fit. Notification No.205/2003. F. No. 142/31/2003-TPL (Deepika Mittal) Under Secretary to the Government of India ANNEXURE VA MINISTRY OF FINANCE (Department of Economic Affairs) (ECB PR Division) NOTIFICATION New Delhi, the 22 nd December, 2003 F.No. 5/7/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accounting (CRA) infrastructure, several Pension Fund Managers (PFMs) to offer three categories of schemes, viz., options A, B and C. (v) The participating entities (PFMs and CRA) would give out easily understood information about past performance, so that the individual would be able to make informed choices about which scheme to choose. 2. The effective date for operationalization of the new pension system shall be from 1st of January, 2004. U.K. SINHA, Jt. Secy. ANNEXURE-VIA MINISTRY OF FINANCE (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, the 24 th November, 2000 S.O. 1048(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, mentioned in column 2 of the table below awarded in the circumstances as mentioned in corresponding column 3 thereof : TABLE Sl. No. Name of gallantry award Circumstances for eligibility (1) (2) (3) 1. Ashok Chakra When awarded to civilians for gallantry 2. Kirti Chakra -do- 3. Shaurya Chakra -do- 4. Sarvottan Jeevan Raksha Padak When awarded to civ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
