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TMI BlogINCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 DURING THE FINANCIAL YEAR 2009-2010X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Miscellaneous 39-44 Annexures I. Examples 45-51 II. Board's Notification dated 4.10.2002 {Form No. 12BA (as amended)} 52-53 III. Board's Notification dated 12.1.2004 (Form No. 16AA) 54-58 IV. Board's Notification dated 26.8.2003 59-61 IVA. Deptt. of Eco. Affairs Notification dated 22.12.2003 62 VA. Board's Notification dated 24.11.2000 63 VB. Board's Notification dated 29.1.2001 64 VII. Form No. 10 B A 65 CIRCULAR NO.: 1/2010 F.No. 275/192/2009-IT (B) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ..... New Delhi, dated the 11th January,2010 SUBJECT:INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2009-2010 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 inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. 1. Where the total income does not exceed Rs.2,40,000/-. Nil 2. Where the total income exceeds Rs.2,40,000 but does not exceed Rs.3,00,000/-. 10 per cent, of the amount by which the total income exceeds .Rs.2,40,000/- 3. Where the total income exceeds Rs.6,000/-plus Rs.3,00,000/-but does not exceed Rs.5,00,000/-. 20 per cent of the amount by which the total income exceeds Rs.3,00,000/-. 2. 4. Where the total income exceeds Rs.46,000/-plus Rs.5,00,000/-. 30 per cent of the amount By which the total income exceeds Rs.5,00,000/-. Surcharge on Income tax: There will be no surcharge on income tax payments by individual taxpayers during FY 2009-10 (AY 2010-11). Education Cess on Income tax: The amount of income-tax shall be further increased by an additional surcharge (Education Cess on Income Tax) at the rate of two percent of the income-tax. 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 percent of income-tax (not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax on Total Salaries(including Cess): Rs. 45,320 Average Rate of Tax [(45,320/4,50,000) X 100]: 10.07% Tax payable on Rs.50,000/-(10.07% of 50,000): Rs. 5,035 Amount required to be deposited each month: (5,035/12) Rs. 420 The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee. Salary From More Than One Employer: 3.4 Sub-section (2) of section 192 deals with situations where an individual is working under more than one employer or has changed from one employer to another. It provides for deduction of tax at source by such employer (as the tax payer may choose) from the aggregate salary of the employee who is or has been in receipt of salary from more than one employer. The employee is now required to furnish to 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 there from, 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 (incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 person responsible for paying any income chargeable under the head "salarie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 01.4.1999.The loan taken prior to 01.4.1999 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. Adjustment for Excess or Shortfall of Deduction: 3.8 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. TDS on Payment of Balance Under Provident Fund and Superannuation Fund: 3.9 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of month in which deduction is made. Interest, Penalty Prosecution for Failure to Deposit Tax Deducted: 4.5 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 one percent for every month or part of the month 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. Such interest, if chargeable, has to be paid before furnishing of quarterly statement of TDS for each quarter. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a serious responsibility of the employer, which is expected 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. Option to issue TDS Certificates by way of digital signatures: 4.7 Since the requirement of annexing the TDS certificates with the return of income has been dispensed with, the TDS certificates will be now issued only for the purpose of personal record of the deductees subject to the condition that they may be required to produce the same on demand before the Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Form No.24Q (for tax deducted from salaries). As the requirement of filing TDS/TCS certificates has been done away with, the lack of PAN of deductees is creating difficulties in giving credit for the tax deducted. It has, therefore, been decided that TDS returns for salaries, i.e. Form No. 24Q with less than 95% of PAN data will not be accepted during FY 2009-10.Tax deductors and tax collectors are, therefore, advised to quote correct PAN details of all deductees in the TDS returns, failing which the TDS returns will not be accepted and all penal consequences under the Income Tax Act will follow. Taxpayers liable to TDS are also advised to furnish their correct PAN with their deductors, failing which they will also face penal proceedings under the Income Tax Act . Quarterly Statement of TDS: 4.10. The person deducting the tax (employer in case of salary income), is required to file Quarterly Statements of TDS for the periods ending on 30th June, 30th September, 31st December and 31st March of each financial year, duly verified, to the Director General of Income Tax (Systems) or M/s National Securities Depository Ltd (NSDL). These statements are required to be filed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timating a false PAN. 4.11. A return filed on the prescribed computer readable media shall be deemed to be a return for the purposes of section 200(3) and the Rules made thereunder, and shall be admissible in any proceeding thereunder, without further proof of production of the original, as evidence of any contents of the original. Challans for Deposit of TDS: 4.12. While making the payment of tax deducted at source to the credit of the Central 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. Wherever 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. TDS on Income from Pension: 4.13. 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 pensi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r No. 747 dated 27.12.1996. 2. 4.16 There is a specific procedure laid down for refund of payments made by the deductor in excess of taxes deducted at source, vide Circular No. 285 dated 21.10.1980. 3. 4.17 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India. 1. 5. ESTIMATION OF INCOME UNDER THE HEAD "SALARIES" 2. 5.1 Income chargeable under the head "Salaries". (1) The following income shall be chargeable to income-tax under the head "Salaries" : (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not; (b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him. (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee 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 provided by way of monetary payment, exceeds Rs.50,000/-. What constitute concession in the matter of rent have been prescribed in explanation 1 to 4 below 17(2)(ii) of the Income Tax Act, 1961 . With effect from 1/04/2010 (AY 2010-11) it is further clarified that the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee, shall be constituted as perquisites in the hand of employees. Explanation.—For the purposes of this sub-clause,— (a) "specified security" means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uisite value would be 7 1/2% of the salary. b. Where the accommodation so provided is taken on lease/rent by the employer, the prescribed rate is 15% of the salary or the actual amount of lease rental payable by the employer, whichever is lower, as reduced by any amount of rent paid by the employee. For furnished accommodation, the value of perquisite as determined by the above method shall be increased by- i) 10% of the cost of furniture, appliances and equipments, or 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 on- shore 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonal service rendered to him. Any amount paid by the employee for such facilities or services shall be reduced from the above amount. III Gas, electricity water : For free supply of gas, electricity and water for household consumption, the rules provide that the amount paid by the employer to the agency supplying the amenity shall be the value of perquisite. Where the supply is made from the employer's own resources, the manufacturing cost per unit incurred by the employer would be 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employee, shall be taken as the value of perquisite. In case of a movable asset, which has already been put to use, the original cost shall be reduced by a sum of 10% of such original cost for every completed year of use of the asset. Owing to a higher degree of obsolescence, in case of computers and electronic gadgets, however, the value of perquisite shall be worked out by reducing 50% of the actual cost by the reducing balance method for each completed year of use. 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% 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. u/s. 17(2)(v) is to be taken as perquisites. It is further clarified that the rule position regarding valuation of perquisites are given at Section 17(2) of Income Tax Act,1961 and at Rule 3 of Income Tax Rules,1962 . The deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atuity received in cases other than above on retirement, termination etc is exempt up to the limit as prescribed by the Board. (3) Any payment in commutation of pension received under the Civil Pension (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union, or holders of civil posts/posts connected with defence, under the Union, or civil posts under a State, or to the members of the All India Services/Defence Services, or, to the employees of a local authority or a corporation established by a Central, State or Provincial Act, is exempt under sub-clause (i) of clause (10A) of Section 10. As regards payments in commutation of pension received under any scheme of any other employer, exemption will be governed by the provisions of sub-clause (ii) of clause (10A) of section 10. Also, any payment in commutation of pension received from a Regimental Fund or Non-Public Fund established by the Armed Forces of the Union referred to in Section 10(23AAB) is exempt under sub-clause (iii) of clause (10A) of Section 10. (4) Any payment received by an employee of the Central Government or a State Government, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Clause (g) of Section 3 of the Institute of Technology Act, 1961; h) Such Institute of Management as the Central Government may by notification in the Official Gazette, specify in this behalf. The exemption of amount received under VRS has been extended to employees of the Central Government and State Government and employees of notified institutions having importance throughout India or any State or States. It may also be noted that where this exemption has been allowed to any employee for any assessment year, it shall not be allowed to him for any other assessment year. (7) Any sum received under a Life Insurance Policy, including the sum allocated by way of bonus on such policy other than: i) any sum received under sub-section (3) of section 80DD or sub-section (3) of section 80DDA or, ii) any sum received under Keyman insurance policy or, iii) any sum received under an insurance policy issued on or after 1.4.2003 in respect of which the premium payable for any of the years during the term of the policy exceeds 20 percent of the actual capital sum assured. However, any sum received under such policy on the death of a person would still be exempt. (8) any paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent. (10) Clause (14) of section 10 provides for exemption of the following allowances:- (i) Any special allowance or benefit granted to an employee to meet the expenses incurred in the performance of his duties as prescribed under Rule 2BB subject to the extent to which such expenses are actually incurred for that purpose. (ii) Any allowance granted to an employee either to meet his personal expenses at the place of his posting or at the place he ordinarily resides or to compensate him for the increased cost of living, which may be prescribed and to the extent as may be prescribed. However, the allowance referred to in (ii) above should not be in the nature of a personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to his pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees; (ii) in respect of the prescribed diseases or ailments as provided in Rule 3A(2) of I.T. Rules 1962 , in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines as provided in Rule 3(A)(1)of I.T.Rule,1962 : (c) premium paid by the employer in respect of medical insurance taken for his employees (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority) or reimbursement of insurance premium to the employees who take medical insurance for themselves or for their family members (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority); (d) reimbursement, by the employer, of the amount spent by an employee in obtaining medical treatment for himself or any member of his family from any doctor, not exceeding in the aggregate Rs.15,000/-in an year. (e) As regards medical treatment abroad, the actual expenditure on stay and treatment abroad of the employee or any member of his family, or, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; (3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary; (4) Any contribution made: (a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies; (b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children ; [The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05.] (c) by an employee to a Recognized Provident Fund; (d) by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme, 1998 shall also qualify for deduction under section 80C. (9) Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in clause (23D) of section 10, or, by the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf; [The Central Government has since notified UTI-Retirement Benefit Pension Fund vide Notification S.O. No. 1564(E) dated 3.11.05.] (10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf; (11) Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly. (13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee. Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes. It is clarified that the amount allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 one lakh 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 notified vide Notification No. F.N. 5/7/2003-ECB PR dated 22.12.2003, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed ten per cent of his salary in the previous year. The benefit of new pension scheme has been extended to any other employees (also self emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , "family" means the spouse and dependent children of the assessee. Where the assessee is a Hindu undivided family, the sum referred to shall be the whole of the amount paid to effect or to keep in force an insurance on the health of any member of that Hindu undivided family as does not exceed in the aggregate fifteen thousand rupees. Where the sum specified above is paid to effect or keep in force an insurance on the health of any person specified therein, and who is a senior citizen, the deduction available is "twenty thousand rupees" rather than fifteen thousand as specified above. Explanation. — For the above "senior citizen" 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. The insurance referred to above shall be in accordance with a scheme made in this behalf by— (a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalisation) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or (b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority in the prescribed form and manner and a copy thereof is furnished along with the return of income. For the purposes of section 80DD,— (a) "Administrator" means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) ; (b) "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable to tax, by way of interest on loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or children. (ii) The deduction specified above shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to above is paid in full by the assessee, whichever is earlier. For this purpose - (a) "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority 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 any course of study pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rs. 2,000/-per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income from salaries on which income tax would be required to be deducted. This income should be rounded off to the nearest multiple of ten rupees. 1. 6.2 Income-tax on such income shall be calculated at the rates given in para 2 of this Circular keeping in view the age and gender of the employee. 2. 6.3 The amount of tax payable so arrived at shall be increased by educational cess as applicable (2% for primary and 1% for secondary education) to arrive at the total tax payable. 3. 6.4 The amount of tax as arrived at para 6.3 should be deducted every month in equal installments. 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. Subject:- Clarification regarding deduction of tax at source from payments of second installment of arrears to Government employees on account of implementation of Sixth Central Pay Commission's recommendations matter regarding. Under the provisions of Section 192 of the Income-tax Act , an employer is required to deduct tax at source from any payments in the nature of salary, which inter alia also includes any arrear payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. 7.2 In case any assistance is required, the Assessing Officer/the local Public Relation Officer of the Income-tax Department may be contacted. 3. 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. 4. 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: www.finmin.nic.in www.incometaxindia.gov.in (A Pattnaik) Director (Budget) Central Board of Direct Taxes To 1. All State Governments/Union Territories. 2. All Ministries/Departments of Government of India etc. 3. President's Secretariat 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. Secret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts, Deptt. Of Economic Affairs, New Delhi 58. Manager, Reserve Bank of India, Public DFebt Office, Ahmedabad, Banglore/Bhubneswar/Mumbai/Kolkata/ Hyderabad / Kanpur/ Jaipur/Chennai/Nasgpur/New Delhi/Patna/Guwahati/Trivandrum. 59. Accountant General, Post Telegraph, Simla. 60. Controller General of Defence Accounts, New Delhi. 61. Directorate of Audit, Defence Services, New Delhi. 62. World Health Organisation, New Delhi. 63. International Labour Office, India Branch, New Delhi. 64. Secretary, Indian Red cross Society, New Delhi 65. Atomic Energy Deptt. Mumbai. 66. Secretary, Development Board, Ministry of Commerce Industry. 67. Natyional Saving Organisation, Nagpur. 68. Deputy Accountant Geeneral, Post Telegraph, Kolkata. 69. The Legal Adviuser, Export-Import Bank of India, P.B.No.19969,Mumbai, 4000021. 70. The Deputy Finance4 Manager (Hqdr.) Indian Airlines, New Delhi. 71. Manager, State Bank of India, Local Head Office:- (i) JeevanDeep Buiulding, 1 Middleton Street, Kolkata. (ii) Circle Top House, Rajai Salai, Chennai-600001. (iii) Lucknowm Uttar Pradesh. (iv) Bank Street, Hyderabad-500001 (v) Hamida Road, Bhopal-462001 (vi) Shop N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (Rupees) (Rupees) (Rupees) (i) (ii) (iii) Gross Salary Income 2,00,000/- 5,00,000/- (Including allowances) Contribution to G.P.F. 20,000/- 50,000/- Computation of Total Income and tax payable thereon Gross Salary 2,00,000/- 5,00,000/- 10,00,000/- Less: Deduction U/s 80C 20,000/- 50,000/- 1,00,000/- Taxable Income 1,80,000/- 4,50,000/- 9,00,000/- Tax thereon 2,000/- 41,000/- 1,71,000/- Add: Education Cess @2% 40/- 820/- 3,420/- Secondary and Higher Education Cess @1% 20/- 410/- 1,710/- Total tax payable 2,060/- 42,230/- 1,76,130/- Example 2 For Assessment Year 2010-2011 Calculation of Income Tax in the case of a male employee having a handicapped depe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax payable Rs. 5665/- Rounded off to Rs. 5660/- Example 4 For Assessment Year 2010-2011 Illustrative calculation of House Rent Allowance U/s 10 (13A)in respect of residential accommodation situated in Delhi in case of a female employee: PARTICULARS 1. Salary Rs.2,50,000/- 2. Dearness Allowance Rs.1,00,000/- 3. House Rent Allowance Rs.1,40,000/- 4. House rent paid Rs.1,44,000/- 5. General Provident Fund Rs. 36,000/- 6. Life Insurance Premium Rs. 4,000/- 7. Subscription to Unit-Linked Insurance Plan Rs. 50,000/- Computation of total income and tax payable thereon 1. Salary + D.A. Rs.3,50,000/- House Rent Allowance Rs.1,40,000/- 2. Total Salary income Rs.4,90,000/- 3. Less: House Rent allowance exempt U/s 10(13A):Least of: a. Actual amount of HRA received=1,40,000 b. Expenditure of rent in excess of 10% of salary (including D.A. presuming that D.A. is taken for retirement benefit) (1,44,000-35,000) =1,09,000 c.50% of Salary(Basic+ DA)= Rs.1,75,000 Rs.1,09,000/- Gross Total Income: Rs.3,81,000/- Less: Deduction u/s 80C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.1,00,000/- Total Income Rs. 8,78,600/- Tax Payable Rs. 1,64,580/- Add: Surcharge Nil Education Cess @2% 3,291.6/- Secondary and Higher Education Cess @1% 1,645.8/- Total Income Tax payable Rs. 1,69,517.4/- Rounded off to Rs. 1,69,520/- Example 6 For Assessment Year 2010-2011 Illustrating Valuation of perquisite and calculation of tax in the case of a female employee of a Private Company posted at Delhi and repaying House Building Loan. Particulars: 1. Salary: Rs.3,00,000/- 2. Dearness Allowance: Rs.1,00,000/- 3. House Rent Allowance: Rs.1,80,000/- 4. Special Duties Allowance: Rs.12,000/- 5. Provident Fund: Rs. 60,000/- 6. LIP: Rs. 10,000/- 7. Deposit in NSC VIII issue: Rs. 30,000/- 8. Rent Paid by the employee for house hired by her: Rs.1,20,000/- 9. Repayment of House Building Loan (Principal): Rs.60,000/- 10. Tuition Fees for three children: Rs. 30,000/- (Rs.10,000/-per child) Computation of total income and tax payable thereon 1. Gross salary : (Basic+DA+HRA+SDA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 Free meals 9 Free Education 10 Gifts, vouchers etc. 11 Credit card expenses 12 Club expenses 13 Use of movable assets by employees 14 Transfer of assets to employees 15 Value of any other benefit/amenity/service/privilege 16 Stock options (non-qualified options) 17 Other benefits or amenities 18 Total value of perquisites 19 Total value of Profits in lieu of 9. Details of tax, - (a) Tax deducted from salary of the employee u/s 192(1) ……… (b) Tax paid by employer on behalf of the employee u/s 192(1A) ……… (c) Total tax paid ……… (d) Date of payment into Government treasury ……… DECLARATIO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ……… … Rs. Rs. …………… … Rs. …………….. Rs. . …………… Rs. … Rs. …………… … Rs. …………… … Rs. DETAILS OF TAX DEDUCTED AND DEPOSITED INTO CENTRAL GOVERNMENT ACCOUNT S.No. TDS (Rs.) Surcharge (Rs.) Education Cess (Rs.) Total Tax Deposited (Rs.) Cheque/ DD No. (if any) BSR Code of Bank Branch Date on which tax deposited (DD/MM/YY) Transfer Voucher /Challan Identification No. 1. 2. 3. ANNNEXURE-IV [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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x deduction account number as also the permanent account number of all persons in respect of whom tax has been deducted by him except in respect of cases to which the first proviso to sub-section (5A) or the second proviso to sub-section (5B) of section 139A of the Act applies. (4) The e-deductor shall ensure that all columns of the Forms of the return for tax deduction at source, prescribed under the Rules, are duly and correctly filled in. (5) Each computer media used for preparation of the e-TDS Return shall be affixed with a label indicating name, permanent account number, tax deduction account number and address of the edeductor, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt, the provisional receipt issued shall be deemed to be the acknowledgement of the e-TDS Return and the date of issue of provisional receipt shall be deemed to be the date of filing of e-TDS Return. (8) Where the deficiencies indicated in the deficiency memo are not removed by the e-deductor within seven days, the e-TDS Intermediary shall communicate the same to the e-filing Administrator and transmit the data to the e-filing Administrator whereupon Assessing Officer may take action for declaring the return as an invalid 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23rd August, 2003 the proposal to implement the budget announcement of 2003-04 relating to introducing a new restructured defined contribution pension system for new entrants to Central Government service, except to Armed Forces, in the first stage, replacing the existing system of defined benefit pension system. (i) The system would be mandatory for all new recruits to the Central Government service from of January 2004 (except the armed forces in the first stage). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central government. However, there will be no contribution form the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a non-withdrawable pension tier-I account. The existing provisions of defined 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 3. Shaurya Chakra -do 4. 4. Sarvottan Jeevan Raksha When awarded to Civilians for bravery Padak displayed by them in life saving acts. 5. 5. Uttam Jeevan Raksha -do Medal 6. 6. Jeevan Raksha Padak -do 7. 7. President's Police Medal When awarded for acts of exceptional for gallantry courage displayed by members of police forces, Central police or security forces and certified to this effect by the head of the department concerned. 1. 8. Police Medal for -do Gallantry 2. 9. Sena Medal When awarded for acts of courage or conspicious gallantry and supported by certificate issued to this effect by relevant service headquarters. 3. 10. Nao Sena Medal -do 4. 11. Vayu Sena Medal -do - 5. 12. Fire Secrvices Medal for Gallantry When awarded for acts of courage or conspicuous gallantry and supported by certificate issued to this effect by the last Head of Department. 13. President's Police Fire -do- Services Medal for Gallantry 14. President's Fire Services Medal for Gallantry -do- 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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