9911796707
TMI BlogIncome-tax deduction from salaries under section 192 during the financial year 2012-13X X X X Extracts X X X X X X X X Extracts X X X X ..... laries" for the financial year 2012-13 (i.e. Assessment Year 2013-14) at the following rates: 2.1 Rates of tax A. Normal Rates of tax: Sl.No. Total Income Rate of tax 1 Where the total income does not exceed Rs. 2,00,000/-. Nil 2 Where the total income exceeds Rs. 2,00,000 but does not exceed Rs. 5,00,000/-. 10 per cent of the amount by which the total income exceeds Rs. 2,00,000/- 3 Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-. 4 Where the total income exceeds Rs. 10,00,000/-. Rs. 1,30,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/- B. Rates of tax for every individual, resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year: Sl.No Total Income Rate of tax 1 Where the total income does not exceed Rs. 2,50,000/-. Nil 2 Where the total income exceeds Rs. 2,50,000 but does not exceed Rs. 5,00,000/-. 10 per cent of the amount by which the total income exceeds Rs. 2,50,000/- 3 Where the total income exceeds Rs. 5,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Employer: An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at his option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. The employer will have to pay such 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 "salaries" of an employee below sixty years of age for the year inclusive of all perquisites is Rs. 4,50,000/-, out of which, Rs. 50,000/- 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of a public sector company referred to in section 10(10C)(i) (read with Rule 2BA), a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under section 10(10C) in respect of such, or any other, assessment year. 3.6 Income under any Other head: (i) Section 192(2B) enables a taxpayer to furnish particulars of income under any head other than "Salaries" (not being a loss under any such head other than the loss under the head "income from house property") received by the assessee for the same financial year and of any tax deducted at source thereon. Form no. 12C, which was earlier prescribed for furnishing such particulars, has since been omitted from the Rules by the Income Tax (24th amendment) Rules, 2003, w.e.f. 1-10-2003. However, the particulars may now be furnished in a simple statement, which is properly signed and verified by the taxpayer in the manner as prescribed under Rule 26B(2) of the Rules and shall be annexed to the simple statement. The form of verification is reproduced as under: I, _________ (nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 24(b) of the Act allows deduction from income from house property on interest on borrowed capital as under:- (i) the deduction is allowed only in case of house property which is owned and in the occupation of the employee for his own residence. However, if it is not actually occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him. (ii) The quantum of deduction allowed as per table below: Sl. No Purpose of borrowing capital Date of borrowing capital Maximum Deduction allowable 1 Repair or renewal or reconstruction of the house Any time Rs. 30,000/- 2 Acquisition or construction of the house Before 01.04.1999 Rs. 30,000/- 3 Acquisition or construction of the house On or after 01.04.1999 Rs. 1,50,000/- In case of Serial No. 3 above (a) The house so acquired or constructed should be completed within 3 years from the end of the FY in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Prescribed time of payment/deposit of TDS made to the credit of Central Government account is as under: (a) In case of an Office of Government: Sl. No. Description Time up to which to be deposited. 1 Tax deposited without Challan [Book Entry] SAME DAY 2 Tax deposited with Challan 7TH DAY NEXT MONTH 3 Tax on perquisites opt to be deposited by the employer. 7TH DAY NEXT MONTH (b) In any case other than an Officer of Government Sl. No. Description Time up to which to be deposited. 1 Tax deductible in March 30th APRIL NEXT FINANCIAL YEAR 2 Tax deductible in any other month 7TH DAY NEXT MONTH 3 Tax on perquisites opt to be deposited by the employer 7TH DAY NEXT MONTH However, if a DDO applies before the jurisdictional Additional/Joint Commissioner of Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allow for payments on quarterly basis and time given in Table below: Sl. No. Quarter to the financial year ended on Date for quarterly payment 1 30th June 7th July 2 30th September 7th October 3 31st December 7th January 4 31st March 30th April next Financial Year 4.4.2 Mode of Payment of TDS 4.4.2.1 Payment by Book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the whole or any part of the tax to the credit of the Central Government within the prescribed time as under: 4.5.1 He shall be liable to action in accordance with the provisions of section 201. Section 201(1A) lays down that such person shall be liable to pay simple interest (i) at 1% 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 such tax is deducted and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter. 4.5.2 Section 271C lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax deducted, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him. 4.5.3 Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art B may be issued by each of the employers or the last employer at the option of the assessee. 4.6.3 The employer may issue a duplicate certificate in Form No. 16 if the deductee has lost the original certificate so issued and makes a request for issuance of a duplicate certificate and such duplicate certificate is certified as duplicate by the deductor. 4.6.4. Authentication by Digital Signatures: (i) Where a certificate is to be furnished in Form No. 16, the deductor may, at his option, use digital signatures** to authenticate such certificates. (ii) In case of certificates issued under clause (i), the deductor shall ensure that (a) the conditions prescribed in para 4.6.1 above are complied with; (b) once the certificate is digitally signed, the contents of the certificates are not amenable to change; and (c) the certificates have a control number and a log of such certificates is maintained by the deductor. Challan identification number (CIN) means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and challan serial number given by the bank. • The di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... datory Quoting of PAN and TAN: 4.7.1 Section 203A of the Act makes it 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.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 272BB, a sum of ten thousand rupees. Similarly, as per Section 139A(5B), it is obligatory for persons deducting tax at source to quote PAN of the persons from whose income-tax has been deducted in the statement furnished u/s 192(2C), certificates furnished u/s 203 and all returns prepared and delivered as per the provisions of section 200(3) of the Act. 4.7.2 All tax deductors are required to file the TDS returns in Form No.24Q (for tax deducted from salaries). As the requirement of filing TDS/TCS certificates, by the employee along with the return of income, has been done away with, the lack of PAN of deductees is creating difficulties in giving credit for the tax deducted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. S.O.704(E), dated 12-5-2006) shall be treated as the annual return of TDS. Due dates of filing this statement quarterwise is as in the Table below. TABLE: Dates of filing Quarterly Statements E-TDS Return 24Q Sl. No Return for Quarter ending Due date for Government Offices Due date for Other Deductors 1 30th June 31st July 15th July 2 30th September 31st October 15th October 3 31st December 31st January 15th January 4 31st March 15th May 15th May 4.9.2. The statements referred above may be furnished in paper form or electronically in accordance with the procedures, formats and standards specified by the Director General of Income-tax (Systems) along with the verification of the statement in Form 27 A. 4.9.3. All Returns in Form 24Q are required to be furnished in computer media except in case where the number of deductee records is less than 20. This is 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 read with Notification No. SO 1261(E), dated 31-5-2010. Deductors have to file quarterly statements with the e-TDS Intermediary at any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EQD" to be quoted in the e-TDS statement; (iii) quote the permanent account number PAN of all deductees; (iv) furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be. (v) furnish particular of amounts paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax u/s 197 by the assessing officer of the payee. 4.10 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 pensioner furnishes 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(11 CVL)-/92), dated the 27th April, 1992, and, these instructions should be followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. (2) For the removal of doubts, it is clarified that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due. Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as "Salary". 5.2 Definition of "Salary", "perquisite" and "profit in lieu of salary" (Section 17): 5.2.1 "Salary" includes:- i. wages, fees, commissions, perquisites, profits in lieu of, or, in addition to salary, advance of salary, annuity or pension, gratuity, payments in respect of encashment of leave etc. ii. the portion of the annual accretion to the employee's account in to the balance credit of the employee participating in a recognized provident fund as consists of { Rule 6 of Part A of the Fourth Schedule of the Act}: (a) Contributions made by the employer to the account of the employee in a recognized provident fund in excess of 12% of the salary of the employee, (b) Interest credited on the balance to the credit of the employee in so far as it is allowed at a rate exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 constitute a perquisite in the hand of employees. Here (a) "specified security" means the securities as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme therefore, includes the securities offered under such plan or scheme; (b) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called; (c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from the assessee in respect of such security or shares; (d) "fair market value" means the value determined in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n into consideration for this purpose. Salary from all employers shall be taken into consideration in respect of the period during which an accommodation is provided. Where on account of the transfer of an employee from one place to another, he is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodation. B Valuation of the perquisite of furnished accommodation, the value of perquisite as determined by the above method (in A) shall be increased by- (i) 10%o 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. It is added that where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with anybody or undertaking under the control of such Government,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 here 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. II Personal attendants etc.: The value of free service of all personal attendants including a sweeper, gardener and a watchman is to be taken at actual cost to the employer. Where the attendant is provided at the residence of the employee, full cost will be taxed as perquisite in the hands of the employee irrespective of the degree of personal 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: Value of perquisite shall be determined at the amount paid or payable by the employer as reduced by the amount recovered if any, from the employee. It is taxable in the hands of all employees (whether specified or not) provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced by it to the general public. Perquisite value would be calculated on the basis of the maximum outstanding monthly balance method. For valuing perquisites under this rule, any other method of calculation and adjustment otherwise adopted by the employer shall not be relevant. However, small loans up to Rs. 20,000/- in the aggregate are exempt. Loans for medical treatment specified in Rule 3A are also exempt, provided the amount of loan for medical reimbursement is not reimbursed under any medical insurance scheme. Where any medical insurance reimbursement is received, the perquisite value at the prescribed rate shall be charged from the date of reimbursement on the amount reimbursed, but not repaid against the outstanding loan taken specifically for this purpose. VI Use of assets: It is common practice for an asset owned by the employer to be used by the employee or any member of his household. This perquisite is to be charged at the rate of 10% of the original cost of the asset as reduced by any charges recovered from the employee for such use. However, the use of Computers and Laptops would not give rise to any perquisite. VII Transfer of assets: Often an employee or me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sation of employment are exempt. Initial fees / deposits, in such case, is not included. IXA Value of Subsidized / Free Lunch provided by employer to an employee: Value of taxable perquisite is calculated as under: Expenditure incurred by the employer on the value of food /non-alcoholic including paid vouchers which are not transferable and usable only at eating joints XXX Less: Fixed value of a sum of Rs. 50/- per meal XXX Less: Amount recovered from the employee XXX XXX Balance amount is the taxable non- monetary perquisites on value of food provided to the employees XXX Note : Exemption is given in following situations : 1. Tea / snacks provided in working hours. 2. Food & non-alcoholic beverages provided in working hours in remote area or in an offshore installation. X Holiday Facility maintained by employer: If a Holiday facility is maintained by the employer and is available uniformly to all employees, the value of such benefit would be exempted. 5.2.2A.2 Monetary perquisites: XI Vehicle Maintenance reimbursement: (a) Use of any vehicle provided by the employer to an employee for journey by him from his residence to office or from office to his residence sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisites. If made in kind up to Rs. 5,000 in aggregate per annum would be exempt, beyond which it would be taxable. XVIII Transfer Grant Allowance: In this connection it is to be noted that as per section 10(14) read with rule 2BB any allowance granted to meet the cost of travel on tour or on transfer includes any sum paid in connection with transfer, packing and transportation of personal effects on such transfer shall be exempt. Also any allowance, whether, granted for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty shall be exempt. XIX Holiday Expenditure reimbursement: It is not taxable. It is an allowable expenditure u/s 37 provided the holiday (picnic) is organized by the employer. However, any Expenditure paid or reimbursed by the employer for any holiday (one day picnic) availed or by the employee or any member or his household is to be considered as taxable perquisite. XX Leave Travel Concession (LTC): The following are the important points, to be taken into consideration, for claiming exemption u/s 10(5) of the Act, read with Rule 2B of the Rules: 1. De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual born after 1-10-1998. This restriction shall not apply in respect of children born before 1-10-1998 and also in case of multiple births after one child. It may be noted that section 2 (15B) of the Act defines a child as includes a step child and an adopted child of the individual. • Definition of Family - As per the provisions of the Rules, family means: ○ Spouse and children of the individual. ○ Parents, brothers and sisters who are wholly or mainly dependent on the individual. • Foreign Travel - As per the provisions of the Rules, exemption is not allowable in case of travel abroad. • Obligation of the employer -the employer has to satisfy the obligation that leave travel (fare) concession is not taxable in view of section 10(5), the employer is not only required to be satisfied about the ingredients of the said clause but also to keep and preserve evidence in support thereof. Some important points to be considered are as under: 1. It is uniform for all employees 2. Where an employee does not avail LTC, either one or on both the occasions during the block of 4 calendar years, the value of LTC first availed during the first calendar ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom his employer or former employer for himself and his family, in connection with his proceeding (a) on leave to any place in India or (b) on retirement from service, or, after termination of service to any place in India is exempt under Section 10(5) subject, however, to the conditions prescribed in Rule 2B of the Rules. For the purpose of this clause, "family" in relation to an individual means: (i) the spouse and children of the individual; and (ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual. It may also be noted that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel. (2) Death-cum-retirement gratuity or any other gratuity which is exempt to the extent specified from inclusion in computing the total income under Section 10(10). Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempted from income-tax to the extent that such amount does not exceed Rs. 5,00,000/-: (a) A public sector company; (b) Any other company; (c) An Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such allowance received by the assessee 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% of the salary due to the employee for the relevant period; or (d) Where such accommodation is situated in any other places, 40% 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 laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(15)(iv)(i) of the 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) Any scholarship granted to meet the cost of education is not to be included in total income as per of section 10( 16) of the Act. (13) Section 10(18) 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 [Notifications No. S.O. 1948(E) dated 24-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des 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. 5.4 Deductions u/s 16 of the Act from the Income from Salaries 5.4.1 Entertainment Allowance [Section 16(ii)]: A deduction is also allowed under section 16(ii) 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. 5.4.2 Tax on Employment [Section 16(iii)]: The tax on employment (Professional Tax) within the meaning of Article 276(2) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. [Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E), dated 3-11-2005 and National Saving Certificate (IXth Issue) vide Notification S.O. No. (E), dated 29-11-2011 F. No. l-13/2011-NS-II] (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 section 10 (23D) 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; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E), dated 11-1-2007, for the purposes of Section 80C(2)(xvi)(a)]. (12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards 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 re-payment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution. (15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company. (16) Investment as a term deposit for a fixed period of 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. Section 80C(3) & 80C(3A) states that in case of Insuranc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification F. N. 5/7/2003- ECB&PR, dated 22-12-2003. However, the deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites). Further where in the case of an employee receives any contribution in the said pension scheme from the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year. However, if any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of (i) Closure or opting out of the pension scheme or (ii) Pension received from the annuity plan purchased and taken on such closure or opting out then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax. Where any amount paid or deposited by the employee has been tak ..... 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Savings Scheme (RGESS)" is being notified for the purpose of this deduction. 5.5.6 Deduction in respect of for health insurance premia paid, etc. (Section 80D) Section 80D provides for deduction available for health insurance premia paid, etc. which is calculated as under: Sl.No. Persons for whom payment made Nature of payment Mode of payment Allowable Deduction (in Rs.) 1 Employee or his family ♦ the whole of the amount paid to effect or to keep in force an insurance on the health of the employee or his family or ♦ any contribution made to the CGHS or ♦ any payment on account of preventive health check-up of the employee or family, [restricted to Rs. 5000/-; cash payment allowed here] any mode other than cash Aggregate allowable is Rs. 15,000/{For Senior Citizens it is Rs. 20000/-}. 2 Parent or Parents of employee ♦ the whole of the amount paid to effect or keep in force an insurance on the health of the parent or parents of the employee or ♦ any payment made on account of preventive health check-up of the parent or parents of the employee [restricted to Rs. 5000/-; cash payment allowed here] any mode other than cash Aggreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability. However, if the dependant, being a person with disability, predeceases the employee, an amount equal to the amount paid or deposited under sub-para (b) above shall be deemed to be the income of the employee of the previous year in which such amount is received by the employee and shall accordingly be chargeable to tax as the income of that previous year. 5.5.7.2 Deductions in respect of a person with disability (section 80U): 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 one lakh rupees shall be allowable. DDOs should note that section 80DD deduction is in case of the dependent of the employee whereas section 80U deduction is in case of the employee himself. However under both the Sections the employee shall furnish to the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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); "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 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or (ii) a person with severe disability referred to in clause (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); (h) "specified company" means a company as referred to in claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so; 5.5.10 Deductions on respect of donations to certain funds, charitable institutions, etc. (Section 80G): Section 80G provides for deductions on account of donation made to various funds, charitable organizations etc. In cases where employees make donations to the Prime Minister's National Relief Fund, the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Section Authority granting approval/ Notification 1 To a research association which has as its object the undertaking of scientific research or to a University, college or other institution to be used for scientific research u/s 35(l)(ii) Central Government 2 To a research association which has as its object the undertaking of research in social science or statistical research or to a University, college or other institution to be used for research in social science or statistical research u/s35(l)(iii) Central Government 3 To an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35CCA furnishes the certificate u/s 35CCA (2) Prescribed Authority under Rule 6AAA 4 an association or institution which has as its object the training of persons for implementing programmes of rural development. furnishes the certificate u/s 35CCA (2) Prescribed Authority under Rule 6AAA 5 To a public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erannuation Fund: 6.1 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(l) of Rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act. The accumulated balance is treated as income chargeable under the head "Salaries" 6.2 Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund. The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if a fund or part of a fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucation) to arrive at the total tax payable. 8.4 The amount of tax as arrived at para 8.3 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. 9. MISCELLANEOUS: 9.1 These instructions are not exhaustive and are issued only with a view to guide 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, the Finance Act, 2012 and the relevant circulars / notifications. 9.2 In case any assistance is required, the Assessing Officer/the Local Public Relation Officer of the Income-tax Department may be contacted. 9.3 These instructions may be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/ State Governments. 9.4 Copies of this Circular are available with the Director of Income-tax(Research, Statistics & Publications and Public Relations), 6th Floor, Mayur Bhavan, Connaught Place, New Delh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70 35 5 Total Income Tax payable 3,605 6 Rounded off to 3,610 Example 3 For Assessment Year 2013-14 Calculation of Income Tax in the case of an employee below age of sixty years where medical treatment expenditure was borne by the employer ( With valid PAN furnished to employer). S.No. Articulars Rupees 1 Gross Salary 3,00,000 2 Medical Reimbursement by employer on the treatment of self and dependent family member 30,000 3 Contribution of GPF 20,000 4 LIC Premium 20,000 5 Repayment of House Building Advance 25,000 6 Tuition fees for two children 60,000 7 Investment in Unit-Linked Insurance Plan 20,000 Computation of Tax S.No. Particulars Rupees 1 Gross Salary 3,00,000 Add: Perquisite in respect of reimbursement of Medical Expenses In excess of Rs. 15,000/- in view of Section 17(2)(v) 15,000 2 Taxable income 3,15,000 Less: Deduction U/s 80C (i) GPF Rs. 20,000/- (ii) LIC Rs. 20,000/- (iii) Repayment of House Building Advance Rs.25,000/- (iv) Tuition fees for two children Rs. 60,000/- (v) Investment in Unit-Linked Insurance Plan Rs. 20,000/- Total =Rs. 1,45,000/- Restricted to Rs. 1,00,000/- 1,00,000 3 Total Income 2,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Premium 10,000 7 Contribution to recognized P.F. 42,000 8 Investment in long term infrastructure bonds (80CCF) 20,000 COMPUTATION OF TOTAL INCOME AND TAX PAID THEREON: S.No. Particulars Rupees 1 Salary 7,00,000 2 Bonus 1,40,000 3 Total Salary(l+2) for Valuation of Perquisites 8,40,000 Valuation of perquisites 4(a) Perq. for flat: Lower of (15% of salary for 10 mnths.=Rs. 1,05,000/-) and (actual rent paid= Rs 3,60,000) Rs. 1,05,000 1,38,600 Rs l,38,600 4(b) Perq for hotel : Lower of (24% of salary of 2 mths.=Rs 33,600) and (actual payment= Rs 1,00,000) Rs. 33,600 4(c) Perquisites for furniture(Rs.2,00,000) @ 10% of cost 20,000 4(c)(i) Total of [4(a)+(b)+(c)] (1,05,000+ 33,600+ 20,000) Rs. 158,600 Less: rent recovered (-)Rs. 60,000 = Rs. 98,600 4(d) Add perq. for free gas, electricity, water etc. Rs.40,000 (+) Rs 98,600 [4(c)(i)] = Rs l,38,600 Total perquisites 5 Gross Total Income (Rs.8,40,000+ 1,38,600) 9,78,600 6 Gross Total Income 9,78,600 7 Less: Deduction U/s 80C & 80CCF: (i). Provident Fund (80C) :42,000 (ii) LIC (80C) :10,000 (iii) Subscription to Unit Linked Insurance Plan(80C) :50,000/- (iv) Investment in Infrastructure Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 70,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Gross Pension 4,50,000 8,00,000 Less: Deduction u/s 80C 70,000 70,000 Taxable Income 3,80,000 7,30,000 Tax thereon 13,000 71,000 Add: (i) Education Cess @ 2%. (ii) Secondary and Higher Education Cess @ 1% 260 130 1420 710 Total tax payable 13,390 73,130 TDS under sec. 206AA in case where PAN is not furnished by the employee 26,000 1,46,000 Example 8 For Assessment Year 2013-14 A. Calculation of Income tax in the case of a retired employee above the age of 80 years and having gross pension of: iii. Rs. 4,50,000/-, iv. Rs. 8,00,000/-, B. What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices: Particulars Rupees (i) Rupees (ii) Gross Pension 4,50,000 8,00,000 Contribution of P.P.F. 70,000 70,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Gross Pension 4,50,000 8,00,000 Less: Deduction U/s 80C 70,000 70,000 Taxable Income 3,80,000 7,30,000 Tax thereon Nil 46,000 Add: (i) Education Cess @ 2%. (ii) Secondary and Highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsible for deduction of tax Place......... Full Name ........................ Date ......... Designation ...................... Annexure-III F. No. SW/TDS/TIN/1/2010-DIT(S)-II Directorate of Income-tax (System) New Delhi Revised Procedure Furnishing of Quarterly e-TDS/TCS Statements by deductors/collectors 1.1 Quarterly Electronic Statements Furnished Through TIN-FC: After preparing and validating the quarterly e-TDS/TCS, the deductor/collector shall furnish the same at any TIN-FC managed by NSDL. Deductor/collector shall ensure that: 1.1.1 Each quarterly e-TDS/TCS statement (Form 24Q, 26Q, 27Q and 27EQ) is in a separate computer media. 1.1.2 Computer media to be used for furnishing e-TDS/TCS statements will be as defined by e-TDS Intermediary with approval of e-filing Administrator. 1.1.3 Each quarterly e-TDS/TCS statement is accompanied by a duly filled and signed (by an authorized signatory) Form 27A in physical form. 1.1.4 Each quarterly e-TDS/TCS statement is in one computer media, it should not span across multiple computer media. 1.1.5 Quarterly e-TDS/TCS statement should be compressed, if required, only by using licensed version of Winzip 8.1 or ZipItF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TIN-FC for every accepted quarterly e-TDS/TCS statement. Maximum charges payable per quarterly e-TDS/e-TCS statement accepted: No. of Deductee Records in e-TDS/TCS Statement Upload Charges Upload Charges inclusive of service tax Upto 100 deductee records Rs. 27.50/- Rs. 30/- 101 to 1000 deductee records Rs. l65/- Rs. 182/- More than 1000 deductee records Rs. 550/- Rs. 606/- 2.1.1.3 TIN-FC will return the computer media containing the e-TDS/TCS statement to the deductor/collector 2.1.1.4 TIN-FC will retain physical Form 27A along with other documents, if any, furnished by the deductor/collector. The retained physical Form 27A along with documents, if any, shall be stored by the TIN-FC for a period of one year from date of receipt of the statement. 2.1.2 Non-Acceptance : TIN-FC will not accept the quarterly e-TDS/TCS statement furnished by deductor/collector if: 2.1.2.1 each quarterly e-TDS/TCS statement (Form 24Q, 26Q, 27Q or 27EQ) is not furnished in a separate computer media along with duly filled and signed Form 27A in physical form; 2.1.2.2 separate Form 27A is not quarterly e-TDS/TCS statement furnished for each striking and overwriting, if any, on Form 27A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers (DTOs)/Cheque Drawing and Disbursing Officers(CDDOs) 1. Under what income tax rule should Form 24G be filed? Income-tax Department Notification no. 41/2010, dated May 31. 2010 amended the Income Tax Rule 30 which mandates that in case of an office of the Government, where tax has been paid to the credit of Central Government without the production of a challan (associated with deposit of the tax in a bank), the relevant PAO / CDDO / DTP or an equivalent office of the Government (herein after called as AO in this document) is required to file Form 24G on monthly basis. 2. Who is the relevant PAO/CDDO/DTO who is liable for filing Form 24G? A relevant PAO/CDDO/DTO is that office to whom the Deductor/DDO (TAN holder) reports remittance of TDS/TCS through book adjustment. Generally, the Central Government DDOs report TDS through book entry to their respective Pay and Accounts Officers (PAOs) and the State Government DDOs report TDS through book entry to their respective District Treasury Officers(DTOs). Such PAOs and DTOs are required to file Form 24G on monthly basis. There are also cases of Cheque Drawing and Disbursing Officers (CDDOs) who report TDS through book entry di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for filing Form No. 24G online through TIN website, vvww.tin-nsdl.com. Registration AO Account is required once only. AO required to submit the Form No. 24G at TIN-FC at least once to comply with the Know Your Customer (KYC) norms for registration of the AO Account. After registration, it is optional for AO either to submit the Form No.24G in CD/Pen drive at TIN-FC or online. 9. What are the functionalities available with AO Account? Through the AO Account, the AO can view the status of Form No. 24G filed, obtain BIN (Book Identification Number) details, update AO profile and upload Form No. 24G. The status tracking is based on AIN and concerned Provisional Receipt Number (PRN) of Form 24G. 10. Can the AO furnish Form No. 24G in paper form? No. Form 24G is to be filed only in electronic form. 11. Can the AO submit the electronically prepared Form No.24G at the Income Tax Office? No. Electronically prepared Form No.24G can only be submitted at TIN-FC or online . 12. What does Form 24G contain? Every Form 24G should be prepared in accordance with the data structure prescribed by the Income Tax Department (ITD). Form 24G contains- • Details of the AO filing Form 24G ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lick on the '24GRPU.bat' file. If JRE is not installed on the computer, then on clicking '24GRPU.bat', a message will be displayed. In such cases, install JRE and try again. If appropriate version of JRE is installed, then the 'Form 24G Preparation Utility' will be displayed. 15. What are the steps to download and install Form 24G Preparation Utility? For assistance in downloading and using Form 24G Preparation Utility, please read the instructions provided in 'Help' in the Form 24G Preparation Utility. This utility can be used for preparation of Form 24G with up to 75,000 records. Form 24G Preparation Utility (version 1.2) should be used for regular and correction statements. 16. What is File Validation Utility (FVU)? The AO should pass the Form 24G (Regular/Correction) file generated using Preparation Utility through the File Validation Utility (FVU) to ensure format level accuracy of the file. This utility is also freely downloadable from TIN website. In case the Form 24G contains any errors, the AO should rectify the same. After rectifying the errors, user should pass the rectified Form 24G through the FVU. This process should be continued till an error-free Form 24G is ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take made in an original accepted statement can be rectified by submitting a 'correction statement'. For correction, the latest version of the RPU should be downloaded from TIN website. Form 24G corrections can also be uploaded directly at the TIN website. For direct upload at TIN Central system, AO has to first register AIN at TIN website and upload the Form 24G correction. 19. What are the different kinds of correction statements allowed? There are two different types of correction statements that can be furnished by the AO. These are listed below. • M (Modify) -: For any modification in the existing Form 24G statement. • X (Cancel) -: For cancellation of an existing Form 24G statement. For preparation of correction statement, the receipt number of the original statement and receipt number of the previous statement is mandatory. In case of first correction, PRN of original statement should be provided in field "Receipt number of Original Statement" and also in the field "Receipt number of Previous Statement ". In case a correction statement has already been filed earlier, PRN of original statement should be provided in field "Receipt number of Original Stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective DDO should be correctly filled in TDS statement. 23. When is BIN generated? On processing of accepted Form 24G statement, BIN is generated for each DDO record (with valid TAN) present in Form 24G statement. BIN are generated at TIN Central System and intimated to the PAOs with details of TAN and Form Type. DDOs can also download the same from TIN portal after TAN registration with TIN portal for online view. 24. What do the PAO and DDO have to do with the BIN? PAOs have to disseminate the BINS to respective DDOs. While preparing the quarterly TDS/TCS statement, DDO has to quote the said BIN details, if tax has been paid through transfer voucher (book adjustment). BINs generated for a particular 24G are mailed to the AO on the e-mail id provided in Form 24G. In addition, AO may also download the BIN details through AO login at TIN site. The DDOs can obtain the respective BIN either from PAO directly or can download from the TIN website www.tin-nsdl.com through the TAN account. Detailed procedure for registration of TAN on the TIN website and download of BIN is available on the TIN website as referred to above. 25. Under what circumstances will BIN be generated? &b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DDOs? i. To provide correct TAN to their PAOs/DTOs/CDDOs to whom the DDO/Deductor reports the tax so deducted & who is responsible for crediting such sum to the credit of the Central Government. ii. To report to PAOs/DTOs/CDDOs, the details of tax deducted and credited to the Central Government account through book adjustment. iii. To quote BIN in the quarterly TDS/TCS Statement (24Q, 26Q, etc) for the tax deducted and credited through book adjustment. 30. What are the consequences of non-quoting of BIN details in quarterly TDS/TCS statement? (a) BIN details and amount of TDS reported in the quarterly TDS/TCS Statement filed by the DDO will be matched with the details filed in Form No.24G filed by the PAO at the TIN Central System for accepting TDS/TCS Statement and for verification purpose. (b) Any wrong information reported by the DDOs in TDS/TCS Statement may lead to mismatch in the TIN Central System due to which credit to the respective deductee will not be "finally booked" in the deductee's Form 26AS. (c) Further details are available at TIN website vvwvv.tin-nsdl.com and ITD website www.incometaxindia.gov.in. ANNEXURE-V MINISTRY OF FINANCE (Department of Economic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Architecture of the new Pension System (i) It will have a central record keeping and accounting (CRA) infrastructure, several pension fund managers (PFMs) to offer three categories of schemes viz. option A, B and C. (ii) 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 form 1st of January, 2004. ANNEXURE-VI MINISTRY OF FINANCE (Department of Revenue) (Central Board of Direct Taxes) Notification New Delhi, the 24th November, 2000 INCOME- TAX 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 SI.No. Name of gallantry award Circumstances for eligibility (1) (2) (3) 1. Ashok Chakra When awarded to Civilians for gallantry 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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