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TMI BlogINCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2021-22 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 and Income-tax Rules, 1962 respectively unless otherwise specified. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia.gov.in. As per section 192(1) of the Act, any person responsible for paying any income chargeable under the head Salaries shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under the head of Salary income for that financial year. The section also provides that a person responsible for paying any income chargeable under the head Salaries shall furnish to the person to whom such payment is made a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof. 1. Definition of salary , perquisite and profit in lieu of salary (section 17) 1.1 What is salary? As per section 15 of the Act, the following incomes are chargeable to income-tax under the head Salaries (a) any salary due from an employer or a former employer to an assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired to deduct TDS on family pension paid to person. 1.2 What is a perquisite ? As per section 17(2) of the Act, perquisites include : (i) The value of rent-free accommodation provided to the employee by his employer ; (ii) The value of any concession in the matter of rent in respect of any accommodation provided to the employee by his employer ; (iii) The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases : (a) By a company to an employee who is a director of such company ; (b) By a company to an employee who has a substantial interest in the company ; (c) By an employer (including a company) to an employee, who is not covered by (a) or (b) 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 or amenities not provided for by way of monetary payment, exceeds Rs. 50,000. [What constitutes concession in the matter of rent have been prescribed in Explanations 1 to 4 below section 17(2)(ii) of the Act.] (iv) Any sum paid by the employer in respect of any obligation which would otherwise have been payable by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inge benefit or amenity as prescribed in rule 3. 1.3 What is profit in lieu of salary ? As per section 17(2) of the Act, Profits in lieu of salary include : I. the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto ; II. any payment (other than any payment referred to in clauses (10), (10A), (10B), (11), (12) (13) or (13A) of section 10) due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy, Keyman insurance policy shall have the same meaning as assigned to it in section 10(10D) : III. any amount due to or received, whether in lump sum or otherwise, by any assessee from any person (A) before his joining any employment with that person ; or (B) after cessation of his employment with that person. 2. Rates of income-tax as per Finance Act, 2021 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, 1961 (a) having a total income (including the income by way of dividend or income under the provisions of section 111A and section 112A of the Income-tax Act) exceeding fifty lakh rupees but not exceeding one crore rupees, at the rate of ten per cent., of such income-tax ; (b) having a total income (including the income by way of dividend or income under the provisions of section 111A and section 112A of the Income-tax Act) exceeding one crore rupees but not exceeding two crore rupees, at the rate of fifteen per cent., of such income-tax ; (c) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and section 112A of the Income-tax Act) exceeding two crore rupees but not exceeding five crore rupees, at the rate of twenty-five per cent. of such income-tax ; (d) having a total income (excluding the income by way of dividend or income under the provisions of section 111A and section 112A of the Income-tax Act) exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 115BAC of the Income-tax Act, 1961 was inserted by the Finance Act, 2020 with effect from the assessment year 2021-22. The new section 115BAC provides that the income-tax payable in respect of the total income of a person, being an individual or a HUF, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2021, shall, at the option of such person, be computed at the concessional rates as given in table below : Sl. No. Total income Rate of tax 1. Up to Rs. 2,50,000 Nil 2. From Rs. 2,50,001 to Rs. 5,00,000 5 per cent. 3. From Rs. 5,00,001 to Rs. 7,50,000 10 per cent. 4. From Rs. 7,50,001 to Rs. 10,00,000 15 per cent. 5. From Rs. 10,00,001 to Rs. 12,50,0000 20 per cent. 6. From Rs. 12,50,001 to Rs. 15,00,000 25 per cent. 7. Above Rs. 15,00,000 30 per cent. Such person is required to exercise the option in the prescribed manner along with the return of income to be furnished under section 139(1) of the Act for the previous year relevant to the assessment year. The concessional rates of tax provided under section 115BAC are subject to the condition that the total income of the individual or HUF shall be computed : (a) Without any exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed ; and (iv) without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force. Furthermore, in case of a person having income from business or profession, such person is required to exercise the option in prescribed manner on or before the due date specified under sub-section (1) of section 139 of the Act for any previous year relevant to assessment year commencing on or after April 1, 2021 and such option once exercised shall apply to subsequent assessment years. However, in case of such persons, the option once exercised can be withdrawn only once and such person shall never be eligible to exercise the option again unless such person ceases to have income from business or profession. 3. Section 192 of the Income-tax Act, 1961 : Broad scheme of tax deduction at source from salaries 3.1 Method of tax calculation Every person who is responsible for paying any income chargeable under the head Salaries shall deduct income-tax on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in the hands of specified employees. The following employees are deemed as specified employees : (1) A director-employee. (2) An employee who has substantial interest (i.e. beneficial owner of equity shares carrying 20% or more voting power) in the employer-company. (3) An employee whose monetary income under the salary exceeds Rs. 50,000. The taxable value of perquisites can be determined on the basis of specific rules for valuation of certain perquisites as laid down in rule 3 of the Income-tax Rules. An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at its option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. As per section 10(10CC) of the Act, the tax paid on such non-monetary perquisites by the employer is exempt from tax in the hands of the employee. However, the employer will have to pay the 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 on the payment of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.5.2 Under section 192(2A) where the assessee being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body is entitled to the relief under section 89 he/she may furnish to the person responsible for making the payment referred to in para (3.1), such particulars in Form No. 10E (Rule 21AA of the Income-tax Rules) duly verified by him, and thereupon the person responsible, as aforesaid, shall compute the relief on the basis of such particulars and take the same into account in making the deduction under para (3.1) above. Further, such assessee shall upload the aforesaid Form 10E electronically in the e-Filing portal along with the return of income. 3.5.3 Here university means a university established or incorporated by or under a Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956 to be a university for the purpose of that Act. 3.5.4 With effect from April 1, 2010 (assessment year 2010-11), no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or terminatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Gross annual rent/value (b) Municipal taxes paid, if any (c) Deduction claimed for interest paid, if any (d) Other deductions claimed (e) Address of the property The DDO shall also ensure furnishing of the evidence or particulars in Form No. 12BB in respect of deduction of interest as specified in rule 26C read with section 192(2D). 3.7.1 Conditions for claim of deduction of interest on borrowed capital for computation of income from house property (section 24(b)) Section 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 is in the occupation of the employee for his own residence. In case the house property is not occupied by the employee in view of his place of the employment being at other place, then 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 (Rs.) 1 Repair or renewal or reconstruction of the house Any time 30,000 2 Acquisition or construction of the house B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date on which tax is required to be deducted at source (see rule 26 and rule 115). 4 Persons responsible for deducting tax and their duties Section 204 of the Act explains the meaning of the expression Person responsible for paying . As per clause (i) of section 204 in the case of payment of salary, other than payments by the Central Government or the Stale Government, the person responsible for paying for the purpose of section 192 means the employer himself or if the employer is a company, the company itself including the Principal Officer thereof. As per clause (iv) of section 204, in case the credit, or as the case may be, the payment of any sum chargeable under the Act, is made by or on behalf of Central Government or State Government, the Drawing and Disbursing Officer or any other person by whatever name called, responsible for crediting, or as the case may be, paying such sum is the person responsible for paying for the purpose of section 192. As per clause (v) of section 204, in case of a person not resident in India, the person responsible for paying means the person himself or any person authorised by such person or the agent of such person in India including any perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext month 3 Tax on perquisites opted to be deposited by the employer. 7th day next month In case of deduction by deductor other than an office of Government Sl. No. Description Time up to which to be deposited 1 Tax deducted in March 30th April next financial year 2 Tax deducted in any other month 7th day next month 3 Tax on perquisites opted to be deposited by the employer 7th day next month As per rule 30(3), an Assessing Officer with prior approval of the Joint Commissioner of Income-tax may permit quarterly payments of TDS under section 192, for the quarters of the financial year on the dates specified in table below : Sl. No. Quarter of 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 Mode of Payment of TDS 4.4.1 Compulsory filing of Statement by PAO. Treasury Officer, etc. in case of payment of TDS by book entry under section 200(2A) In case of an office of the Government, where tax has been paid to the credit of the Central Government without the production of a challan [book entry], the Pay and Accounts Officer or the Treasury Officer or the Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax so deducted shall be deposited to the credit of the Central Government by remitting it, within the time specified in Table in para 4.4.1 above, into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank : (ii) In case of a company and a person (other than a company), to whom provisions of section 44AB are applicable, the amount deducted shall be electronically remitted into the Reserve Bank of India or the State Bank of India or any authorised bank accompanied by an electronic income-tax challan (rule 125). The amount shall be construed as electronically remitted to the Reserve Bank of India or to the State Bank of India or to any authorized bank, if the amount is remitted by way of : (a) internet banking facility of the Reserve Bank of India or of the State Bank of India or of any authorized bank ; or (b) debit card. (rule 30(7)) 4.5 Interest, penalty and prosecution for failure to deposit tax deducted If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he/she shall be deemed to be an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or numbers (BIN) where deposit of tax deducted is without production of challan in case of an office of the Government ; (ii) Challan identification number or numbers (CIN*) in case of payment through bank. (*C1N 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.) (d) Receipt numbers of all the relevant quarterly statements of TDS (24Q). The receipt number of the quarterly statement is of 8 digit. 4.6.3 Further as per Circular 4 of 2013 dated April 17, 2013 all deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall issue the Part A of Form No. 16, by generating and subsequently downloading it through TRACES Portal and after duly authenticating and verifying it, in respect of all sums deducted on or after the 1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of Form No 16 shall have a unique TDS certificate number. The deductor shall generate Part B (Annexure) of Form No. 16 from the TRACES website and issue to the deductee aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of the employers. (ii) Part B (Annexure-I) of the certificate in Form No. 16 may be issued by each of the employers or the last employer at the option of the assessee. (iii) Part B (Annexure-II) of the certificate in Form 16 may be issued by the specified bank to a specified senior citizen (refer section 194P of the Act). 6. In Part A, in items I and II, in the column for tax deposited in respect of deductee, furnish total amount of tax, surcharge and health and education cess. 7. Deductor shall duly fill details, where available, in item numbers 2(f) and 10(k) before furnishing of Part B (Annexure) to the employee. 8. If an assessee is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the assessee. 9. TDS certificate (Form 16) would be generated for the deductee only if valid PAN or Aadhaar number as the case may be, is correctly mentioned in the Annexure II of Form 24Q in Quarter 4 filed by the deductor. Moreover, employers ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment deductors to write B where TDS is remitted to the credit of Central Government through book adjustment. Other deductors to write C . (j) Challan/Transfer Voucher (CIN/BIN) particulars, i. e., 310, 311, 312 should be exactly the same as available at Tax Information Network. (k) In column 313, mention minor head as marked on the challan. (l) Where an employer deducts from the emoluments paid to an employee or pays on his behalf any contributions of that employee to any approved superannuation fund, all such deductions or payments should be included in the statement. 4.6.9 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. The digital signature is being used to authenticate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed up to July 31, 2021. Form 12BA should be furnished to the employee by 30th April of the assessment year. If the person responsible for paying any income chargeable under the head salaries and therefore responsible for furnishing statement under Form 12BA and Form 16, as the case may be fails to issue these certificates to the person concerned, as required by section 192(2C), he/she will be liable to pay, by way of penalty, under section 272A(2)(i), a sum which shall be Rs. 100 for every day during which the failure continues. 4.7.4 DDOs empowered to obtain evidence of proof or particulars of the prescribed claim (including claim for set-off of loss) under the section 192(2D) DDOs have been authorized under section 192 to allow certain deductions, exemptions or allowances or set-off of certain loss as per the provisions of the Act for the purpose of estimating the income of the assessee or computing the amount of tax deductible under the said section. The evidence/proof/particulars for some of the deductions/exemptions/allowances/set-off of loss claimed by the employee such as rent receipt for claiming deduction in HRA. evidence of interest payments for claiming loss from self-oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act mentioned in para 4.9 below. 4.9 Compulsory requirement to furnish PAN or Aadhaar by employee (section 206AA) 4.9.1 Section 206AA in the Act makes furnishing of PAN or Aadhaar number as the case may be, by the employee compulsory in case of receipt of any sum or income or amount, on which tax is deductible. If the employee (deductee) fails to furnish his/her PAN or Aadhaar number, as the case may be, to the deductor, the deductor has been made responsible to make TDS at higher of the following rates : (i) at the rate specified in the relevant provision of this Act; or (ii) at the rate or rates in force; or (iii) at the rate of twenty percent. 4.9.2 The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS. However, where the income of the employee computed for TDS under section 192 is below taxable limit, no tax will be deducted. But where the income of the employee computed for TDS under section 192 is above taxable limit, the deductor will calculate the average rate of income-tax based on rates in force as provided in section 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 44AB in the immediately preceding financial year, or the number of deductee s records in a statement for any quarter of the financial year are twenty or more, the deductor shall furnish the statement electronically under digital signature or along with the verification of the statement in Form 27A or verified through an electronic process (Rule 31 A(3)]. 4.11 Fee for default in furnishing statements under section 200(3) of the Act Under section 234E of the Act if a person fails to deliver or caused to be delivered ? statement within the time prescribed in section 200(3) in respect of tax deducted at source (on or after July 1, 2012) he/she shall be liable to pay, by way of fee a sum of Rs. 200 for every day during which the failure continues. However, the amount of such fee shall not exceed the amount of tax which was deductible at source. This fee is mandatory in nature and to be paid before furnishing of such statement. 4.12 Rectification of mistake in filing TDS Statement A DDO can also file a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered earlier. 4.13 Penalty for failure to furnishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed banks vide RBI s Pension Circular (Central Series) No. 7/C.D.R./1992 (Ref. CO : DGBA : GA (NBS) No. 60/GA.64 (11CVL)-/92), dated the April 27, 1992, and, these instructions should be followed by all the branches of the banks, which have been entrusted with the task of payment of pensions. 4.14.2 Under section 194P of the Act, the specified bank shall compute the total income of specified senior citizen and deduct income-tax on the basis of rates in force. As per clause (2) of section 194P. The provisions of section 139 will not apply to specified senior citizen for the assessment year for which tax has been deducted. The specified senior citizen has been defined as an individual resident in India who has attained age of 75 years or more at any time during the financial year and who is having income of the nature of pension and no other income except the income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income. Further the specified senior citizen has to furnish declaration in Form 12BBA (rule 26D) to the specified bank. 4.14.3 The declaration in Form No. 12BBA is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 not charged to income-tax for any earlier previous year. (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 Value of perquisites as per rule 3 The value of perquisites provided directly or indirectly by the employer to the employee or to any member of household of employee, for the purpose of computing the income chargeable under the head Salaries for that employee shall be determined on the basis of rule 3 of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 17 ; (f) lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments ; 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/she 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) Furnished accommodation : The accommodation is divided into two categories : (i) Accommodation provided by the Central Government or any State Governments : The value of perquisite shall be as determined for unfurnished accommodation and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 if : (i) such accommodation is located in a remote area or (ii) the accommodation is of a temporary nature having plinth area of not more than 800 square feet and is not located within 8 kilometers of the local limits of any municipality or cantonment board. 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. B. Perquisite on motor car provided by the employer [rule 3(2)] (I) if an employer provides motor ear facility to his employee, the value of such perquisite shall be determined as follows : (a) If the motor car is used by the employee wholly and exclusively in the performance of his official duties, the value of perquisite shall be taken as Nil. However, following compliances are necessary : The employer has maintained complete details of the journey undertaken which may include date of journey, destination, mileage and the amount of expenditure incurred thereon for officia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for performance of official duties. (b) Such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee or any member of his household, the value of perquisite shall be the actual amount of expenditure incurred by the employer as reduced by the amount of Rs. 1,800 (plus Rs. 900 if chauffeur is also provided) per month for motor car where cubic capacity of engine of the motor car does not exceed 1.6 litres, and if the cubic capacity of engine of the motor car exceeds 1.6 litres, reduced by Rs. 2,400 (plus Rs. 900, if chauffeur is also provided) per month, However, following compliances are necessary ; The employer has maintained complete details of the journey undertaken which may include date of journey, destination, mileage and the amount of expenditure incurred thereon for official purposes ; The employer gives a certificate that the expenditure was incurred wholly and exclusively for performance of official duties. (III) Where any other automotive conveyance is owned by the employee but actual maintenance and running expenses are met or reimbursed by the employer, no perquisite shall be chargeable to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be reduced from the perquisite value. (E) Free or concessional education [Rule 3(5)] Perquisite on account of free or concessional education for any member of the employee s household shall be determined as : the sum equal to the amount of expenditure incurred by the employer in that behalf, or where such educational institution is maintained and owned by the employer or where free educational facilities for such member of employee s household is provided in any other institution by reason of his being in employment of that employer, the value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality. The value of perquisite shall be reduced by the amount, if any, paid or recovered from the employee. In case where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, the value of perquisite shall be taken as Nil if the cost of such education or the value of such benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the employer for any holiday availed of by the employee or any member of his/her household, other than travel concession or assistance (as per clause 5 of section 10), shall be the amount of the expenditure incurred by the employer in that behalf. However, any amount recovered from or paid by the employee shall be reduced from the perquisite value so determined. Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public. Where the employee is on official tour and the expenses are incurred in respect of any member of his/her household accompanying him, the amount of expenditure with respect to the member of the household shall be a perquisite. Where the employee is on official tour which is extended as a vacation, the value of such fringe benefit shall be limited to the expenses incurred in relation to such extended period of stay or vacation, reduced by the amount paid or recovered from the employee for such perquisite, (I) Value of subsidized/free food/non-alcoholic beverages provided by employer lo an employee [rule 3( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incurred (including annual and periodical fees) by the employee (or any member of his/her household) in a club, shall be the amount which is paid or reimbursed by the employer, as reduced by the any amount paid or recovered from the employee. In case of corporate membership by the employer, the value of perquisite shall not include the initial fees paid for acquiring such corporate membership. However, if the amount is incurred wholly and exclusively for business purposes it will be exempt if the following conditions are fulfilled : (i) Complete details of such expense, including date and nature of expenditure and its business expediency is maintained by the employer. (ii) Employer gives a certificate that the same was incurred wholly and exclusively for official purpose. Note : Use of health club, sport facilities, etc. provided uniformly to all classes of employee by the employer are exempt. (M) Use of assets [rule 3(7)(vii)] The value of perquisite of a movable asset (other than laptops and computers and those referred in other sub-rules of rule 3) owned by the employer and used by the employee or any member of his/her household shall be calculated at 10% per annum of the actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent years. The exemption shall he allowed without any limit for the amount received from the employer and shall be limited to Rs. 10 lakh in aggregate for the amount received from any other persons. The Legislative amendments in this regard have been proposed in the Finance Bill, 2022, which is as follows : In order to provide the relief as stated in the press statement, it is proposed to amend clause (2) of section 17 and to insert a new sub-clause in the proviso to state that any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family in respect of any illness relating to Covid-19 subject to such conditions, as may be notified by the Central Government, shall not be forming part of perquisite . Further, it is proposed to amend the proviso to clause (x) of sub-section (2) of section 56 and insert two new clauses in the proviso so as to provide that (i) any sum of money received by an individual, from any person, in respect of any expenditure actually incurred by him on his medical treatment or treatment of any member of his family, in respect of any illness related to Covid-19 subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm 12BB, 5.3.2. 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 defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulations applicable to the members of the defence service is exempt. Gratuity received in cases other than those mentioned above, on retirement, termination, etc. is exempt up to the limit as prescribed by the Board. Presently, the limit is Rs. 20 lakhs with effect from March 29, 2018 [Notification No. 16/2019/F. No. 200/8/2018-ITA-I, dated March 8, 2019] 5.3.3. Any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of exemption will include basic salary, dearness allowance forming part of salary while computing retirement benefits and commission based on fixed percentage of turnover achieved by the employee. If an employee receives leave salary from more than one employer in the same year, then the maximum amount of exemption under section 10(10AA)(ii) cannot exceed the amount specified by the Central Government (i. e., Rs. 3.00,000). Where any employee has claimed exemption of leave salary under this section in any earlier year(s), then in case of such employee, the ceiling limit (i.e., Rs. 3.00,000) shall be reduced by the amount of exemption earlier claimed. 5.3.5. Under section 10(10B), the retrenchment compensation received by a workman is exempt from income-tax subject to certain limits. The maximum amount of retrenchment compensation exempt is the sum calculated on the basis provided in section 25F(b) of the Industrial Disputes Act, 1947 or any amount not less than Rs. 50,000 as the Central Government may by notification specify in the Official Gazette, whichever is less. These limits shall not apply in the case where the compensation is paid under any scheme which is approved in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received under an insurance policy issued on or after April 1, 2003, but on or before March 31, 2012, 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 : or (iv) any sum received under an insurance policy issued on or after April 1, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10 per cent. of the actual capital sum assured ; or (v) any sum received under an insurance policy issued on or after April 1, 2013 in cases of persons with disability or person with severe disability as per section 80U or suffering from disease or ailment as specified in section 80DDB, in respect of which the premium payable for any of the years during the term of the policy exceeds 15 per cent. of the actual capital sum assured. However, any sum received under such policy referred to in (iii), (iv) and (v) above, on the death of a person would be exempt. The said clause was amended by the Finance Act, 2021 to provide that : (a) with effect from February 1, 2021, the sum received under a Unit Linked Insurance Policy issued on or after February 1, 2021, shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so shall have the effect as if for the words two lakh and fifty thousand rupees , the words five lakh rupees had been substituted. Rule 9D of the Income-tax Rules, 1962 provides for the calculation of taxable interest relating to contribution in a provident fund or recognized provident fund, exceeding specified limit. 5.3.9 The accumulated balance due and becoming payable to an employee participating in a recognized provident fund, to the extent provided in rule 8 of Part A of the Fourth Schedule to the Act is exempt under clause (12) of section 10 of the Act. With effect from April 1, 2022, the exemption under the said clause will not be applicable to the income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding two lakh and fifty thousand rupees in any previous year in that fund, on or after the 1st day of April, 2021 and computed in prescribed manner. Second proviso to clause (11) of section 10, with effect from April 1, 2022, provides that if the contribution by a person is in a fund in which there is no contribution by the employer of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 place of posting or residence. It is further clarified that any allowance granted to an employee which is not exempted under section 10(14) read with rule 2BB or the sum of allowance exceeding the amount prescribed under rule shall be chargeable to tax under the head income from salary. For example, no exemption is provided in rule 2BB for the training allowance paid for the posting in any training institute. Hence whole of the training allowance shall be included in the salary. The CBDT has prescribed guidelines for the purpose of section 10(14)(i) and 10(14)(ii) vide notification No. S.O. 617(E), dated July 7, 1995 (F. No. 142/9/95-TPL) which has been amended vide notification S. O. No. 403(E), dated April 24, 2000 (F. No. 142/34/99-TPL). Rule 2BB has been amended and the exemption in respect of transport allowance for financial year 2018-19 shall be available up to Rs. 3,200 per month only to the person who is blind or orthopedically handicapped with disabilities of lower extremities, to meet his/her expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employer in relation to an employee, to effect or to keep in force health insurance of such employee under any scheme approved by the Central Government or Insurance Regulatory and Development Authority (IRDA), for the purposes of clause (ib) of sub-section (1) of section 36 ; (d) any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his/her health or the health of any member of his family, under any scheme approved by the Central Government or IRDA, for the purpose of section 80D ; (e) any expenditure incurred by the employer on medical treatment of the employee (or any member of his/her family) outside India, travel and stay abroad of the employee (or any member of his/her family) for medical treatment and expenditure on travel and stay abroad of one attendant who accompanies the patient. However, the expenditures on medical treatment abroad are excluded from perquisites only to the extent permitted by the Reserve Bank of India. Further, the expenditure on travel shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he condition that the free conveyance is not provided by the employer. 5.4 Deductions under section 16 of the Act 5.4.1 Standard deduction under section 16(ia) : From financial year 2019-20 a deduction of fifty thousand rupees or the amount of salary whichever is less, shall be allowed as standard deduction. 5.4.2 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. 5.4.3 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 , 5.5 Deductions under Chapter VI-A of the Act In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income : 5.5.1 Dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated December 2, 2014] (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. [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated November 2, 2005 and National Saving Certificate (IXth Issue) vide Notification No. G.S.R. 848(E), dated the November 29, 2011, publishing the National Savings Certificates (IX-Issue) Rules, 2011, G.S.R. 868(E), dated the December 7, 2011, specifying the National Savings Certificates IX Issue as the class of Savings Certificates F. No.13/2011-NS-II r/w amendment Notification No. G.S.R. 319(E), dated April 25, 2012] (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 Dha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lic 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 for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both. [The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No. 37(E), dated January 11, 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 installment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board or other authority engaged in the construction and sale of house property on ownership basis or by way of instalment or par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. (14) Subscription to equity shares or debentures forming 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 July 28, 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 invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit of the employee in the fund referred to above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the interest or bonus accrued or credited to this account due to the reason of (i) surrender of annuity plan whether in whole or part, (ii) pension received from the annuity plan, then the amount so received during the financial year 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 taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C. 5.5.3 Deduction in respect of contribution to pension scheme of Central Government (section 80CCD) : Section 80CCD(1) allows an employee, being an individual employed by the Central Government on or after January 1, 2004 or being an individual employed by any other employer, or any other assessee being an individual, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F.N. 5/7/2003-EGB PR, dated December 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension scheme referred to in sub-section (1) or sub-section (1B) shall not be deemed to be the income of the nominee. Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C. Further, as per section 80CCD(5), it has been specified that with effect from April 1, 2009, any amount received by the employee from the New Pension Scheme shall be deemed not to have been received in the previous year if such amount is used for purchasing an annuity plan in the same previous year. It is emphasized that as per the section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and section 80CCD(1) shall not exceed Rs. 1,50,000. The deduction allowed under section 80CCD(1B) is an additional deduction in respect of any amount paid in the NPS up to Rs.50,000. However, the contribution made by the Central Government or any other employer to a pension scheme under section 80CCD(2) shall be excluded from the limit of Rs. 1,50,000 provided under this section. 5.5.4 Deduction in respect of health insurance premia paid, etc. (section 80D) Particulars Case- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (4A) of section 80D. 5.5.5 Deductions in respect of expenditure on persons or dependants with disability (a) Deductions in respect of maintenance including medical treatment of a dependent who is a person with disability (section 80DD) : Under section 80DD, where an employee, who is a resident in India, has, during the previous year (a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability ; or (b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the employee shall be allowed a deduction of a sum of Rs. 75,000 from his gross total income of that year. However, where such dependant is a person with severe disability, an amount Rs 1,25,000 shall be allowed as deduction subject to the specified conditions. The deduction under (b) above shall be allowed only if the following conditions are fulfilled : (i) the scheme r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in I above and furnished before the DDO. 3. For the purposes of sections 80DD and 80U some of the terms defined are as under : (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 ; (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 whichever is less. Now the deduction can be allowed on the basis of a prescription from an oncologist, a urologist, nephrologist, a hematolegist, an immunologist or such other specialist, as mentioned in rule 11DD. However, the amount of the claim shall be reduced by the amount if any received from the insurer or reimbursed by the employer. Further in case of the person against whom such claim is made is a senior citizen (60 age years or more) then the deduction up to one lakh rupees is allowed. For the purpose of this section, in the case of an employee, dependant means individual, the spouse, children, parents, brothers and sisters of the employee or any of them, dependant wholly or mainly on the employee for his support and maintenance. Vide Notification S.O. No. 2791(E), dated October 12, 2015, rules 11DD has been amended to do away with the requirement of furnishing a certificate in Form 10-I. A prescription from a specialist as specified in the Rules containing the name and age the patient, name of the disease/ailment along with the name, address, registration number and qualification of the specialist issuing the prescription would now be required. 5.5.7 Deduction in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty on the date of sanction of loan. For the purposes of this section, (a) the expression financial institution shall have the meaning assigned to it in clause (a) of sub-section (5) of section 80EE ; (b) the expression stamp duty value means value adopted or assessed or assessable by any authority of the Central Government or a State Government for the purpose of payment of stamp duty in respect of an immovable property. The amount of this deduction shall not exceed Rs. 1,50,000 and it shall be allowed in computing the total income of the individual for the assessment year 2020-21 and subsequent assessment years. Where a deduction under this section is allowed for any interest referred to in this section, no deduction shall be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year. 5.5.9 Deduction in respect of the interest payable on loan taken for the purpose of purchase of an electric vehicle (80EEB) Section 80EEB introduced by the Finance (No. 2) Act, 2019 (No. 23 of 2009), allows deduction from gross total income of an individual in respect of the interest payable on loan taken by him from any financial institutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowable in case the amount of donation exceeds Rs. 2,000 unless the amount is paid by any mode other than cash. 5.5.11 Deductions in respect of rents paid (section 80GG) : Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions : (a) the employee has not been in receipt of any house rent allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act ; (b) the employee files the declaration in Form No. 10BA. (Annexure X) (c) The employee does not own : (i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu undivided family, by such family, at the place where he/she ordinarily resides or performs duties of his office or carries on his business or profession ; or (ii) at any other place, any residential accommodation which is in the occupation of the employee, the value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be. (d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Fund notified under section 35CCA(1)(d) set up and notified by the Central Government No deduction under this section is allowable in case : (i) The employee has gross total income which includes income which is chargeable under the head Profits and gains of business or profession , (ii) The amount of donation exceeds Rs. 2000 unless such sum is paid by any mode other than cash. 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 employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of donation and a receipt from the person to whom donation has been made and ensure that the approval/notification has been issued by the right authority. DDO must ensure a self-declaration from the employee that he/she has no income from Profits and gains of business or profession . 5.5.13 Deduction in respect of interest on deposits in savings account (section 80TTA) : Section 80TTA allows to an employee, not being a senior citizen employee, from his gross total income if it includes any income by way of interest on deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Finance Act, 2019 with effect from April 1, 2019, provided relief in the form of rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e., having total income not exceeding Rs. 5,00,000. The amount of rebate available under section 87A is Rs. 12,500 or the amount of tax payable, whichever is less from financial year 2019-20. 7. TDS on payment of accumulated balance under recognised provident fund and contribution from approved superannuation fund : 7.1 The trustees of a recognized provident fund, or any person authorised by the regulations of the Fund to make payment of accumulated balances due to employees, shall in cases where sub-rule (1) of rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due lo 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 . 7.2 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed balance due and becoming payable to an employee includes any amount transferred from his individual account in any other recognized provident fund(s) maintained by his former employer(s), then in computing the period of continuous service the period or periods of continuous services rendered under former employer(s) shall be counted for the purposes of (i) and (ii) above. Under the above four situations at (i) to (iv), the accumulated balance due and payable to the employee is not liable for TDS under section 192A. 8. DDOs to obtain evidence/proof of claims For the purpose of estimating income of the assessee or computing tax deductions, section 192(2D) provides that person responsible for paying (DDOs) shall obtain from the assessee evidence or proof or particular of claims such as house rent allowance (where aggregate annual rent exceeds one lakh rupees) : Deduction of interest under the head Income from house property and deduction under Chapter VI-A as per the prescribed form 12BB laid down by rule 26C of the Rules. Further, as per section 192(2D) read with the rule 26C, it is mandatory for the DDOs to obtain details/evidence in respect of claim of exemption for leave travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by increasing or decreasing the amount of subsequent deductions during the same financial year. 10. Miscellaneous 10. 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, 2020 (No. 12 of 2020). the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No. 38 of 2020), the relevant circulars/notifications, etc. 10.2 In case any assistance is required, the Assessing Officer/the Local Public Relation Officer of the Income-tax Department may be contacted. 10.3 These instructions may be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/State Governments. 10.4 Copies of this Circular are available at the following websites : www.finmin.nic.in and www.incometaxindia.gov.in. Hindi version will follow. Amit Raj, Director (IT-Budget), CBDT. [F. No. 275/192/2020-IT(B)] ANNEXURE-I SOME ILLUSTRATIONS# Example 1 For Assessment Year 2022-23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.10,000/-) 10000 8 Total Income 2,97,000 9 Income Tax thereon/payable (includes Rebate of Rs.12500 as per Section 87A) Nil 10 Add: Health Education Cess 4%. Nil 11 Total Income Tax payable Nil 12 Rounded off to Nil @ or Aadhaar number, as the case may be, # It may be noted that tax liability may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. Example 3 For Assessment Year 2022-23 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. Particulars Rupees 1 Gross Salary 5,55,000 2 Medical Reimbursement by employer on the treatment of self and dependent family member 35,000 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 30,000 8 Interest Income on Savings Account 8,000 9 Interest Income on Time Deposit 15,000 Computation of Tax S.No. Particulars Rupees I Gross Salary 5,55,000 2 Add: Perquisite in respect of reimbursement of Medical Expenses 35,000 3 Less: Standard deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otal Income Taxable 15288 Rounded off to 15290 @ or Aadhaar number, as the case may be. # It may be noted that tax liability may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. Example 5 For Assessment Year 2022-23 Illustrating valuation of perquisite and calculation of tax in the case of an employee below age of sixty years or a private company in Mumbai who was provided accommodation in a flat at concessional rate for ten months and in a hotel for two months (With valid PAN@ furnished to employer). S.No. Particulars Rupees 1 Salary 7,00,000 2 Bonus 1,40,000 3 Free gas, electricity, water etc. (Actual bills paid by company) 40,000 4(a) Flat at concessional rate (for ten month) @ Rs.36000/- month 3,60,000 4(b) Hotel rent paid by employer (for two month) 1,00,000 4(c) Rent recovered from employee. 60,000 4(d) Cost of furniture 2,00,000 5 Subscription to Unit Linked Insurance Plan 50,000 6 Life Insurance Premium 10,000 7 Contribution to recognized P.F, 42,000 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 (1+2) for Valuation of Perquisites 8,40,000 Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,000 4 Less: Deduction U/s 80C (i). Provident Fund: 60,000 (ii). LIP : 10,000 (iii). NSC VIII Issue: 30,000 (iv). Repayment of HBA : 60,000 (v). Tuition Fees (Restricted to two children) : 20,000 Total : 1,80,000 Restricted to 1,50,000 1,50,000 5 Total Income 4,77,000 6 Income Tax thereon/payable (includes Rebate as per Section 87A) Nil 7 Add: Health Education Cess @ 4%. Nil 8 Total Income Tax payable Nil 9 Rounded off to Nil @ or Aadhaar numbers as the case may be # It may be noted that tax liability may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. Example 7 For Assessment Year 2022-23 A. Calculation of Income tax in the case of a retired employee above the age of sixty years but below the age of 80 years and having gross pensions of: i) Rs.5,00,000 ii) Rs.8,50,000 iii) Rs.13,00,000/-. 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) Rupees(iii) Gross Pension 5,00,000 8,50,000 13,00,000 Contribution of P.P.F. 70,000 1,00,000 1,50,000 Solution: Computation of Total Income and tax payable thereon: Particulars Rupees (i) Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 5. Contribution to Central Govt. Employees Group Insurance Scheme p.m. 500 6. Life Insurance Premium (being a Life Insurance Policy of Rs.1,00,000 taken in name of his wife before 1.04.2012) 10,500 7. Contribution to Public Provident Fund 10,000 8. Repayment of HDFC loan borrowed after 1.04.1999 EMI Rs.25,000 (Towards loan Rs.95,000, towards interest Rs.2,05,000) 3,00,000 Computation of Tax S.No. Particulars Rupees 1. Income from Salary Basic Pay @ Rs.40,000 p.m. (March to June '21) 1,60,000 Rs41,200 p.m * (July 2021 to Feb 2022) 3,29,600 4,89,600 Dearness Allowance(assumed) 1.3.2021 to 30.06.2021 @ 7% i.e., Rs.40,000 p.m 11,200 1.7.2021 to 31.12.2021 @ 9% i.e. Rs.41,200 p.m 22,248 1.1.2022 to 28.02.2022 @ 11% i.e. Rs.41,200 p.m 9,064 5,32,112 House Rent Allowance 1,17,504 6,49,616 Transport Allowance 1.3.2021 to 30.6.2021 @ Rs 3200 p.m 12,800 1.7.2021 to 31.12.2021 @ Rs 3780 p.m 22,680 1.1.2022 to 28.2.2022@ Rs 3852 p.m 7704 43,184 43,184 6,92,800 Honorarium 3,000 Fees (2/3 retained by him) 34,800 Total Salary 7,30,600 Less: Standard Deduction u/s section 16(ia) 50,000 Net Salary 6,80,600 2. Income from House Property Self-occupied u/s 23(2)(a) where property is acquired/con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asury . DECLARATION BY EMPLOYER I .. s/o . working as ...........(designation) dohe/shereby declare on behalf of (name of the employer) that the information given above is based on the books of account, documents and other relevant records or information available with us and the details of value of each such perquisite are in accordance with section 17 and rules framed thereunder and that such information is true and correct. Signature of the person responsible for deduction of tax Place........... Date.............. Full Name .. Designation ..... Annexure IIA FORM NO.12BB (See rule 26C) Statement showing particulars of claims by an employee for deduction of tax under section 192 1. Name and address of the employee: 2. Permanent Account Number or Aadhaar number of the employee: 3. Financial year: Details of claims and evidence thereof Sl. No. Nature of claim Amount (Rs.) Evidence / particulars (1) (2) (3) (4) 1 House Rent Allowance: (i) Rent paid to the landlord (ii) Name of the landlord (iii) Address of the landlord (iv) Permanent Account Number or Aadhaar number, as the ease may be, of the landlord Note: Permanent Account Number or Aadhaar number, shall be furnished if the aggre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 24G. AOs need to communicate the BIN details to respective DDOs. BIN is to be quoted by the DDOs in quarterly e-TDS/TCS statements. BIN consists of receipt number of Form 24G. DDO serial number and date of transfer voucher. The AO is required to furnish Form 24G within ten days from the end of the month in respect of tax deducted by the deductors and reported to him for that month. Only one regular Form 24G for a month-FY can be submitted. Correction in Form 24G: AO can file a correction Form 24G for any modification or cancellation of Form 24G accepted at TIN central system. Preparation and validation of correction Form 24G is in line with regular form 24G. The validated Form 24G correction file (.fvu file) copied on a CD/pen drive is to be submitted along with the provisional receipt of original Form 24G and SSR to TIN-FC. On successful acceptance of correction Form 24G at the TIN-FC, an acknowledgement containing 15 digit Token no. is provided to the AO. The AO can view the status of Form 24G on TIN website. Online upload or Form 24G at TIN websites: For online upload of Form 24G at TIN website, the Accounts Office Identification Number (AIN) is a pre-requisite. For online AI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm 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 directly to State AG. For example, PWD, Forest Department etc. Such CDDOs are also required to file Form 24G on monthly basis. Schematic Diagram at Annexure-III clarifies the person responsible for filing Form 24G in different scenarios. 3. Can the same office/officer also act as DDO and AO.? Ordinarily, the PAO office is the one to whom the DDO reports the TDS and therefore, both should be from different offices. However, where the DDO and AO are the same, as in the case of CDDOs, the statistics report of Form 24G should be counter signed by his superior officer. 4. What is AIN and who should apply? Accounts Office Identification Number (AIN) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (LTD). Form 24G contains- Details of the AO filing Form 24G (AIN name, demographic information, contact details). Category of AO (Central / State Government) along with details of ministry / state. Statement details (month and year for which Form 24G is being filed). Payment summary; nature of deduction wise (TDS Salary /TDS Non-salary / TDS Non-salary Non-resident / TCS). DDO wise payment details (TAN of DDO, name, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CCA). DDOs Which are associated with the AO. If the AO wants to add/delete or update details of DDO, same should be mentioned in the statement. 13. What is the procedure to prepare the Form 24G statement? The AOs ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idation 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 generated. Form 24G (regular/correction) prepared from F.Y. 2005-06 onwards can be validated using this utility. The Form 24G FVU is a Java based utility. JRE (Java Run-time Environment) [versions: SUN JRE: 1.4.2_02 or 1.4.2_03 or 1.4.2_04 or IBM JRE: 1.4.1.0] should be installed on the computer where the Form 24G FVU is being installed. JRE is freely downloadable from http://java.sun.com and http://www.ibm.com/developerworks/java/jdk or you can request your computer vendor (hardware) to install the same for you. The Form 24G FVU setup comprises of two files, namely- Form 24G FVU.bat: This is a setup program for installation of FVU. Form 24G_FVU_STANDALONE.jar: This is the FVU program file. These files a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal 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 Statement and PRN of last correction to be mentioned in field Receipt number of Previous Statement . 20. What is M Type of Correction Statement? This type of correction statement is to be furnished by AO, if it wishes to update any of its details like its name, address, Responsible person details, category, Ministry, State or deletion and addition of DDO (Drawing Disbursing Officer) etc. Modifications in AIN (Account office Identification Number), Financial Year and Month are not allowed. There are three modes by which changes can be made in the DDO details provided in original Form 24G statement: Add: DDO records can be added to the original Form 24G statement Update: details of DDO (i.e. TAN, TAN Name, demographic and contact details, amount of tax deducted and remitted, nature of deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d TAN-DDO records added in Form 24G correction statement. BIN will be generated for DDO records where invalid TANs/TAN not present in Income Tax Department database is updated with a valid TAN. New BIN will not be generated for any update made in TAN name, demographic and contact details, amount of Tax deducted and remitted or nature of deduction. BIN details will not be generated for deleted DDO records. 26. What is the utility of BIN? The BIN details and amount of TDS reported in the quarterly TDS/TCS Statement filed by the DDO will be matched with the respective details filed in Form No.24G filed by the PAO for verification purpose. 27. Are there instances where BIN details and amount of TDS reported in TDS/TCS statements do not match with that reported in Form 24G? What are the consequences of such mismatch? (i) Instances of wrong/incorrect reporting of BIN by the DDOs in the TDS, TCS Statement have been observed. Reporting of incorrect BINs and corresponding amount in TDS statement will lead to mismatch with the respective amount as reported in the Form No. 24G. In this situation, the corresponding deductees may not get credit of the TDS/TCS. Therefore, the BIN as disseminated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Form 16/16A from the TRACES portal only. Deductor is allowed to issue manually only part _B' of Form 16 for salary details. 32. Is there any scenario where the DDO is also required to obtain the AIN? Yes, if the deductor is in the capacity of CDDO and directly reports tax deduction through transfer voucher to State AG, in that case CDDO is required to obtain the AIN and file 24G for the respective book adjustment entries and then also required to file the TDS/TCS statement as a TAN holder. For example in the case of Executive Engineer in state Government who are making payments to the contractors after deducting the TDS/TCS through cheque are liable to file Form 26Q for reporting such TDS transactions. They will be required to obtain the AIN and file form 24G for monthly reporting of these book adjustment entries and file quarterly TDS statements as TAN der by quoting the corresponding BINs. *** ANNEXURE V Person Responsible for filing Form No. 24G in case of State Govt. Departments ANNEXURE VI POINT NO.4.9 OF DRAFT CIRCULAR OF DEDUCTION OF TAX AT SOURCE FROM SALARIES UIS 192 OF THE INCOME TAX ACT, 1961 - FINANCIAL YEAR 2015-16- PROCEDURE OF PREPARATION OF QUARTERLY STATE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are advised to refer to e-tutoriaIs/FAQs available on TRACES portal. Online correction entails no charges and does away with the requirement of downloading conso file and visiting TIN-FCs. 2.1.2 With effect from 1 st January, 2015, TRACES will be providing a correction window of 7 days from date of processing at CPC-TDS (generally 2 days after date of filing of statement). This facility will enable the filer to correct PAN errors and challan mismatch cases identified by CPC-TDS and avoiding of issuance of demand notices. Therefore, deductors are advised to check the processing status promptly so as to utilize this facility. 2.1.3 Deductor/DDO can also file a correction e-TDS statement for any modification in the e-TDS statement. Correction statement can be prepared by using the TDS Consolidated file that is available at TRACES ( www.tdscpc.gov.in ). Validation of correction statement is in line with regular e-TDS statement, physical Form 27A duly signed and Statement Statistical Report at TIN-FC. On successful acceptance of correction e-TDS statement at the TIN-FC, an acknowledgement containing a unique 15 digit token no. is provided to the Deductor/DDO. Deduetor/DDO can view the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS statement/return. 6. Correction of e-TDS statement/return online at TIN website: Deductor/DDO can file a correction e-TDS statement/return for any modification in e-TDS statement/return accepted at TIN central system. Correction statement/return can be prepared by using the TDS consolidated file only, available at the CPC-TDS portal www.tdscpc.gov.in through TAN registration. Preparation and validation of e-TDS statement is in line with regular e-TDS statement/return (submitted at TIN-FC) Deductor/DDO can login with its user ID and DSC and upload the validated e-TDS file (.fvu file) generated by the FVU to the TIN website. On successful acceptance of correction e-TDS statement/return at TIN, an acknowledgement containing a unique 15 digit token number is generated and displayed. There is no need to submit copy of provisional receipt of regular e-TDS Statement/return, physical Form 27A and SSR in online upload. Deductor/DDO can view the status of e-TDS statement/return on TIN website. For FAQs and further details, Deductors/DDOs are advised to log on website www.tin-nsdl.com ****** ANNEXURE-VII MINISTRY OF FINANCE (Department of Economic Affairs) (ECB PR Division) NOTIFICATION N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1 st of January, 2004. U.K. SINHA, Jt. secy. ANNEXURE-VIII 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, he/shereby 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. Kirti Chakra -do- 3. Shaurya Chakra - do- 4. Sarvottan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds payment of rent to Shri/Ms/M/s . (name and complete address of the landlord). It is further certified that no other residential accommodation is owned by a) me/my spouse/my minor child/our family (in ease the assessee is HUF), at . where l/we ordinarily reside/perform duties of officer or employment or carry on business or professions, or b) me/us at any other place, being accommodation in my occupation, the value of which is to be determined u/s 23(2)(a)(i) of u/s 23(2)(b). ************** Annexure B FORM NO. 16 [See rule 31 (1) (a)] PART A Certificate under section 203 or the Income-tax Act, 1961 for tax deducted at source on salary paid to an employee under section 192 or pension/interest income of specified senior citizen under section 194P Certificate No. Last updated on Name and address of the Employer/Specified Bank Name and address of the Employee/ Specified senior citizen PAN of Deductor TAN of the Deductor PAN of the Employee/ specificed senior citizen Employee Reference No./ Pension Payment order no. provided by the Employer (If available) CIT (TDS) Address .. . Assessment Year Period with the Employer From To City .. Pin Code Summary of amount paid/credited and tax d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Rs. (d) Cash equivalent of leave salary encashment under section 10(10AA) Rs. (e) House rent allowance under section 10(13A) Rs. (f) Amount of any other exemption under section 10 Clause Rs. Clause Rs. Clause Rs. Clause Rs. Clause Rs. Rs. (g) Total amount of any other exemption under section 10 Rs. (h) Total amount of exemption claimed under section 10 Rs. [2(a)+ 2(b)+ 2(c)+ 2(d)+ 2(e)+ 2(g)] 3. Total amount of salary received from current employer Rs. [1(d)-2(h)] 4. Less: Deductions under section 16 (a) Standard deduction under section 16(ia) Rs. (b) Entertainment allowance under section 16(ii) Rs. (c) Tax on employment under section 16(iii) Rs. 5. Total amount of deductions under section 16 Rs. [4(a)+4(b)+4(c)] 6. Income chargeable under the head Salaries [(3+1(e)-5] Rs. 7. Add: Any Other income reported by the employee under as per section 192 (2B) (a) Income (or admissible loss) from house property reported Rs. by employee offered for TDS (b) Income under the head Other Sources offered for TDS Rs. 8. Total amount of other income reported by the employee [7(a)+7(b)] Rs. 9. Gross total income (6+8) Rs. 10. Deductions under Chapter VI-A Gross Amount Deductible Amount (a) Deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 16 (a) Standard deduction undersection 16(ia) Rs. (b) Tax on employment undersection 16(iii) Rs. 4. Total amount of deductions under section 16 [3(a)+3(b)] Rs. 5. Income chargeable under the head Salaries [(2-4)] Rs. 6. Interest Income under the head Other Sources paid by the specified bank Rs. 7. Gross total income (5+6) Rs. 8. Deductions under Chapter VI-A Gross Amount Deductible Amount (a) Deduction in respect of life insurance premia, contributions to provident fund etc. under section 80C Rs. Rs. (b) Deduction in respect of contribution to certain pension funds under section 80CCC Rs. Rs. (c) Deduction in respect of contribution by taxpayer to pension scheme under section 80CCD(1) Rs. Rs. (d) Total deduction under section 80C, 80CCC and 80CCD (I) Rs. Rs. (e) Deductions in respect of amount paid/deposited to notified pension scheme under section 80CCD (1B) Rs. Rs. (b) Deduction in respect of health insurance premia under section 80D Rs. Rs. (e) Deduction in respect of interest on loan taken for higher education under section 80E Rs. Rs. Gross Amount Qualifying Amount Deductible Amount (f) Total Deduction in respect of donations to certain funds, charitable institutions, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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