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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 ..... ome-tax Act, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of section 192 of the Act are not applicable. Hence, DDOs are not required 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 em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates to the contribution referred to in the said clause which is included in total income ; and (viii) the value of any other fringe 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 jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with the provisions of section 111A or section 112 or section 112A or the provisions of section 115BAC of the Income-tax Act, shall be increased by a surcharge for the purposes of the Union, calculated, in the case of every individual or Hindu 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation Cess on Income-tax". Health and education cess on income-tax shall be levied at the rate of four percent of income-tax including surcharge wherever applicable. No marginal relief shall be available in respect of such cess. 2.4 Concessional rates of tax under section 115BAC Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of sub-section (2) of section 80CCD or section 80JJAA ; (ii) without set off of any loss,-- (a) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i) ; (b) under the head "Income from house property" with any other head of income ; (iii) by 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 perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisites is taxable after giving effect to the exemptions, deductions and relief as applicable. (Some typical illustrations of computation of tax are given at annexure-I). 3.2 Payment of tax on perquisites by employer Perquisites are divided in two parts, i. e., monetary perquisites and non-monetary perquisites. Monetary perquisites are taxable for all employees and non-monetary perquisites are taxable 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elief when salary paid in arrear or advance 3.5.1 Section 89 of the Act provides for relief to an assessee to whom salary is being paid in arrear or advance as a result of which, his total income is assessed at a higher rate than that at which it would otherwise have been assessed. Such an assessee can make an application to the Assessing Officer who shall grant relief in the prescribed manner. Rule 21A of the Rules provide the manner for computation of such relief. 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... responsible for making the payment, to obtain the evidence or proof of the prescribed claims, including claim for set-off of loss. While taking into account the loss from house property, the DDO shall ensure that the employee files the declaration referred to above and encloses therewith a computation of such loss from house property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head "Income from house property" separately for each house property : (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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. However, in case of other lenders, obtaining of PAN or Aadhaar number is mandatory by the DDO. 3.8 Adjustment for excess or shortfall of deduction The provisions of section 192(3) allow the deductor to make adjustments for any excess or shortfall in tax deduction arising out of any previous deduction or failure to deduct during the financial year. 3.9 Salary paid in foreign currency For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the "Telegraphic transfer buying rate" of such currency as on the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 200 of the Act, any person responsible for deducting any sum has to pay within the prescribed time, the sum so deducted to the credit of the Central Government. Rule 30 prescribes time and mode of payment of tax deducted at source to the account of Central Government. 4.3.1 Due dates for payment of TDS Prescribed time of payment/deposit of TDS to the credit of Central Government account is as under : In case of deduction by an office of Government Sl. No. Description Time up to which the tax deducted is 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 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 quarter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dure of furnishing Form 24G is detailed in Annexure III. PAOs/DDOs should go through the FAQs in Annexure IV to understand the correct process to be followed. The ZAO/PAO of Central Government Ministries is responsible for filing of Form No. 24G on monthly basis. The person responsible for filing Form No. 24G in case of State Government Departments is shown at Annexure V. (Note : The TDS book adjustment statement in Form 24G for the month of May 2021, required to be furnished on or before June 15, 2021 under rule 30 was to be furnished on or before June 30, 2021, as per Circular No. 9 of 2021, dated May 20, 2021) 4.4.2 Payment by an income-tax challan (i) In case the payment is made by an income-tax challan, the amount of tax 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 Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther particulars. Rule 31 prescribes that Form 16 should be furnished to the employee by 15th June after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. Through Circular No. 12 of 2021 dated June 25, 2021. the Central Board of Direct taxes extended the due date for furnishing Form 16 for the financial year 2020-21 to the employee up to July 31, 2021. 4.6.2 The certificate in Form 16 shall specify the following ; (a) Valid permanent account number (PAN) or Aadhaar number, as the case may be, of the deductee ; (b) Valid tax deduction and collection account number (TAN) of the deductor ; (c) (i) Book identification number 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.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallan and in item II of Part A if tax is paid accompanied by an income-tax challan. 2. Non-Government deductors are to fill information in item II of Part A. 3. The deductor shall furnish the address of the Commissioner of Income-tax (TDS) having jurisdiction as regards TDS statements of the assessee. 4. If an assessee is employed under one employer only during the year, certificate in Form No. 16 issued for the quarter ending on 31st March of the financial year shall contain the details of tax deducted and deposited for all the quarters of the financial year. 5. (i) if an assessee is employed under 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. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deductee) has to be mentioned in column 328 of Annexure I of Form 24Q. (d) The total amount of salary received from other employer(s) to be quoted in column 337 of Annexure II of Form No. 24Q. (e) Employer is advised to quote Total Taxable Income (Column 346) in Annexure II without rounding-off and TDS should be deducted and reported accordingly i.e. without rounding-off of TDS also. (f) It is mandatory for non-Government deductors to quote PAN. In case of Government deductors, "PANNOTREQD" should be mentioned. (g) Fee paid under section 234E for late filling of TDS statement to be mentioned in separate column of Fee (column 306) (h) In column 308, Government DDOs to mention the amount of TDS remitted by the PAO/TO/CDDO, other deductors to write the exact amount of TDS deposited through challan. (i) In column 309, Government 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so paid, the rate at which tax has been paid and certain other particulars in the amended Form 16. 4.7.3 The obligation cast on the employer under section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a crucial responsibility of the employer, which is expected to he discharged in accordance with law and rules of valuation framed there under. Any false information, fabricated documentation or suppression of requisite information will entail consequences thereof provided under the law. The certificates in Form 16 shall be furnished to the employee by June 15, of the financial year immediately following the financial year in which the income was paid and taxes deducted. Through the Circular No. 12 of 2021, dated June 25, 2021, the due date for furnishing Form 16 for the financial year 2020-21 to the employee was extended 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 certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and delivered as per the provisions of section 200(3) of the Act. 4.8.2 All tax deductors are required to file the TDS statements in Form No. 24Q (for tax deducted from salaries). As the requirement of filing TDS certificates along with the return of income has been done away with, the lack of PAN or Aadhaar number as the case may be, of deductees is creating difficulties in giving credit for the tax deducted, "tax deductors are therefore, advised to procure and quote correct PAN or Aadhaar number, as the case may be of all deductees in the TDS statements for salaries in Form 24Q. Taxpayers are also liable to furnish their correct PAN or Aadhaar number as the case may be, to their deductors. Non-furnishing of PAN or Aadhaar number as the case may be, by the deductee (employee) to the deductor (employer) will result in deduction of TDS at higher rates under section 206AA of the 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 de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction is made (Note : The statement of deduction of tax for the last quarter of the financial year 2020-21 required to be furnished on or before May 31, 2021 under rule 31A of the Income-tax Rules, was extended to June 30, 2021 vide Circular No. 9 of 2021, dated May 20, 2021, which was further extended to July 1, 2021 vide Circular No. 12 of 2021, dated June 25, 2021) 4.10.2 The statements in Form 24Q may be furnished in paper form or electronically under digital signature or along with verification of the statement in Form 27A or verified through an electronic process in accordance with the procedures, formats and standards specified by the Director General of Income-tax (Systems). The procedure for furnishing the e-TDS/TCS statement is detailed at Annexure VI. 4.10.3 Where the deductor is an office of the Government or is the principal officer of a company or is a person who is required to get his accounts audited under 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under section 197 by the Assessing Officer of the payee. 4.14 TPS on Income from Pension 4.14.1 As per section 17(1)(ii) of the Income-tax Act, 1961, the term "Salary" includes pension. In the case of pensioners who receive their pension (not being family pension paid to a spouse) 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, subscription to certain equity shares or debentures, 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 (11CVL)-/92), dated the April 27, 1992, and, these instructions should be followed by all the branches of the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidential status of the recipient. 4.15.2 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Explanation to section 9(1)(ii) of the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India. 4.15.3 Where non-residents are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he/she has already left India and has no bank account in India by the time the assessment orders are passed, the refund can be issued to the employer as the tax has been borne by it [Circular No. 707, dated July 11, 1995]. 5. Computation of income under the head "Salaries" 5.1 Income chargeable under the head "Salaries" (1) The following income shall be chargeable to income-tax under the head "Salaries" : (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not ; (b) any salary paid or allowed to him in the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation so provided is taken on lease/ rent by the employer : The value of perquisite is lower of the two : (i) 15% of the salary or (ii) the actual amount of lease rental paid or payable by the employer, as reduced by any amount of rent actually paid by the employee. For the purpose of calculation of value of perquisite under rule 3, the term "Salary" includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but docs not include the following : (a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned ; (b) employer's contribution to the provident fund account of the employee : (c) allowances which are exempted from payment of tax ; (d) the value of perquisites specified in clause (2) of section 17 of the Income-tax Act ; (e) any payment or expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) or proviso to clause (2) of section 17 ; (f) lump-sum payments received at the time of termination of service or superannuation or volunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of perquisite shall be determined on the basis of lower of the following two : 1. 24% of salary paid or payable in respect of period during which the accommodation is provided ; or 2. Actual charges paid or payable to such hotel, for the period during which such accommodation is provided as reduced by any rent actually paid or payable by the employee. However, nothing in para (c) above shall be taxable if the hotel accommodation is provided for a total period not exceeding in aggregate 15 days on transfer of an employee from one place to another place. It may be clarified that while services provided as an integral part of the accommodation, need not be valued separately as perquisite, any other services over and above that for which the employer makes payment or reimburses the employee shall be valued as a perquisite as per the residual clause. In other words, composite tariff for accommodation will be valued as per the Rules and any other charges for other facilities provided by the hotel will be separately valued under the residual clause. (d) However, the value of any accommodation provided to an employee working at a mining site or an on-shore oil exploration site ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he motor car exceeds 1.6 litres. * the expenses on maintenance and running of motor car for such private or personal use are fully met by the employee, the value of perquisite will be Rs. 600 (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. However, the value of perquisite will be Rs. 900 (plus Rs. 900. If chauffeur is also provided) per month if the cubic capacity of engine of the motor car exceeds 1.6 litres, (II) If the motor car is owned by the employee but the actual running and maintenance charges (including remuneration of chauffeur, if any) are met or reimbursed by the employer, and (a) Such reimbursement is for the use of vehicle wholly and exclusively for official purposes, the value of perquisites shall be 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 official purposes ; * The employer gives a certificate that the expenditure was incurred wholly and exclusively for performance of off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the amount calculated in respect of the other car or cars as if he had been provided with such car exclusively for his private or personal purposes. The normal wear and tear of the motor shall be taken at 10% per annum of the actual cost of the motor car. (C) Personal attendants etc. (rule 3(3)) : The value of benefit of all personal attendants including a sweeper, gardener and a watchman shall be the 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. (D) Gas, electricity A water for household consumption (rule 3(4)) : The value of benefit in the nature of gas, electricity and water shall be the amount paid by the employer to the agency supplying gas, electricity and water. Where the supply is made from the employer's own resources, the manufacturing cost per unit incurred by the employer would be taken for the valuation of perquisite. Any amount paid by the employee for such facilities or ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per annum by the State Bank of India as on the 1st day of the relevant financial year in respect of loans of same type and for the same purpose advanced by it to the general public.Perquisite value would be calculated on the basis of the maximum outstanding 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, for loans up to Rs. 20,000 in the aggregate no value would be charged. Loans for medical treatment of diseases 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. (H) Perquisite on account of travelling, touring, accommodation and any other expenses paid for or reimbursed by the employer for any holiday availed [rule 3(7)(ii)] The value of perquisite on account of travelling, touring, accommodation and any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such gift may be received by the employee or member of his/her household shall be the sum equal to the amount of such gift. However, in case the gift, etc is less than Rs. 5,000 in aggregate per annum, the value of perquisite shall be Nil. (K) Membership fees and annual fees (rule 3(7)(v)) Any membership fees and annual fees incurred by the employee (or any member of his/her household), which is charged to a credit card (including any add-on card) provided by the employer, or otherwise, paid for or reimbursed by the employer is taxable on the following basis : Amount of expenditure incurred by the employer xxx Less : Expenditure on use for official purposes xxx Less : Amount, if any, recovered from the employee xxx xxx Amount taxable as perquisite xxx However, if the amount is incurred wholly and exclusively for official purposes it will be exempt if the following conditions are fulfilled : (i) Complete details of such expense, including date and nature of expenditure, is maintained by the employer. (ii) Employer gives a certificate that the same was incurred wholly and exclusively for official purpose. (L) Club expenditure [rule 3(7)(vi)] The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding a mobile phone actually incurred on behalf of the employee by the employer, the value shall be Nil. In paras (A) to (N) above, the phrase "member of household" shall include-- (a) spouse(s), (b) children and their spouses, (c) parents, (d) servants and dependents. Medical Reimbursement by the employer : As per the amendment vide Finance Act, 2018 the total amount of medical reimbursement is to be taken as perquisite under section 17(2). It is further clarified that the method regarding valuation of perquisites is given in section 17(2) of the Act and in rule 3 of the Rules. The deductors may look into the above provisions carefully before they determine the perquisite value for deduction purposes. In this regard, in view of the Covid-19 pandemic, vide press release dated June 25, 2021, it has been announced to provide income-tax exemption to the amount received by a taxpayer from employer or any other person for treatment of Covid-19 during the financial year 2019-20 and subsequent assessment years. Further, through the same press release, it was also announced to provide income-tax exemption to ex-gratia payment received by family members of a person from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequent assessment years. 5.3 Incomes not included under the head "Salaries" (exemptions) Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of section 192 of the Act 53.1 The value of any travel concession or assistance received by or due to an employee from his employer or former employer for self and his/her family, in connection with proceeding on (a) leave to any place in India or (b) after 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 ease exceed the amount of expenses actually incurred for the purpose of such travel. As discussed in para 4.6.5 section 192(2D) read with the rule 26C makes it mandatory for the DDO to obtain details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of his retirement, whether on superannuation or otherwise, is exempt under section 10(10AA)(i) of the Act. In the case of employees other than Government employees, this exemption will be determined with reference to the leave to their credit at the time of retirement on superannuation or otherwise, subject to a maximum of ten months' leave, calculated on the basis of the average salary drawn during ten months immediately preceding retirement on superannuation or otherwise. The entitlement of earned leave shall not exceed 30 days for every year of actual service rendered. This exemption will be further limited to the maximum amount specified by the Government of India Notification No. S. O. 588(E), dated May 31, 2002 at Rs. 3,00,000 in relation to such employees who retire, whether on superannuation or otherwise, after April 1, 1998. As per section 10(10AA)(ii), the exemption in respect of leave encashment in case of a non-Government employee at the time of retirement will be lower of the following amounts : * Period of earned leave standing to the credit in the employee's account at the time of retirement × average monthly salary. * Average monthly salary × ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciety : (f) A university established or incorporated or under a Central, State or Provincial Act, or, an Institution declared to be a University under section 3 of the University Grants Commission Act, 1956 : (g) Any Indian Institute of Technology within the meaning of section 3(g) of the Institute of Technology Act, 1961 ; (h) Any State Government ; or (i) The Central Government ; or (j) Such Institute of Management as the Central Government may by notification in the Official Gazette, specify in this behalf. The exemption of amount received under VRS has been extended to employees of the Central Government and State Government and employees of notified institutions having importance throughout India or any State or States. It may also he noted that where this exemption has been allowed to any employee for any assessment year, it shall not be allowed to him for any other assessment year. Further, if relief has been allowed under section 89 for any assessment year in respect of amount received on voluntary retirement or superannuation, no exemption under section 10(10C) shall be available. 5.3.7 Any sum received under a Life Insurance Policy [section 10(10D)], includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the scheme shall be exempt. Under section 10(12B) of the Act, any payment from the National Pension System Trust to an employee under the pension scheme referred to in section 80CCD, on partial withdrawal made out of his account in accordance with the terms and conditions, specified under the Pension Fund regulatory and Development Authority Act, 2013 and the regulation made thereunder, to the extent it does not exceed twenty-five per cent. of the amount of contribution made by him shall be exempt. 5.3.8 Any payment from a Provident Fund to which the Provident Funds Act, 1925, applies or from any other provident fund set up by the Central Government and notified by it in the Official Gazette, is exempt under section 10(11). First proviso to clause (11) of section 10, with effect from April 1, 2022, provides that exemption under said clause will not be available in case of an 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he least of the following : In Mumbai/Delhi/Kolkata/Chennai In Any other cities 1. Allowance actually received 1. Allowance actually received 2. Rent paid in excess of 10% of salary 2. Rent paid in excess of 10% of salary 3. 50 percent of salary 3. 40 percent of salary 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. 5.3.11 Section 10(14) provides for exemption of the following allowances : (i) Any special allowance or benefit granted to an employee to meet the expenses wholly, necessarily and exclusively incurred in the performance of his duties as prescribed under rule 2BB subject to the extent to which such expenses are actually incurred for that purpose. (ii) Any allowance granted to an employee either to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. 5.3.14 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 "Malta Vir Chakra" or "Vir Chakra" or such other gallantry award as may be specifically notified by the Central Government. Family pension received by any member of the family of such individual is also exempt [Notifications No. S. O. 1948(E) dated November 24, 2000 and 81(E) dated January 29, 2001. which are enclosed as per Annexure VIII and IX]. Family for this purpose shall have the meaning assigned to it in section 10(5) of the Act. DDO may not deduct any tax in the case of recipients of such awards after satisfying himself about the veracity of the claim. 5.3.15 Under section 17 of the Act exemption from tax will also be available in respect of : The following shall not be included under the perquisites : (a) the value of any medical treatment provided to an employee or any member of his/her family in any hospital maintained by the employer ; (b) any sum paid by the employer on medical expenditure incurred by the employee on self or any member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tour expenses as prescribed, medical facilities subject to conditions. 5.3.16 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 on tour or 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. 5.3.17 Vide Notification No. G.S.R. 415(E), dated June 26, 2020, rule 2BB has been amended so as to provide that in case of an assessee opting for concessional taxation regime under section 115BAC of the Act shall be entitled exemption only in respect of the following allowances : (a) Transport allowance granted to an employee who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities to meet expenditure for the purpose of commuting between place of his residence and place of his duty ; (b) Any allowance granted to meet the cost of travel on tour or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity ; (3) Any sum deducted from the salary payable by, or on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary. (4) Any contribution made : (a) by an individual to any provident fund to which the Provident Fund Act, 1925 applies ; (b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children ; [The Central Government has since notified public provident fund vide Notification S.O. No. 1559(E), dated November 3, 2005] (c) by an employee to a recognized provident fund ; (d) by an employee to an approved superannuation fund ; It may be noted that "contribution" to any fund shall not include any sums in repayment of loan or advance. (5) Any sum paid or deposited during the year as a subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (8) Any subscription made to any units of any mutual fund, of section 10(23D), or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf ; [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E), dated November 3, 2005] The investments made after April 1, 2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C. (9) Any contribution made by an individual to any pension fund set up by any mutual fund referred to in section 10(23D), or by the Administrator or the specified company defined in Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002, as the Central Government may by notification in the Official Gazette, specify in this behalf : [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act. Payment towards the purchase of house property shall include the stamp duty, registration fee and other expenses but shall not cover admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property. Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he/she receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xvi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion Fund Regulatory and Development Authority Act, 2013 (23 of 2013). B. Section 80C(3) and 80C(3A) states that in case of Insurance Policy other than contract for a deferred annuity the amount of any premium or other payment made is restricted to : Policy issued before 1st April, 2012 20 per cent. of the actual capital sum assured Policy issued on or after 1st April, 2012 10 per cent. of the actual capital sum assured Policy issued on or after 1st April, 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 rules made under section 80DDB 15 per cent. of the actual capital sum assured *Introduced by the Finance Act, 2013. Actual capital sum assured in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account-- (i) the value of any premium agreed to be returned ; or (ii) any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person. 5.5.2 Deduction in respect of contri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The deduction of Rs. 50,000 shall be allowed whether or not any deduction is allowed under sub-section (1), However, the same amount cannot be claimed both under sub-section (1) and sub-section (1B) of section 80CCD. As per section 80CCD(2), where any contribution in the said pension scheme is made by 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 14% if the amount is contributed by the Central Government of his salary, and 10% in case of contribution by any other employer. As per section 80CCD(3), any amount standing to the credit of the assessee in his account referred to in sub-section (1) or sub-section (1B), in respect of which a deduction has been allowed under those sub-sections or sub-section (2), together with the amount accrued thereon, if any, is received by the assessee or his nominee, in whole or in part, on account of closure or his opting out of the pension scheme or as pension received from the annuity plan purchased or taken on such closure or opting out. the whole of the amount shall be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75,000 1,00,000 *Includes (i) contribution to the Central Government Health Scheme/notified scheme for self and family ; and (ii) amount paid for preventive health check-up up to Rs. 5,000. **Allowable only if no amount is paid for medical insurance. Note 1 : The payment for preventive health check-up can be made either in cash or in any other mode, whereas payment other than preventive health checkup can be made only in non-cash mode. Note 2 : Finance Act, 2018 amended section 80D of the Act to provide that in case of single premium health insurance policy having cover of more than one year, the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the monetary limits specified above. Here, (i) "family" means the spouse and dependent children of the employee. (ii) "Senior citizen" means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year. 1. The DDO must ensure that the medical insurance referred to above shall be in accordance with a scheme made in this behalf by-- (a) the General Insurance Corporation of India formed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deceases 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. The assessee, claiming a deduction shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139 in the assessment year in which the deduction is claimed. However, no deduction shall be allowed for any assessment year relating to any previous year beginning after the expiry of the previous year during which the said certificate of disability had expired, unless a new certificate in the prescribed form and manner, is obtained. b. 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 Rs. 75,000. However, where such individual is a person with sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Disabilities (Equal Opportunities. Protection of Rights and Full Participation) Act, 1995 or such other medical authority as may, by notification, be specified by the Central Government for certifying "autism", "cerebral palsy", "multiple disabilities", "person with disability" and "severe disability" referred to in clauses (a), (c), (h), (i) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 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 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 ; (g) "Person with severe disability" means-- (i) a person with eighty per cent. or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 ; or (ii) a person with severe disability referred to in claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed in computing the total income for the financial year in which the employee starts paying the interest on the loan taken and immediately succeeding seven financial years or until the financial year in which the interest is paid in full by the employee, whichever is earlier. For the purpose of this section-- (a) "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority section 10(23C), or an institution referred to in section 80G(2)(a) ; (b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act) ; or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf ; (c) "higher education" means any course of study 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehicle and has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy ; (b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act and includes any deposit taking non-banking financial company or a systemically important non-deposit taking non-banking financial company as defined in clauses (e) and (g) of Explanation 4 to section 43B. 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. 5.5.10 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 organizat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 rent. 5.5.12 Deductions in respect of certain donations for scientific research or rural development (section 80GGA) : Section 80GGA allows deduction from total income of employee in respect of donations of any sum as given in the Table below : Sl. No. Donations made to persons Approval/Notification under section Authority granting approval/Notification 1. 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 under section 35(1)(ii) Central Government 2. 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 under section 35(1)(iii) Central Government 3. An association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upees. The deduction is available if such savings account is maintained in a-- (a) banking company to which the Ranking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act) ; (b) co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank) ; or (c) Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898. For this section, "time deposits" means the deposits repayable on expiry of fixed periods. 5.5.14 Deduction in respect of interest on deposits in case of senior citizens (section 80TTB) : Section 80TTB introduced by the Finance Act, 2018 allows deduction to a senior citizen from his gross total income in respect of income by way of interest on deposits with-- (a) banking company to which the Banking Regulation Act, 1949. applies (including any bank or banking institution referred to in section 51 of that Act) ; (b) co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank) ; or (c) a Post o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the preceding three years or during the period, if that period is less than three years, when he/she 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 fund ceases to be an approved Superannuation fund. 7.3 As per section 192A of the Act, with effect from June 1, 2015 the trustees of the EPF Scheme, 1952 framed under section 5 of the EPF and Misc. Provisions Act, 1952 or any person authorized under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognized provident fund is includible in his total income owing to the provisions of rule 8 of Part A of Fourth Schedule not being applicable at the time of payment of accumulated balance due to the employee, deduct income-tax thereon at 10% if the amount of such payment or aggregate of such payment exceeds Rs 50,000. In case the employee does not provide his/her PAN or Aadhaar number as the case may be, or provides an invalid PAN or Aadhaar number as the ease may be, then the deduction will have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the DDOs shall allow income-tax exemption as referred to in para 5.3.1 after, obtaining copies of invoices of specified expenditure incurred during the specified period. 9. Calculation of income-tax to be deducted 9.1 Salary income for the purpose of section 192 shall be computed as follow :-- (a) First compute the gross salary as mentioned in para 5.1 including all the incomes mentioned in para 5.2 and excluding the income mentioned in para 5.3. (b) Allow deductions mentioned in para 5.4 from the figure arrived at (a) above and compute the amount to arrive at net salary of the employee (c) Add income from all other heads--"House property". "Profits and gains of Business or Profession". Capital gains and Income from other Sources to arrive at the gross total income as shown in the form of simple statement mentioned para 3.6. However, it may be remembered that no loss under any such head is allowable by DDO other than loss under the head "Income from house property" to the extent of Rs. 2.00 lakhs, (d) Allow deductions mentioned in para 5.5 from the figure arrived at (c) above ensuring that the relevant conditions are satisfied. The aggregate of the deductions s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty years and having gross salary income of: i) Rs.2,50,000/- ii) Rs.6,00,000/- iii) Rs.10,50,000/- iv) Rs.55,50,000/-, and v) Rs.1,10,50,000/- (A) 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) Rupees (iv) Rupees (v) Gross Salary Income (including allowances) 2,50,000 6,00,000 10,50,000 55,50,000 1,10,50,000 Contribution of G.P.F. 45,000 50,000 1,00,000 1,00,000 1,00,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Rupees (iii) Rupees (iv) Rupees (v) Gross Salary 2,50,000 6,00,000 10,50,000 55,50,000 1,10,50,000 Less: Standard deduction u/s 16 (ia) 50000 50000 50000 50000 50000 Less: Deduction U/s 80C 45,000 50,000 1,00,000 1,00,000 1,00,000 Taxable Income 1,55,000 5,00,000 9,00,000 54,00,000 1,09,00,000 (A) Tax thereon Nil Nil* 92,500 14,32,500 30,82,500 Surcharge 1,43,250 4,62,375 Add: Health & Education Cess@ 4%. Nil Nil 3700 63,030 1,41,795 Total tax payable Nil Nil 96,200 16,38,780 36,86,670 @ or Aadhaar number, as the case may be, * After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,55,000 2 Add: Perquisite in respect of reimbursement of Medical Expenses 35,000 3 Less: Standard deduction u/s 16(ia) 50,000 4 Income from Other Sources i) Interest Income on Savings Account Rs.8,000 ii) Interest Income on Time Deposit Rs.15,000 23,000 5 Gross Total Income 5,63,000 6 a. 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.30,000/- Total = Rs.1,55,000/- Restricted to Rs. 1,50,000/- b. Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 10,000/- - available only on Savings account interest) Rs.8000 Total deduction available Rs.1,58,000/- 1,58,000/- 7 Total Income 4,05,000 8 Income Tax thereon/payable (includes Rebate of Rs.12500 as per Section 87A) Nil* 9 Add: Health & Education Cess @ 4%. Nil 10 Total Income Tax payable 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 4 For Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance 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 Valuation of perquisites 4(a) Perquisite for flat (Cities having population>25 lakh as per 2001 census) 15% of salary for 10 months=Rs. 1,05,000/- 1,38,600 4(b) Perquisite for hotel: Lower of (24% of salary of 2 months=Rs 33,600) and (actual payment=Rs 1,00,000) i.e. Rs 33,600 4(c) Perquisites for furniture @ 10% of cost (10% of Rs. 2,00,000) Rs.20,000 4(c)(i) Total of [4(a)+4(b)+(c)] (1,05,000+33,600+20,000) = Rs.158,600 Less: rent recovered: (-) Rs.60,000 = Rs.98,600 4(d) Add: Perquisite for free gas, electricity, water etc. Rs.40,000 (+) Rs.98,600 [4(c)(i)] = Rs.1,38,600 Total perquisites 5 Gross Total Income (Rs.8,40,000+1,38,600) 9,78,600 6 Less: Standard deduction u/s 16(ia) 50,000 7 Gross Total Income 9,28,600 8 Less: Deduction U/s 80C: (i). Provident Fund (80C): 42,000 (ii) LIC (80C): 10,000 (iii) Subscription to Unit Linked Insurance Plan(80C): 50,000/- Total = 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 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) Rupees (ii) Rupees (iii) Gross Pension 5,00,000 8,50,000 50,000 Less: Standard deduction u/s 16 (ia) 50,000 50,000 50,000 Less: Deduction U/s 80C 70,000 1,00,000 1,50,000 Taxable Income 3,80,000 7,00,000 11,00,000 Tax thereon (includes Rebate as Section 87A) Nil 50,000 1,40,000 Add: Health & Education Cess @ 4%. Nil 2,000 5,600 Total tax payable Nil 52,000 1,45,600 @ 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 8 For Assessment Year 2022-23 A. Calculation of Income tax in the case of a retired employee above the age of 80 years and having gross pension of: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2021 @ 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/constructed with borrowed capital on or after 1.4.1999 and such acquisition/construction computed within five years from the end of FY in which capital was borrowed. Nil Less: Interest on HDFC Loan (upto Rs.2,00,000) 2,00,000(-) 2,00,000 Gross Total Income 4,80,600 Less: Deduction u/s 80 C - GPF@ Rs 4,700/-p.m 56,400 - CGEGIS @ Rs 500/- p.m 6,000 - Life Insurance Premium 10,500 - Repayment of HDFC Loan 95,000 - Deposit in Public provident Fund 10,000 1,77,900 1,50,000 Restricted to a maximum of Taxable Income 3,30,600 Computation of Tax Liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;……...........(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) Permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Officer, etc. in case of payment of TDS by Book Entry. 1. Procedure of preparation and furnishing Form 24G at TIN-Facilitation Centres (TIN-FCs): The Form 24G should be prepared by the PAO/DTO/CDDO (hereinafter referred to as AOs) as per the data structure (File format) prescribed by the DIT (Systems), Delhi which is available on TIN website www.tin-nsdl.com. The AOs can prepare Form 24G either by using in-house facilities, third party software or by using form 24G Return Preparation Utility (RPU) developed by NSDL e-Governance Infrastructure Limited (NSDL), which is freely downloadable from the TIN web-site www.tin-nsdl.com. After preparation of form 24G, the AO is required to validate the same by using the Form 24G File Validation Utility (FVU) which is freely available on TIN website. Once file is validated through FVU, 'fvu file' in CD/DVD/Pen Drive along with physical Statement Statistic Report (SSR) signed by the AO, to be furnished at TIN-FCs. On successful acceptance of 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. Book identification Number (BIN) is generated fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrection form 24G is in line with regular form 24G. The validated Form 24G correction file (.fvu file) can be uploaded online through AO account at TIN website. For correction Form 24G accepted at TIN central system, an online acknowledgement containing a 15 digit token number is generated and displayed to the AO. The format of the acknowledgement is identical to the one issued by the TIN-FC. There is no need to submit SSR and provisional receipt of original form 24G in online upload. 2. For FAQs and further details, AOs are advised to log on TIN website www.tin-nsdl.com ****** ANNEXURE IV Furnishing of Monthly Form No. 24G Statements by Pay and Accounts Officers (PAOs)/District Treasury Officers (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/DTO or an equivalent office of the government (herein a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted through Form 24G? Every AO should furnish one complete, correct and consolidated Form 24G every month having details of each type of deduction / collection separately viz. TDS-SaIary / TDS-Non Salary / TDS-Non Salary Non Residents / TCS made by each DDO under his jurisdiction. 7. Where should Form 24G be submitted? Form 24G is to be furnished only in electronic form in a CD/pen drive at TIN-FCs or online through AO Account at www.tin-nsdl.com web portal. The facility to submit Form No. 24G online is available free of cost. Provisional Receipt Number (PRN) is issued as an acknowledgement of the receipt of Form 24G. 8. How to register for online facility? Registration for AO Account is mandatory for filing Form No. 24G online through TIN website, www.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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reparation Utility can be freely downloaded from www-tin-nsdl.com. After downloading, it needs to be saved on the local disk of the machine. 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 Form 24G Preparation Utility is being installed. JRE is freely downloadable from http://java.sun.com and http://www.ibm.com/developrworks/java/jdk or you can ask your computer vendor (hardware) to install the same for you. Form 24G Preparation Utility can be executed on Windows platform(s) Win 2K Prof. / Win 2K Server/ Win NT 4.0 Server/ Win XP Prof. To run the _Form 24G Preparation Utility', click 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 "HeIp" in the Form 24G Prepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form of Form 24G in html format. It contains all the details of Accounts Officer as well as Drawing and Disbursement Officer. There is no need to submit this file, 18. Can the Form 24G Statement be corrected? Every Form 24G is to be prepared in accordance with the data structure prescribed by the Income Tax Department (ITD). If it does not confirm to the new data structure it will be rejected by TIN. As per procedure, statements relating to Form 24G should be complete and correct. No fragmented statements are expected to be filed (i.e. separate statements giving details for deductions under different form type with respect to the same AIN, FY and month). However, any mistake made in an original accepted statement can be rectified by submitting a 'correction statemen'. 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 furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber is a seven digit unique number generated on successful acceptance of Form 24G. (ii) DDO Serial Number: It is a five digit unique number generated for every DDO transaction reported in Form 24G statement. (iii) Transfer Voucher Date: It is the last date of month for which Form 24G statement is filed. BIN is required to be disseminated to the respective DDOs who in turn are required to report the same in the TDS/TCS Statement. The quoting of BIN has been made mandatory w.e.f 01st February, 2012. BIN is a unique number to verify the claim of TDS deposited without production of challan. As it is a verification key, it is advised that valid BIN disseminated by AO to the 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. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o track status of the filed Form No. 24G through TIN website. v. To download Book Identification Number (BIN) generated on the basis of 24G statement. vi. To disseminate BIN to the respective DDOs. 29. What are the duties of 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. iv. Filing of TDS/TCS statement (24Q, 26Q etc) within the due date. v. To download Form 16/26A from TRACES website (www.tdscpc.gov.in) and timely issuance of the same to the deductees. 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 for verification purpose. (b) Any wrong information rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce file is validated through FVU, _.fvu file' is generated. Copy of this _.fvu file' in CD/DVD/Pen Drive along with physical Form 27A duly filled and signed by the Deductor/DDO or by the person authorized by the Deductor/DDO, to be furnished at TIN-FC, an acknowledgement containing a unique 15 digit token number is provided to the Deductor/DDO. Deductor/DDO can view the status of e-TDS statement/return on TIN website. Only one regular e-TDS statement/return for a _FY-Quarter-TAN -Form' can be submitted. 2.1 Correction in e-TDS statements/returns: 1.1.1 CPC-TDS portal (wsvw.tdscpg.gov.in) has also introduced online correction of statements whereby personal information, PAN correction, add/update of challan information, add/update of salary detail, add/update/movement of deductee row etc. can be done in the statements filed by the deductors, with or without the digital signatures. For further details, kindly refer the matrix below: Default Summary Vie Default Summary View w Personal information Challan Correction (Unmatched, Matched Deduetee+ Deductee Movement PAN Correction (Annex-I) PAN Correction (Annex-II) Add ChalIan to statement Interest Levy Payment Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns: The physical TDS statement/return is to be filed again in ease of any correction to a physical TDS statement/return accepted at TIN. The deductor will submit the duly filled and signed physical TDS statement/return along with a copy of provisional receipt of regular paper statement/return at TIN-FC. On successful acceptance of correction paper statement/return at the TIN-FC, an acknowledgement containing a unique 15 digit token number is provided to the Deductor/DDO. Deductor/DDO can view the status of paper statement/return on TIN website. 5. Procedure of furnishing of e-TDS statement/return online at TIN website: Deductor/DDO is required to procure Digital Signature Certificate (DSC) for online upload of e-TDS statement/return. After registration on TIN website, an authorization letter by the Deductor/DDO should be provided on the letterhe/shead of the organisation to NSDL. Once application is approved by NSDL, user ID is created and intimated to Deductor/DDO on their registered email ID provided at the time of 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 use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution form the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a non-withdrawable pension tier-I account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service. ii. In addition to the above pension account, each individual may also have a voluntary tier-II withdrawable account at his option. This option is given as GPF will be withdrawn for new recruits in Central government service. Government will make no contribution into this account. These assets would be managed through exactly the above procedures. However, the employee would be free to withdraw part or all of the 'second tier' of his money anytime. This withdrawable account does not constitute pension investment, and would attract no special tax treatment. iii. Individuals can normally exit at or after age 60 years for tier-I of the pension system. At the exit the individual would be mandatorily required to invest 40 percent of pension wealth to purchase an annuity (from an IRDA- regulated life insurance company). In case of Government employees the annuit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Gallantry When awarded for acts of courage or conspicuous gallantry and supported by certificate issued to this effect by the lasthe/Shead of Department. 13. President's Police & Fire Services Medal for Gallantry -do- 14. President's Fire Services Medal for Gallantry -do- 15. President's Home Guards and Civil Defence Medal for Gallantry -do- 16. Home Guard and Civil Defence Medal for Gallantry -do- (Notification no. 1156/F.No. 142/29/99-TPL) T.K. SHAH Director ANNEXURE IX MINISTRY OF FINANCE Department of Revenue Central Board of Direct Taxes New Delhi, the 29th January, 2001 S.O.81 (E) - In exercise of the powers conferred by sub-clause (i) of clause (18) of Section 10 of the Income --tax Act, 1961 (43 of 1961)), the Central Government, he/shereby specifies the gallantry awards for the purposes of the said Section and for that purpose makes the following amendment in the notification of the Government of India in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number S.O. 1048(E), dated the 24th November 2000, namely:- In the said notification, in the Table, against serial numbers 1,2 and 3 under column (3) rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;……………………….. …………………………………. Assessment Year Period with the Employer From To City …………………….. Pin Code ……………………… Summary of amount paid/credited and tax deducted at source thereon in respect of the employee Quarter(s) Receipt Numbers of original quarterly statement of TDS under sub-section (3) of Section 200 Amount paid/credited Amount of tax deducted (Rs.) Amount of tax deposited/remitted (Rs.) Total (Rs.) 1. DETAILS OF TAX DEDUCTED AND DEPOSITED IN THE CENTRAL GOVERNMENT ACCOUNT THROUGH BOOK ADJUSTMENT (the deductor to provide payment wise details of tax deducted and deposited with respect to the deductee) Sl. No. Tax Deposited in respect of the deductee (Rs.) Book Identification Number (BIN) Receipt numbers of Form No. 24G DDO serial number in Form No. 24G Date of transfer voucher dd/mm/yyyy Status of matching with Form No. 24G Total (Rs.) II. DETAILS OF TAX DEDUCTED AND DEPOSITED IN TH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. … (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 offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellip; 15. Surcharge, wherever applicable Rs. … 16. Health and education cess @ 4% Rs. … 17. Tax payable (13+15+16-14) Rs. … 18. Less: Relief under section 89 (attach details) Rs. … 19. Net tax payable (17-18) Rs. … Verification I, ………………………., son/daughter of ……………………….. working in the capacity of ………………………. (designation) do hereby certify that the information given above is true, complete and correct and is based on the books of account, documents, TDS Statements, and Other available records. (Signature Of person responsible for deduction of tax) Full Name : ………………………… Place …………………………… Date …………………………… Annexure II In relation to specified senior citizen for tax deduction under section 194P A Whether opting for taxat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision(s) of Chapter VI-A Rs. … Rs. … Rs. … 9. Aggregate Of deductible amount under Chapter VI-A [8(a)+ 8(b)+ 8(c)+ 8(d)+ 8(e)+ 8(f)+ 8(g)+ 8(h)+ 8(i)] Rs. … 10. Total taxable income (7-9) Rs. … 11. Tax on total income Rs. … 12. Rebate under section 87A, if applicable Rs. … 13. Surcharge. wherever applicable Rs. … 14. Health and education cess Rs. … 15. Tax payable (11+13+14-12) Rs. … 16. Less: Relief under section 89 (attach details) Rs. … 17. Net tax payable (16-17) Rs. … Verification I, ……………………………, son/daughter of …………………………. working in the capacity of ………………………… (designation) do hereby certify that the information given above is true, complete and correct and is based on the books of account, documents, TDS statements, and other available records. Place ……………………………&hellip ..... X X X X Extracts X X X X X X X X Extracts X X X X
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