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TMI BlogINCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2022-23 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.X X X X Extracts X X X X X X X X Extracts X X X X ..... levant 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 assessee in the previous year, whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 employer in respect of any obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s included in total income; and (viii) the value of any other fringe benefit or amenity as prescribed in Rule 3. However, the following are not included as perquisite,- (i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer; (ii) 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- (a) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees; (b) in respect of the prescribed diseases or ailments, in any hospital approved by the Principal Chief Commissioner or Chief Commissioner having regard to the prescribed guidelines; [(c) in respect of any illness relating to COVID-19 subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf. This has been inserted as amendment through Finance Act 2022 with retrospective effect from 01.04.2020 and thus accordingly, applies in relation to the assessment year 2020-2021 and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the total income does not exceed Rs. 3,00,000/- Nil; 2 Where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000/- 5 per cent of the amount by which the total income exceeds Rs. 3,00,000/-; 3 Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- Rs. 10,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-; 4 Where the total income exceeds Rs. 10,00,000/- Rs. 1,10,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/- C. In case of every individual, being a resident in India, who is of the age of eighty years or more at any time during the financial year: Sl No Total Income Rate of tax 1 Where the total income does not exceed Rs. 5,00,000/- Nil; 2 Where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000/- 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-; 4 Where the total income exceeds Rs. 10,00,000/- Rs. 1,00,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-. 2.2 Surcharge on Income-tax The amount of Income-tax computed in accordance with the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the total amount payable as income-tax on a total income of fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees; (b) one crore rupees but does not exceed two crore rupees, the total amount payable as incometax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees; (c) two crore rupees but does not exceed five crore rupees, the total amount payable as incometax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees; (d) five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees. 2.3 Health and Education Cess The amount of Income tax as increased by the applicable surcharge shall be further increased by an additional surcharge, for the purposes of Union, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om business or profession. 3. Section 192 of the 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 estimated income of the assessee under the head "Salaries" for the financial year 2022-23. The income-tax is required to be calculated on the basis of the rates given in para 2 above, subject to the provisions related to requirement to furnish PAN or Aadhaar number, as the case may be, as per sec 206AA of the Act, and TDS u/s 192 shall be deducted at the time of each payment. The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee. It may be noted that tax liability may not be the same in case the employee opts for concessional tax regime under section 115BAC of the Act. As per section 192(1C) of the Act, a person, being an eligible start-up referred to in section 80IAC, responsible for paying any income to the assessee being perquisite of the nature specified in sub-clause (vi) of clause (2) of Section 17 in any previous year relevant to As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 income in the nature of non-monetary perquisites, mentioned in para 3.2 above, tax payable is to be determined by calculating the average rate of tax on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself. Illustration: The income chargeable under the head "salaries" of an employee below sixty years of age during the Financial Year 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 1/04/2010 (AY 2010-11), no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in section 10(10C)(i) (read with Rule 2BA), a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 houses 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 1 Repair or renewal or reconstruction of the house Any time Rs. 30,000/- 2 Acquisition or construction of the house Before 01.04.1999 Rs. 30,000/- 3 Acquisition or construction of the house On or after 01.04.1999 Rs. 1,50,000/- (upto AY 2014-15) Rs. 2,00,000/- (w. e. f. AY 2015-16) 444 Aggregate deduction of Sl. 1 and Sl. 3 of the table above shall not exceed Rs.2,00,000/- from the Financial Year 2019-20. In case of Serial No. 3 above: (a) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible 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 person treated as an agent under section 163. 4.1 Tax Deduction at Source The concept of Tax deduction at Source (TDS) was introduced with an aim to collect tax from the source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax on perquisites opted to be deposited by the employer 7th day of 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 of the 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 u/ s 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 Cheque Drawing and Disbursing Officer or any other person, by whatever name called, to whom the deductor reports about the tax deducted and who is responsible for crediting such sum to the credit of the Central Government, shall‐ (a) submit a statement in Form No. 24G under section 200 (2A) on o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llan (Rule125). 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 & Prosecution for Failure to Deposit Tax Deducted 4.5.1 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 assessee-in-default in respect of such tax in accordance with the provisions of section 201, and shall also be liable to penal action u/s 221 of the Act. Further Section 201(1A) provides that such person shall be liable to pay simple interest at the rate of one per cent for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and at the rate of one and one-half percent for every month or part of a month on the amount of such tax from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment; (ii) Challan identification number or numbers (CIN*) in case of payment through bank. (*CIN means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and challan serial number given by the bank.) (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 04/2013 dated 17-04-2013 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 after due authentication and verification along with the Part A of the Form No. 16. 4.6.4 It may be note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 (Form16) 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 are advised to ensure in Form 16 that the status of "matching" with respect to "Form 24G/OLTAS" i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. m. Permanent Account Number of landlord shall be mandatorily furnished where the aggregate rent paid during the previous year exceeds one lakh rupees. n. Permanent Account Number of lender shall be mandatorily furnished where the housing loan, on which interest is paid, is taken from a person other than a Financial Institution or the Employer. 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), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof provided under the law. The certificates in Forms 16 and Form 12BA specified above, shall be furnished to the employee by 15th June of the financial year immediately following the financial year in which the income was paid and taxes deducted. If he/she 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.500 /- 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 u/s 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-occupied house property, etc. is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnish 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 per cent 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 u/s 192 is below taxable limit, no tax will be deducted. But where the income of the employee computed for TDS u/s 192 is above taxable limit, the deductor will calculate the average rate of income- tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to be deducted at the average rate. 4.10 Statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) of the Act Under section 234E of the Act, if a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) in respect of tax deducted at source [on or after 1.07.2012] 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 furnishing statements or furnishing incorrect information (section 271H) Under section 271H of the Act, if a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) or furnishes an incorrect statement, in respect of tax deducted at source [on or after 1.07.2012], he/she shall be liable to pay, by way of penalty, a sum which shall not be less than Rs. 10,000/- but which may extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e pensioners. All tax deductors (incl. nationalized banks) are required to file the TDS returns for TDS on pension payments in Form No. 24Q only. 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 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). 4.14.3 The declaration in Form no. 12BBA is to be furnished in paper form duly verified. The specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed 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 Income-tax Rules 1962. The provisions of Rule 3 are as follows: - A. Residential Accommodation provided by the employer [Rule 3(1)] As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, 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 plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable for the same a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 car 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 official purposes; * The employer gives a certificate that the expenditure was incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. 1800/- (plus Rs. 900/-, if chauffeur is also provided) per month for motor car where cubic capacity of engine does not exceed 1.6 litres, and if the cubic capacity of engine of the motor car exceeds 1.6 litres, reduced by Rs. 2400/- (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 & running expenses are met or reimbursed by the employer, no perquisite shall be chargeable to tax if the reimbursement is for the use of the vehicle wholly and exclusively for offici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 benefit per child does not exceed one thousand rupees per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 to an employee [Rule 3(7)(iii)] The value of fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding 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 actual cost of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith retrospective effect from 01.04.2020 and thus accordingly, applies in relation to the assessment year 2020-2021 and subsequent assessment years. The conditions have been notified vide CBDT Notification No. [S.O. 3703(E)] 90/2022 dated: 05.08.2022. (c) any portion of the premium paid by an 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 the 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 * on travel & stay abroad of the employee (or any member of his/her family) for medical treatment * on travel and stay abroad of one attendant who accompanies the patient. However, the expenditures on medi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form for furnishing details by employee is Form 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 w.e.f. 29.03.2018 [Notification No. 16/2019/F. No. 200/8/2018-ITA-I dated 08.03.2019] 5.3.3 Any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of retirement. Salary for the purpose of computation 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an insurance policy; or iii) any sum received under an insurance policy issued on or after 1.4.2003, but on or before 31-03-2012, 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 1.4.2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10 percent of the actual capital sum assured; or v) any sum received under an insurance policy issued on or after 1.4.2013 in cases of persons with disability or person with severe disability as per Sec 80U or suffering from disease or ailment as specified in Sec 80DDB, in respect of which the premium payable for any of the years during the term of the policy exceeds 15 percent 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 1st February, 2021, the sum received under a Unit Linked Insurance Policy (ULIP) issued on or after 1st Feb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the threshold limit would be five lakhs rupees. 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 provided 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 1st April, 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 prescribed threshold limit 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 (12) of section 10 provides that if the contribution by such person in a fund in which there is no contribution by the employer of such person, the threshold limit would be five lakhs rupees. Rule 9D of the Income-tax Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) & 10 (14) (ii) vide notification No.SO 617(E) dated 7th July, 1995 (F.No.142/9/95-TPL) which has been amended vide notification SO No.403(E) dt 24.4.2000 (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 upto Rs. 3200 per month only to the person who is blind or orthopedically handicapped with disabilities of lower extremities, to meet his/her expenditure for the purpose of commuting between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 26.06.2020, 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 on transfer; (c) 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; (d) Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit subject to the condition that the free conveyance is not provided by the employer." Please Note: A. With regard to section 194S of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; (3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary; (4) Any contribution made: (a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies; (b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children; [The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05] (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.05, Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006, Jeevan Akshay-VI vide Notification S.O. No. 1184(E) dated 19.05.2010 and Jeevan Akshay-VII vide Notification S.O. No. 5056(E) dated 06.12.2021] (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 & 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 3.11.2005] The investments made after 1.4.2006 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 & Repeal) Act, 2002, as the Central Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Government in the Official Gazette for the purposes of this clause. Explanation.-For the purposes of this clause, "specified account" means an additional account referred to in sub-section (3) of section 20 of the Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013). B. Section 80C(3) & 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% of the actual capital sum Assured Policy issued on or after 1st April 2012 10% 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 Sec 80 U or suffering from disease or ailment as specified in rules made under Sec 80DDB 15% of the actual capital sum assured *Introduced by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the previous year in his account under the pension scheme notified or as may be notified by the Central Government, which shall not exceed Rs. 50,000. 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 the State 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 or the State Government of his salary, and 10% in case of contribution by any other employer. The provisions with respect to the employer being "State Government" is effective retrospectively from the 1st day of April, 2020 and accordingly, applies in relation to the assessment year 2020-2021 and subsequent assessment years so as to ensure no additional tax liability arises on any contribution made in excess of 14% during such time. As per S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ension 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 80 CCD(1B) is an additional deduction in respect of any amount paid in the NPS upto Rs. 50,000/-. However, the contribution made by the Central Government or any other employer to a pension scheme u/s 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-1 Case-2 Case-3 Self & Family (no one of them is a senior citizen) Parents (no one of them is a senior citizen) Self & Family (no one of them is a senior citizen) Parents (atleast one of them is a senior citizen) Self & Family (atleast one of them is a senior citizen) Parents (atleast one of them is a senior citizen) Medical Insurance, etc.* 25,000 25,000 25,000 50,000 50,000 50,000 Medical Expenditure** -- -- -- 50,000 50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent (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 dependent, 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 dependent 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 was earlier to be allowed only if the following condition was fulfilled: (i) the scheme referred to in (b) above provides for payment of annuity or lump sum amount for the benefit of a dependent, being a person with disability, in the event of the death of the individual in whose name subscription to the scheme has been made; With effect from 01.04.2022, the provision has been amended and allows for the deduction on satisfaction of either of the conditions (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein. 2. Further in cases where the condition of disability 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 1 above and furnished before the DDO. 3. For the purposes of sections 80DD and 80 U 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, dependent wholly or mainly on such individual or Hindu undivided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, etc. (Section 80DDB): Section 80DDB allows a deduction in case of employee, who is resident in India, during the previous year, of any amount actually paid for the medical treatment of such disease or ailment as may be specified in the rules 11DD (1) for himself or a dependent. The deduction allowed is equal to the amount actually paid is in respect of the employee or his dependent or Rs. 40,000 whichever is less. Now the deduction can be allowed on the basis of a prescription from an oncologist, a urologist, nephrologist, a hematologist, 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, "dependent" means individual, the spouse, children, parents, brothers and sisters of the employee or any of them, dependent wholly or mainly on the employee for his support and maintenance. Vide Notification SO No. 2791(E) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om any financial institution for the purpose of acquisition of a residential house property if following conditions are met:- (i) the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2019 and ending on the 31st day of March, 2021; (ii) the stamp duty value of residential house property does not exceed forty-five lakh rupees; (iii) the assessee does not own any residential house property 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 dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf - Circular No. 2/2005, dated 12-1-2005. No deduction under this section is allowable in case the amount of donation exceeds Rs 2000/- 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 emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme. furnishes the certificate u/s 35AC(2)(a) National Committee for Promotion of Social & Economic Welfare 6. An association or institution, which has as its object the undertaking of any programme of conservation of natural resources or of afforestation. Approved for the purposes of section 35CCB. set up and notified by the Central Government 7. A fund for afforestation Notified under clause(b) of subsection (1) of section 35CCB set up and notified by the Central Government 8. A rural development fund notified u/s 35CCA (1)(c) set up and notified by the Central Government 9. National Urban Poverty Eradication Fund notified u/s 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as under:- (i) in a case where the amount of such income does not exceed in the aggregate fifty thousand rupees, the whole of such amount; and (ii) in any other case, fifty thousand rupees. However, no deduction is allowed under section 80TTB to any partner of the firm or any member of the association or any individual of the body if said interest is derived from any deposits held by, or on behalf of, a firm, an association of persons or a body of individuals. For this purpose, "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. However, taxpayers claiming deduction under section 80TTB shall not be eligible for deduction under section 80TTA. 6. Rebate of Rs 12,500 For Individuals Having Total Income Upto Rs 5 Lakh [Section 87A] Finance Act, 2019 w.e.f. 01.04.2019, 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 paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e/she has rendered continuous service with his employer for a period of five years or more, or (ii) If, though he/she has not rendered such continuous service, the service has been terminated by reason of - * the employee's ill health, or * by the contraction or discontinuance of the employer's business or * other cause beyond the control of employee, or (iii) if, on cessation of his employment, the employee obtains employment with any other employer, to the extent amount of such accumulated balance is transferred to his individual account in any recognized provident fund maintained by such other employer, or (iv) if the entire balance standing to the credit of employee is transferred to his account under a pension scheme referred to in section 80 CCD and notified by the Central Government. When the accumulated 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be required to be deducted. This income should be rounded off to the nearest multiple of ten rupees. 9.2 Income-tax on such income shall be calculated at the rates given in para 2.1 of this Circular keeping in view the age of the employee and subject to the provisions of section 206AA, as discussed in para 4.8. Rebate as per Section 87 A up to Rs 12,5001- to eligible persons (see para 6) may be given. Surcharge shall be calculated in cases where applicable (see para 2.2). 9.3 The amount of tax as increased by the surcharge if applicable so arrived at shall be increased by Health and Education Cess at the rate of 4% to arrive at the total tax payable. 9.4 The amount of total tax payable as arrived at para 9.3 should be deducted every month in equal installments. Any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deductions during the same financial year. 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployee below the age of sixty years having a handicapped dependent (With valid PAN@ furnished to employer). S.No. Particulars Rupees 1 Gross Salary 4,70,000 2 Amount spent on treatment of a dependent, being person with disability (but not severe disability) 7000 3 Amount paid to LIC with regard to annuity for the maintenance of a dependent, being person with disability (But not severe disability) 60,000 4 GPF Contribution 25,000 5 LIP Paid 10,000 6 Interest Income on Savings Account 12,000 Computation of Tax S.No. Particulars Rupees 1 Gross Salary 4,70,000 2 Less: Standard deduction u/s 16(ia) 50,000 3 Add: Income from Other Sources Interest Income on Savings Account Rs 12,000 4 Gross Total Income 4,32,000 5 Less: Deduction U/s 80DD (Restricted to Rs.75,000/- only) 60,000 6 Less: Deduction U/s 80C (i) GPF Rs.25,000/- (ii) LIP Rs.10,000/- 35,000 7 Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs 10000/-) 10000 8 Total Income 3,27,000 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 3,50,000 2 Dearness Allowance 2,00,000 3 House Rent Allowance 1,40,000 4 House rent paid 1,44,000 5 General Provident Fund 36,000 6 Life Insurance Premium 4,000 7 Subscription to Unit-Linked Insurance Plan 50,000 Computation of total income and tax payable thereon S.No. Particulars Rupees 1 Salary + Dearness Allowance + House Rent Allowance 3,50,000+2,00,000+1,40,000 = 6,90,000 7,40,000 2 Total Salary Income 7,40,000 3 Less: Standard deduction u/s 16(ia) 50,000 4 Less: House Rent allowance exempt U/s 10(13A): Least of: (a) Actual amount of HRA received= 1,40,000 (b) Expenditure of rent in excess of 10% of salary (including D.A. presuming that D.A. is taken for retirement benefit) (1,44,000-55,000) = 89,000 (c) 50% of Salary(Basic+ DA) = 2,75,000 [Bombay/Kolkata/Delhi/Chennai] or 40% of salary (Basic + DA) in case of other cities 89,000 Gross Total Income 6,01,000 Less: Deduction U/s 80C (i) GPF Rs.36,000/- (ii) LIC Rs. 4,000 (iii) Investment in Unit-Linked Insurance Plan Rs.50,000/- Total =Rs.90,000/- 90,000 5 Total Income 5,11,000 Tax payable 14700 Add: Health & Education Cess @ 4%. 588 Total Income Tax payable 15288 Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. Example 6 For Assessment Year 2023-24 Illustrating Valuation of perquisite and calculation of tax in the case of an employee below the age of 60 years of a Private Company posted at Delhi and repaying House Building Loan (With valid PAN@ furnished to employer). S.No. Particulars Rupees 1 Salary 4,50,000 2 Dearness Allowance 1,00,000 3 House Rent Allowance 1,80,000 4 Special Duties Allowance 12,000 5 Provident Fund 60,000 6 LIP 10,000 7 Deposit in NSC VIII issue 30,000 8 Rent Paid for house hired by employee 1,20,000 9 Repayment of House Building Loan (Principal) 60,000 10 Tuition Fees for three children (Rs.10,000 per child) 30,000 Computation of total income and tax payable thereon S.No. Particulars Rupees 1 Gross Salary (Basic+DA+HRA+SDA) 7,42,000 Less : House rent allowance exempt U/s 10 (13A) will the amount which is least of: (i) Actual amount of HRA received : Rs.1,80,000 (ii) Rent paid in excess of 10% of salary (Including D.A.) assuming D.A. is included for retirement benefits (1,20,000- 55,000) : Rs. 65,000 (iii) 50% of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000 Contribution of P.P.F. 80,000 1,20,000 1,50,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Rupees (iii) Gross Pension 5,50,000 8,50,000 13,00,000 Less: Standard deduction u/s 16(ia) 50,000 50,000 50,000 Less: Deduction U/s 80C 80,000 1,20,000 1,50,000 Taxable Income 4,20,000 6,80,000 11,00,000 Tax thereon Nil 36,000 1,30,000 Add: Health & Education Cess @ 4%. Nil 1,440 5,200 Total tax payable Nil 37,440 1,35,200 @ 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 9 1. Computation of Taxable Salary and allowances, Deduction for Interest on Housing Loan and Deduction u/s 80C. Mr. X, a Central Govt. Officers in Delhi, is receiving Basic Pay Rs.40,000, DA at prescribed rates, transport allowances @ Rs.3600+DA thereon, and HRA (existing- from 1st July 2022 @24% of basic pay (though living in his own house). His date of increment is 1st July. The following are other particulars of his income. Compute his taxable income and tax payable, for A.Y.2023-24 S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me under section 115BAC of the Act. ANNEXURE-II FORM NO.12BA {See rule 26A(2)(b)} Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof 1) Name and address of employer : 2) TAN 3) TDS Assessment Range of the employer : 4) Name, designation and PAN or Aadhaar number of employee : 5) Is the employee a director or a person with : substantial interest in the company (where the employer is a company) 6) Income under thehe/shead "Salaries" of the employee : (other than from perquisites) 7) Financial Year : 8) Valuation of Perquisites S.No Nature of perquisite (see rule 3) Value of perquisite as per rules (Rs.) Amount, if any recovered from the employee (Rs.) Amount of perquisite chargeable to tax Col(3) - Col(4) (Rs.) (1) (2) (3) (4) (5) 1 Accommodation 2 Cars/Other automotive 3 Sweeper, gardener, watchman or personal attendant 4 Gas, electricity, water 5 Interest free or concessional loans 6 Holiday expenses 7 Free or concessional travel 8 Free meals 9 Free Education 10 Gifts, vouchers etc. 11 Credit card expenses 12 Club expenses 13 Use of movable asset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lip;……… ….. (e) …………… ….. (f) …………… ….. (g) …………… ….. (ii) Section 80CCC (iii) Section 80CCD (B) Other sections (e.g. 80E, 80G, 80TTA, etc.) under Chapter VI-A. (i) section………………. (ii) section………………. (iii) section………………. (iv) section………………. (v) section………………. Verification I,………………….., son/daughter of……………………….. do hereby certify that the information given above is complete and correct. Place……………………………………………... Date…………………………………………….... (Signature of the employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile (.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. 2. Online upload of 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 AIN registration, AO need to file at least one Form 24G through TIN-FC. After AIN registration, AO can file Form 24G through AO Account at TIN website. Preparation and validation of correction Form 24G is in line with regular Form 24G (submitted at TIN-FC). The validated Form 24G correction file (.fvu file) is to be uploaded at TIN website. There is no need to submit SSR in online upload. For 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. No charges are applicable to AOs for online upload of Form 24G. On login, AO can als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agram 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) is a unique seven digit which is allotted by the Directorate of Income Tax (Systems), Delhi, to every AO. Each AO is uniquely identified in the system by this number. AOs are required to apply for AIN with jurisdictional TDS office. The AIN application can be downloaded from TIN site. Every AIN holder is required to file Form 24G. Each DDO is identified in the system by a Tax Deduction and Collection Account Number (TAN). This number is allotted by Income Tax Department. 5. Where should the Accounts Office Identification Number (AIN) application be submitted ? The duly filled and signed application for AIN allotment is to be submitted in physical form by the PAO / CDDO / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nistry / 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 can prepare Form 24G either by using in-house facilities, third party software or by using Form 24G Preparation Utility developed by NSDL, which is freely downloadable from the TIN web-site (www.tin-nsdl.com) or ITD website (www.incometaxindia.gov.in). Once the statement is prepared, the AO shall validate the same by using File Validation Utility (FVU) developed by NSDL and freely available at the TIN or ITD website. The statement can be furnished in Compact Disk (CD) at any of the TIN-Facilitation Centres (TIN-FC) managed by NSDL along with Form 24G Statement Statistics Report (generated through File Validation Utility), duly signe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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/developer works/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 are in an executable zip file (Form24GFVU) (version 1.2). These files are required for installing the Form 24G FVU. Instructions for extracting and setup are given in: - Form 24G FVU Extract and Setup 17. After preparation of Form No. 24G statement through RPU, three files are generated when such statement passes through FVU. Is the AO required to take all three files in CD /Pen drive to TIN-FC? When a valid file is passed through the FVU, the following three files are generated:- (a) The upload file (b) Form 24G statement Statistics Report and (c) Form 24G. Every Form 24G (upl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 deduction) can be updated for the DDO records provided in original or subsequent correction statement - Delete: DDO records provided in original Form 24G or subsequent correction statement can be deleted M-type correction statement will always contain AO details and details of DDO which are added and/or deleted. 21. What is X-Type of Correction Statement? This type of correction statement is to be furnished by AO if it wishes to cancel an existing Form 24G statement. Filing of Correction type X ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 by the respective PAO should be reported correctly along with the corresponding amount in the TDS/TCS Statement filed by the DDOs. (ii) In a number of cases, one distinct DDO has been found to be reported by more than one AO in the Form No. 24G for the same form type of TDS statement which is not a valid scenario. The DDOs and respective AOs are advised to reconcile the issue and one DDO should be mapped to one AO only for a particular form type for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 holder by quoting the corresponding BINs. *** 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 consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of e-TDS statement/return, the Deductor/DDO is required to validate the same by using the File Validation Utility (FVU) which is freely available on TIN website. 2. Procedure of furnishing of e-TDS statement/return at TIN Facilitation Centres (TIN-FCs): Once 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 TINFC, 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: 2.1.1 CPC-TDS portal (www.tdscpc.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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be furnished at TIN-FC. On successful acceptance of paper statement/return at the TIN-FC, an acknowledgment containing a unique 15 digit token no. is provided to the Deductor/DDO. Deductor/DDO can view the status of paper statement/return on TIN website. No charges are applicable for paper TDS statement/return. 3.1 Correction in paper statements/returns: The physical TDS statement/return is to be filed again in case 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. 4. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of defined benefit pension system. i. The system would be mandatory for all new recruits to the Central Government service from 1stof January 2004 (except the armed forces in the first stage). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central government. However, there will be no contribution form the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a non- withdrawable pension tier-I account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service. ii. In addition to the above pension account, each individual may also have a voluntary tier-II withdrawable account at his option. This option is given as GPF will be withdrawn for new recruits in Central government service. 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 pens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curity forces and certified to this effect by the he/she head of the department concerned 8. Police Medal for Gallantry - do - 9. Sena Medal When awarded for acts of courage or conspicuous gallantry and supported by certificate issued to this effect by relevant service headquarters. 10. NaoSena Medal - do - 11. VayuSena Medal - do - 12. Fire Services Medal 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 of Section 10 of the Income -tax Act, 1961 (43 of 1961)), the Central Government, hereby specifies the gallantry awards for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eductor Tan of the Deductor PAN of the Employee/Specified senior citizen Employee Reference No./ Pension Payment order no. provided by the Employer(If available) CIT(TDS) Assessment year Period with the Employer Address : 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 statements of TDS under sub-section (3) of section 200 Amount paid/credited Amount of tax deducted (Rs.) Amount of tax deposited/remitted(Rs. ) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total (Rs.) I. 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 THE CENTRAL GOVERNMENT ACCOUNT THROUGH CHALLAN (The deductor to provide payment wise details of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable under the head "Salaries" [(3+1(e)-51 Rs. ... 7. Add: Any other income reported by the employee under as per section 192(2B) Rs. ... a) Income (or admissible loss) from house property reported by employee offered for TDS Rs. ... b) Income under the head Other Sources offered for TDS 8. Total amount of other income reported by the employee [7(a)+7(b)1 9. Gross total income (6+8) 10. 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. ... Total b) Deduction in respect of contribution by taxpayer to pension scheme under section 80CCD (1) Rs. ... Rs. ... c) Total deduction under section 80C, 80CCC and 80CCD(1) Rs. ... Rs. ... d) Deductions in respect of amount paid/deposited to notified pension scheme under section 80CCD (1B) Rs. ... Rs. ... e) Total deduction under section 80C, 80CCC and 80CCD(1) Rs. ... Rs. ... f) Deduction in respect of contribution by Employer to pension scheme under section 80CCD (2) Rs. ... Rs. ... g) Deduction in respect of health insurance premia under section 80D Rs. . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... +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) D eduction 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(1) 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, etc. under section 80G Rs. ... Rs. ... Rs. ... g) Deduction in respect of interest on deposits in savings account under section 80TTB Rs. ... Rs. ... Rs. ... h) Amount deductible under any other provision(s)of chapter VI-A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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