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TMI BlogINCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2006-07 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 ..... e following rates: RATES OF INCOME-TAX A. Normal Rates of tax: 1. Where the total income does not exceed Rs. 1,00,000 Nil 2. Where the total income exceeds Rs. 1,00,000 but does not exceed Rs. 1,50,000 10 per cent of the amount by which the total income exceeds Rs. 1,00,000 3. Where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000 Rs. 5,000 plus 20 per cent of the amount by which the total income exceeds Rs.1,50,000 4. Where the total income exceeds Rs. 2,50,000 Rs. 25,000 plus 30 per cent of the amount by which the total income exceeds Rs.2,50,000 B. Rates of tax for a woman, resident in India and below sixty-five years of age: 1. Where the total income does not exceed Rs. 1,35,000 Nil 2. Where the total income exceeds Rs. 1,35,000 but does not exceed Rs. 1,50,000 10 per cent of the amount by which the total income exceeds Rs. 1,35,000 3. Where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000 Rs. 1,500 plus 20 per cent of the amount by which the total income exceeds Rs. 1,50,000 4. Where the total income exceeds Rs. 2,50,000 Rs. 21,500 plus 30 per cent of the amount by which the total income exceeds Rs. 2,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS from the salary of the employee. The employer will have to pay such tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head salaries to the employee. Computation of Average Income-tax: 3.3 For the purpose of making the payment of tax mentioned in para 3.2 above, tax is to be determined at the average of Income-tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself. ILLUSTRATION: Suppose that the income chargeable under the head 'salary' of a male employee below sixty-five years of age for the year inclusive of all perquisites is Rs. 2,40,000, out of which, Rs. 40,000 is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites as per the provisions discussed in para 3.2 above. STEPS: Income Chargeable under the head "Salaries" inclusive of all perquisites: Rs. 2,40,000 Tax on Total Salaries: Rs. 23,000 Average Rate of Tax [(23,000/2,40,000) x 100]: 9.58% Tax payable on Rs.40,000 (9.58% of 40,000) Rs. 3,833 Amount re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the taxpayer in the same manner as was required to be done in Form 12C. (ii) Such income should not be a loss under any such head other than the loss under the head "Income from House Property" for the same financial year. The person responsible for making payment (DDO) shall take such other income and tax, if any, deducted at source from such income, and the loss, if any, under the head "Income from House Property" into account for the purpose of computing tax deductible under section 192 of the Income-tax Act. However, this sub-section shall not in any case have the effect of reducing the tax deductible (except where the loss under the head "Income from House Property" has been taken into account) from income under the head "Salaries" below the amount that would be so deductible if the other income and the tax deducted thereon had not been taken into account'. In other words, the DDO can take into account any loss (negative income) only under the head "income from House Property" and no other head for working out the amount of total tax to be deducted. While taking into the account the loss from House Property, the DDO shall ensure that the assessee files the declaration re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al house could have commenced before 1-4-1999 but, as long as its construction/acquisition is completed within three years, from the end of the financial year in which capital was borrowed the higher deduction would be available in respect of the capital borrowed after 1-4-1999. It may also be noted that there is no stipulation regarding the construction/ acquisition of the residential unit being entirely financed by capital borrowed on or after 1-4-1999.The loan taken prior to 1-4-1999 will carry deduction of interest up to Rs.30,000 only. However, in any case the total amount of deduction of interest on borrowed capital will not exceed Rs. 1,50,000 in a year. Adjustment for Excess or Shortfall of Deduction: 3.8 The provisions of sub-section (3) of section 192 allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deductions for that employee within that financial year itself. TDS on Payment of Balance Under Provident Fund and Superannuation Fund: 3.9 The trustees of a Recognized Provident Fund, or any person authorized by the regulations of the Fund to make payment of accumulated balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the tax-deduction itself. In other cases, the payment has to be made within one week from the last day of month in which deduction is made. Penalty for Failure to Deposit Tax Deducted: 4.5 If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201. Sub-section (1A) of section 201 lays down that such person shall be liable to pay simple interest at twelve per cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which the tax is actually paid. Such interest, if chargeable, has to be paid before furnishing of quarterly statement of TDS for each quarter. Section 271C lays down that if any person fails to deduct tax at source, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted by him. Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time the tax deducted at source by him, he shall be punishable wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cast on the employer under section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a serious responsibility of the employer, which is expected to be discharged in accordance with law and rules of valuation framed thereunder. Any false information, fabricated documentation or suppression of requisite information will entail consequences therefore provided under the law. The certificates in Form No.12BA and Form No. 16 are to be issued on tax-deductor's own stationery within one month from the close of the financial year i.e. by April 30 of every year. If he fails to issue these certificates to the person concerned, as required by section 203, he will be liable to pay, by way of penalty, under section 272A, a sum which shall be Rs.100 for every day during which the failure continues. Mandatory Quoting of PAN and TAN: 4.7 According to the provisions of section 203A of the Income-tax Act, it is obligatory for all persons responsible for deducting tax at source to obtain and quote the Tax-deduction Account No. (TAN) in the challans, TDS-certificates, statements and other documents. Detailed instructions in this regard are available in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 31A of the Income-tax Rules, 1962. These Quarterly Statements compulsorily require quoting of the Tax Deduction Account Number (TAN) of the tax-deductor and the Permanent Account Number(PAN) of the employees whose tax has been deducted. Therefore, all Drawing and Disbursing Officers of the Central and State Governments/Departments, who have not yet obtained TAN, must immediately apply for and obtain TAN. Similarly, all employees (including non-resident employees) from whose Income-tax is to be deducted may be advised to obtain PAN, if not already obtained, and to quote the same correctly, as otherwise the credit for the tax deducted cannot be given. A penalty under section 272B of Rs. 10,000 has been prescribed for wilfully intimating a false PAN. 4.9 A return filed on the prescribed computer readable media shall be deemed to be a return for the purposes of section 200(3) and the Rules made thereunder, and shall be admissible in any proceeding thereunder, without further proof of production of the original, as evidence of any contents of the original. Challans for Deposit of TDS: 4.10 While making the payment of tax deducted at source to the credit of the Central Government, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them : Circular No. 747, dated 27-12-1996. 4.14 There is a specific procedure laid down for refund of payments made by the deductor in excess of taxes deducted at source, vide Circular No. 285, dated 21-10-1980. 4.15 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India. 5. ESTIMATION 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 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 charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to an employee who has a substantial interest in the company; (iii) By an employer (including a company) to an employee, who is not covered by (i) or (ii) above and whose income under the head Salaries (whether due from or paid or allowed by one or more employers), exclusive of the value of all benefits and amenities not provided by way of monetary payment, exceeds Rs.50,000. The rules relating to valuation of such benefits and amenities have been prescribed in Rule 3. It is further provided that 'profits in lieu of salary' shall include amounts received in lump sum or otherwise, prior to employment or after cessation of employment for the purposes of taxation. The rules for valuation of perquisite are as under: - I. Accommodation : For purpose of valuation of the perquisite of unfurnished accommodation, all employees are divided into two categories: (i) Govt. & State Govt. employees; and (ii) Others. For employees of the Central and State Government the value of perquisite shall be equal to the licence fee charged for such accommodation as reduced by the rent actually paid by the employee. For all others, i.e., those salaried taxpayers not in employment of the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable by the employee. However, where in cases the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on transfer from one place to another, no perquisite value for such accommodation provided in a hotel shall be charged. 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 these Rules and any other charges for other facilities provided by the hotel will be separately valued under the residual clause. Also, if on account of an employee's transfer from one place to another, the employee 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 as per the table prescribed in Rule 3 of the Income-tax Rules, for a period up to 90 days. However, after that the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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, small loans up to Rs. 20,000 in the aggregate are exempt. Loans for medical treatment specified in Rule 3A are also exempt, provided the amount of loan for medical reimbursement is not reimbursed under any medical insurance scheme. Where any medical insurance reimbursement is received, the perquisite value at the prescribed rate shall be charged from the date of reimbursement on the amount reimbursed, but not repaid against the outstanding loan taken specifically for this purpose. VI. Use of assets: It is common practice for an asset owned by the employer to be used by the employee or any member of his household. This perquisite is to be charged at the rate of 10% of the original cost of the asset as reduced by any charges recovered from the employee for such use. However, the us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A), 10(5), 10(14), 17 etc. would continue to be exempt. These include benefits like travel on tour and transfer, leave travel, daily allowance to meet tour expenses as prescribed, medical facilities subject to conditions. 5.2 Incomes not included in 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 :- (1) The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding (a) on leave to any place in India or (b) on retirement from service, or, after termination of service to any place in India is exempt under clause (5) of section 10 subject, however, to the conditions prescribed in rule 2B of the Income-tax Rules, 1962. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special protection to the workmen in the undertaking to which the scheme applies and other relevant circumstances. The maximum limit of such payment is Rs. 5,00,000 where retrenchment is on or after 1-1-1997. (6)Under section 10(10C), any payment received or receivable (even if received in instalments) by an employee of the following bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempted from income-tax to the extent that such amount does not exceed five lakh rupees: (a) A public sector company; (b) Any other company; (c) An Authority established under a Central, State or Provincial Act; (d) A Local Authority; (e) A Cooperative Society; (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 Clause (g) of section 3 of the Institute of Technology Act, 1961; (h) Such Institute of Management as the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period, whichever is the least. For this purpose, "Salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from Income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee. Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto Rs. 3,000 per month will be exempted from production of rent receipt. It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the family of an individual who has been in the service of the Central Government or State Government and has been awarded "Param Vir Chakra" or "Maha Vir Chakra" or "Vir Chakra" or such other gallantry award as may be specifically notified by the Central Government. Such notification has been made vide Notification Nos. S.O. 1948(E), dated 24-11-2000 and 81 (E), dated 29-1-2001 which are enclosed as per Annexure- VIA & VIB (13)Under section 17 of the Act, exemption from tax will also be available in respect of:- (a) the value of any medical treatment provided to an employee or any member of his family, in any hospital maintained by the employer; (b) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or of any member of his family: (i) 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; (ii) in respect of the prescribed diseases or ailments as provided in Rule 3A(2) of Income-tax Rules 1962, in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines as pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment employees. Tax On Employment: The tax on employment (Professional Tax) within the meaning of clause (2) of Article 276 of the Constitution of India, leviable by or under any law, shall also be allowed as a deduction in computing the income under the head "Salaries". It may be clarified that "Standard Deduction" from gross salary income, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards. 5.4 Deductions under chapter VI-A of the Act In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income: A. As per section 80C, an employee will be entitled to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs. 1,00,000: (1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual. (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify; [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S. O. No. 1562(E) dated 3-11-2005 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006] (8) Any subscription made to any units of any Mutual Fund, referred to in clause(23D) of section 10, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other body established under a Central or State Act. The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, 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 Income-tax 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 receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of India or any other insurer for receiving pension from the Fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessee's account, if any) as does not exceed the amount of one lakh rupees in the previous year. Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section, a rebate/deduction with reference to such amount shall not be allowed under section 88 up to assessment year 2005-06 and under section 80C from assessment year 2006-07 onwards. C. As per the provisions of section 80CCD, where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004, has in the previous year paid or deposited any amount in his account under a pension scheme as notified vide Notification No. F.N. 5/7/2003- ECB&PR dated 22-12-2003 (copy enclosed as Annexure-VA), he shall be allowed a deduction in the computation of his total income, of the whole of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to effect or to keep in force an insurance on the health of the assessee or on the health of the wife or husband, dependent parents or dependent children of the assessee. (ii) where the assessee is a Hindu Undivided Family, any sum paid to effect or to keep in force an insurance on the health of any member of the family. However, the deduction can be allowed for a sum not exceeding Rs. 15,000/- per annum where the assessee or his wife or husband, or dependent parents or any member of the family (in case the assessee is a Hindu Undivided Family) is a senior citizen which means an individual resident in India who is of the age of sixty-five years or more at any time during the relevant previous year. E. Under section 80DD, where an assessee, who is a resident in India, has, during the previous year,- (a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or (b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard and appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year; (c) "disability" shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) and includes "autism", "cerebral palsy" and "multiple disability" referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retar-dation and Multiple Disabilities Act, 1999 (44 of 1999); (d) "Life Insurance Corporation" shall have the same meaning as in clause (iii) of sub-section (8) of section 88; (e) "medical authority" means the medical authority as referred to in clause (p) of section 2 of the Persons with Disa-bilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or such other medical authority as may, by notification, be specified by the Central Government for certifying " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er clause (2C) of section 10, or, an institution referred to in clause (a) of sub-section (2) of section 80G. (b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf; (c) "higher education" means full-time studies for any graduate or post-graduate course in engineering medicine, management, or, for post-graduate course in applied sciences or pure sciences, including mathematics and statistics; (d) "initial assessment year" means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan. G. No deduction should be allowed by the D.D.O. from the salary income in respect of any donations made for charitable purposes. The tax relief on such donations as admissible under section 80G of the Act, will have to be claimed by the tax payer in the return of income. However, D.D.O. on due verification may allow donations to following bodies to the extent of 50% of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or (ii) at any other place, any residential accommodation being accommodation in the occupation of the assessee, the value of which is to be determined under clause (a) of sub section (2) or, as the case may be, clause (a) of sub-section (4) of section 23: The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the assessee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent. I. Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of fifty thousand rupees. However, where such individual is a person with severe disability, a higher deduction of seventy-five thousand rupees shall be allowable. Every individual claiming a deduction under this section shall furnish a copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le so arrived at shall be increased by surcharge (if applicable) and additional surcharge (Education Cess) at the prescribed rate to arrive at the total tax payable. 6.4 The amount of tax as arrived at para 6.3 should be deducted every month in equal installments. Any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deductions during the same financial year. 7. MISCELLANEOUS: 7.1 These instructions are not exhaustive and are issued only with a view to helping the employers to understand the various provisions relating to deduction of tax from salaries. Wherever there is any doubt, reference may be made to the provisions of the Income-tax Act, 1961, the Income-tax Rules, 1962 and the Finance Act 2006. 7.2 In case any assistance is required, the Assessing Officer/the local Public Relation Officer of the Income-tax Department may be contacted. 7.3 These instructions may be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/State Governments. 6.4 Copies of this Circular are available with the Director of Income-tax (Research, Statistics & Pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond Rs. 20,000 Computation of Tax Gross Salary Rs.3,00,000 Add: Perquisite in respect of reimbursement of Medical Expenses in excess of Rs. 15,000 in view of Section 17(2)(v) Rs. 15,000 Taxable Income Rs.3,15,000 Less: Deduction u/s 80C: GPF 20,000 LIC 20,000 Repayment of HBA 25,000 Tuition Fees 30,000 Investment in infrastructural Bonds 20,000 Total 1,15,000 Restricted to Rs. 1,00,000 Rs. 1,00,000 Total Income: Rs. 2,15,000 Tax Payable 18,000 Add: Surcharge Nil Add: Education Cess @ 2%: Rs. 360 Total Tax Payable Rs. 18,360 Example 4 For Assessment Year 2007-2008 Illustrative calculation of House Rent Allowance under section 10 (13A) in respect of residential accommodation situated in Delhi in case of a female employee: Particulars: 1. Salary Rs.2,00,000 2. Dearness Allowance Rs. 1,00,000 3. House Rent Allowance Rs. 1,20,000 4. C.C.A Rs. 6,000 5. House rent paid Rs. 1,44,000 6. General Provident Fund Rs. 36,000 7. Life Insurance Premium Rs. 4,000 8. Subscription to Infrastructure Bonds Rs. 20,000 Computation of total income and taxpayable thereon 1. Salary + D.A. + C.C.A. Rs.3,06,000 House Rent Allowance 2. Total Salary in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Payable Rs. 1,38,412 Surcharge: Nil Education Cess @ 2% Rs. 2,768 Total Tax Payable 1,41,180 EXAMPLE 6 For Assessment Year 2007-2008 Illustrating Valuation of perquisite and calculation of tax in the case of a female employee of a Private Company posted at Delhi and repaying House Building Loan. Particulars: 1.Salary Rs.3,00,000 2.Dearness Allowance Rs. 1,00,000 3.House rent allowance Rs. 1,80,000 4.Special Duties Allowance Rs. 12,000 5.Provident Fund Rs. 60,000 6.LIP Rs. 10,000 7.Deposit in NSC VIII issue Rs. 30,000 8.Rent paid by the employee for house hired by her Rs. 1,20,000 9.Repayment of House Building Loan (Principal) Rs. 60,000 10. Tuition Fees for three children (Rs. 10,000 per child) Rs. 30,000 Computation of total income and tax payable thereon 1.Gross salary Rs.5,92,000 (Basic+DA+HRA+SDA) Less: House rent allowance exempt under section 10 (13A) Least of: a.Actual amount of HRA received 1,80,000 b.Expenditure on rent in excess of 10% of salary (Including D.A.) assuming D.A. is including for retirement benefits (1,20,000-40,000) 80,000 c.50% of salary (including D.A) 2,00,000 (-) 80,000 Gross Total Taxable Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 Gross total income Rs. 3,70,000 Less : Deduction under section 80G 50% of Rs.6,000 Rs.3,000 Less: Deduction under section 80C: GPF 20,000 NSC 10,000 Housing Loan repaid 30,000 Total Rs. 60,000 Total Deductions under Chapter VI-A Rs. 63,000 Total Income Rs.3,07,000 Tax Payable Rs. 42,100 Add: surcharge Nil Add: Education Cess @ 2% Rs. 842 Total tax payable Rs. 42,942 EXAMPLE-9 For Assessment Year 2007-2008 Income-tax calculation in the case of a male pensioner who is more than 65 years of age (Rupees) Particulars: Service Pension 1,80,000 Infrastructure Bond 30,000 N.S.C. purchased 20,000 Computation of Taxable Income and Tax thereon Income from Salary (Pension) 1,80,000 Less: Deduction u/s 80C G.P.F. 30,000 N.S.C. 20,000 Total 50,000 Total Income 1,30,000 Tax payable Nil Note:Taxpayers of sixty five years of age or above do not have to pay tax up to a total income of Rs.1,85,000 ANNEXURE-II Form for sending particulars of income under section 192(2B) for the year ending 31st March, 1. Name and address of the employee 2. Permanent Account Number 3. Residential status 4. Particulars of income under an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service/privilege 16 Stock options (non-qualified options) 17 Other benefits or amenities 18 Total value of perquisites 19 Total value of Profits in lieu of salary as per 17(3) (9) Details of tax, - (a) Tax deducted from salary of the employee under section 192(1) .. (b) Tax paid by employer on behalf of the employee under section 192(1 A) ... (c) Total tax paid ... (d) Date of payment into Government treasury ... DECLARATION BY EMPLOYER I______________________s/o____________________________working as____________________ (designation) do hereby 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. Full Name Date.. Designation...; ANNNEXURE-IV FORM NO. 16AA [See third proviso to rule 12(1)(b) and rule 31(1)(a)] Certificate for tax deducted at source from income chargeable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ___________________ (designation) do hereby certify that a sum of Rupees __________________ (in words) has been deducted at source and paid to the credit of the Central Government. I further certify that the information given above is true and correct based on the books of account, documents and other available records. (c) Rs. Rs. (d) Rs. Rs. (e) Rs. Rs. (f) Rs. Rs. (g) Total [(a) to (f)] Rs. Rs. II. (a) under section 88B (b) under section 88C 14. Aggregate of tax rebates at 13 above [I(g)+II(a)+II(b)] 15. Tax payable on total income (12-14) and surcharge thereon 16. Less: Relief under section 89 (attach details) 17. Balance Tax payable(15-16) 18. Less: (a) tax deducted at source under section 192(1) (b) Tax paid by the employer on behalf of the employee under section 192(1 A) on perquisites under section 17(2) 19. Tax payable/refundable (17-18) DETAILS OF TAX DEDUCTED AND DEPOSITED INTO CENTRAL GOVERNMENT ACCOUNT AMOUNT DATE OF PAYMENT NAME OF BANK AND BRANCH WHERE TAX DEPOSITED Place .. Signature of the person responsible for deduction of tax Date Full Name . Designation TO BE FILLED IN BY THE ASSESSEE 1. NAME OF THE ASSESSEE 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of this scheme; (6) "e-TDS Intermediary" means a person, being a company, authorised by the Board to act as e-TDS Intermediary under this scheme; (7) "e-TDS Return" means a return to be filed under section 206 of the Act duly supported by a declaration in Form No. 27A as prescribed under the Rules; (8) "Rules" means the Income-tax Rules, 1962; (9) All other words and expressions used herein but not defined and defined in the Act shall have the meanings respectively assigned to them in the Act. 3. Preparation of e-TDS Return. - (1) The e-deductor shall use the relevant Forms prescribed under the Rules for preparing e-TDS Returns. (2) The e-deductor shall prepare his e-TDS Return according to the data structure to be provided by the e-filing Administrator. (3) While preparing e-TDS Return, the e-deductor shall quote his permanent account number and tax deduction account number as also the permanent account number of all persons in respect of whom tax has been deducted by him except in respect of cases to which the first proviso to sub-section (5A) or the second proviso to sub-section (5B) of section 139A of the Act applies. (4) The e-deductor shall ensure that all columns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails of deposit of tax deducted at source in bank, the permanent account number, tax deduction account number or any other relevant details are not given in the e-TDS Return, the e-filing Administrator shall forward a deficiency memo to the e-deductor with a request to remove the deficiencies within seven days of receipt of the same. (6) In case the deficiency indicated in the deficiency memo is removed within seven days, the data on e-TDS Return shall be transmitted by the e-TDS Intermediary to the e-filing Administrator and the provisional receipt hall be deemed to be acknowledgement of the e-TDS Return. The date of issue of provisional receipt shall e deemed to be the date of filing of the e-TDS Return. (7) In case no deficiency memo is issued by the e-filing Administrator within thirty days of issue of the provisional receipt, the provisional receipt issued shall be deemed to be the acknowledgement of the e-TDS Return and the date of issue of provisional receipt shall be deemed to be the date of filing of e-TDS Return. (8) Where the deficiencies indicated in the deficiency memo are not removed by the e-deductor within seven days, the e-TDS Intermediary shall communicate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other matters as he deems fit. 8. Powers of the Board: The Board may revoke the authorisation of an e-filing Intermediary on grounds of improper conduct, misrepresentation, unethical practices, fraud or established lack of service to the e-deductors or such other ground as it may deem fit. [F. No. 142/31 /2003-TPL] ANNEXURE-VA NOTIFICATION The government approved on 23rd August, 2003 the proposal to implement the budget announcement of 2003-04 relating to introducing a new restructured defined contribution pension system for new entrants to Central Government service, except to Armed Forces, in the first stage, replacing the existing system of defined benefit pension system. (i) The system would be mandatory for all new recruits to the Central Government service from 1st of January 2004 (except the armed forces in the first stage). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central government. However, there will be no contribution form the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a non-withdrawable pension tier-I a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof:- Table Sl No. Name of gallantry award Circumstances for eligibility (1) (2) (3) 1. Ashok Chakra When awarded to Civilians for gallantry 2. Kirti Chakra -do- 3. Shaurya Chakra -do- 4. Sarvottan Jeevan Raksha Padak When awarded to Civilians for bravery displayed by them in life saving acts. 5. Uttam Jeevan Raksha Medal -do- 6. Jeevan Raksha Padak -do- 7. President's Police Medal for gallantry When awarded for acts of exceptional courage displayed by members of police forces, Central police or security forces and certified to this effect by the head of the department concerned. 8. Police Medal for Gallantry -do- 9. Sena Medal When awarded for acts of courage or conspicious gallantry and supported by certificate issued to this effect by relevant service headquarters. 10. Nao Sena Medal -do- 11. Vayu Sena 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 last Head of Department. 13. President's Police & Fire Services Medal for Gallantry -do- 14. President's Fire Services Medal for Gallantry -do- 15. President ..... X X X X Extracts X X X X X X X X Extracts X X X X
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