TMI BlogIncome-tax deduction from salaries during the financial year 2005-06 under section 192X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of Rs. 2,50,000. Rs. 25,000 plus 30 per cent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es by employer : An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at his option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. The employer will have to pay such tax at the time when such tax was otherwise deductible, i.e., at the time of payment of income chargeable under the head 'salaries' to the employee. 3.3 Computation of average Income-tax : For the purpose of making the payment of tax mentioned in para 3.2 above, tax is to be determined at the average of income-tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself. ILLUSTRATION : Suppose that the income chargeable under the head '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 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income under any head other than "Salaries" and of any tax deducted at source thereon in the prescribed Form No.12C ( Annexure II) . (Form No. 12C has since been omitted from the Income-tax Rules. However, the particulars may now be furnished in a simple statement, which is properly verified by the taxpayer in the same manner as in Form No. 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 tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of residential house must have been completed within three years from the end of the financial year in which capital was borrowed. There is no stipulation regarding the date of commencement of construction. Consequently, the construction of the residential 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. 3.8 Adjustment for excess or shortfall of deduction : 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 em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculated on the said non-monetary perquisites, as the case may be, to the credit of the Central Government in prescribed manner (vide rule 30 of the Income-tax Rules,1962). In the case of deductions made by, or, on behalf of the Government, the payment has to be made on the day 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. 4.5 Penalty for failure to deposit tax deducted : If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he 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 with effect from 8-9-2003 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in paras 3.2 and 3.3, shall furnish to the employee concerned a certificate to the effect that tax has been paid to the Central Government and specify the amount so paid, the rate at which tax has been paid and certain other particulars in the amended Form No. 16. The obligation cast on the employer under section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a 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. 4.7 Mandatory quoting of PAN and TAN : According to the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceed the amount of tax, which was deductible at source. 4.9 A return filed on the prescribed computer readable media shall be deemed to be a return for the purposes of section 206 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. 4.10 Challans for deposit of TDS : While making the payment of tax deducted at source to the credit of the Central Government, it may be ensured that the correct amount of income-tax is recorded in the relevant challan. It may also be ensured that the right type of challan is used. The relevant challan for making payment of tax deducted at source from salaries is challan No. ITNS-281. Where the amount of tax deducted at source is credited to the Central Government through book adjustment, care should be taken to ensure that the correct amount of income-tax is reflected therein. 4.11 TDS on Income from Pension : In the case of pensioners who receive their pension from a nationalized bank, the instructions contained in this circular shall apply in the same manner as they apply to salary income. The deductions fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st of April, 2005 : (a) The person deducting the tax (employer in case of salary income), is required to file Quarterly Statements for the periods ending on 30th June, 30th September, 31st December and 31st March of each financial year, duly verified, to the Director General of Income-tax (Systems) or M/s. National Securities Depository Ltd. (NSDL).These statements are required to be filed on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year and on or before the 15th Junefollowing the last quarter of the financial year. (b) The Quarterly Statements are to be filed on computer media only in accordance with rule 31A of the Income-tax Rules, 1962. In case of failure in filing of the Quarterly Statement, the person deducting the tax shall be liable for a penalty under section 272A(2)(k) of Rs.100 for each day of default. 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/De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exureVA) and referred to in section 80CCD (para 5.4(E) of this Circular) shall also be included in the salary income. Other items included in salary, profits in lieu of salary and perquisites are described in section 17 of the Income-tax Act. The scope of the term profit in lieu of salary has been amended so as not to include interest on contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. For the purposes of this sub-clause, the expression Keyman insurance policy shall have the meaning assigned to it in clause (10D) of section 10. It may be noted that, since salary includes pensions, tax at source would have to be deducted from pension also, if otherwise called for. However, no tax is required to be deducted from the commuted portion of pension as explained in clause (3) of para 5.2 of this Circular. (4) Section 17 defines the terms "salary", "perquisite" and "profits in lieu of salary". Perquisite includes : (a) The value of rent free accommodation provided to the employee by his employer; (b) The value of any concession in the matter of rent in respect of any accommodation provided to the employee b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual hire charges payable. - as reduced by any charges paid by the employee himself. The scope of the word "accommodation" has been widened to include a house, flat, farm house, hotel accommodation, motel, service apartment, guest house, a caravan, mobile home, ship etc. However, the value of any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site or a dam site or a power generation site or an off-shore site will not be treated as a perquisite. However, such accommodation should either be located in a "remote area" or where it is not located in a "remote area", the accommodation should be of a temporary nature having plinth area of not more than 800 square feet and should not be located within 8 kilometers of the local limits of any municipality or cantonment board. A project execution site for the purposes of this sub-rule means a site of project up to the stage of its commissioning. A "remote area" means an area located at least 40 kilometers away from a town having a population not exceeding 20,000 as per the latest published All-India Census. Off-shore sites of similar nature do not have to meet any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing cost per unit incurred by the employer would be taken for the valuation of perquisite. Any amount paid by the employee for such facilities or services shall be reduced from the above amount. IV. Free or concessional education:— Perquisite on account of free or concessional education shall be valued in a manner assuming that such expenses are borne by the employee, and would cover cases where an employer is running, maintaining or directly or indirectly financing the educational institution. Any amount paid by the employee for such facilities or services shall be reduced from the above amount. However, where such educational institution itself is maintained and owned by the employer or where such free educational facilities are provided in any 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 if the cost of such education or such benefit per child exceeds Rs.1000 p.m. V. Interest-free or concessional loans :— It is common practice, particularly in financial institutions, to provide interest free or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce method for each completed year of use. Electronic gadgets in this case means data storage and handling devices like computer, digital diaries and printers. They do not include household appliance (i.e. white goods) like washing machines, microwave ovens, mixers, hot plates, ovens etc. Similarly, in case of cars, the value of perquisite shall be worked out by reducing 20 per cent of its actual cost by the reducing balance method for each completed year of use. VIII. Employee Stock Option Plan : —Prior to Finance Act, 2000, stock options were taxed at two stages i.e., as perquisite (on the amount representing the difference between the exercise price and the fair market value on the date of exercise), and as capital gains at the time of transfer of the same. With effect from 1-4-2001 (relevant to assessment year 2001-02) onward, stock options issued as per guidelines of the Central Government are to be taxed only once, at the time of sale, as capital gains. In cases, where perquisite has been assessed with reference to exercise of the option by the employee under section 17(2), the fair market value at the time of exercise of the option shall be the cost of acquisition of sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. As regards payments in commutation of pension received under any scheme of any other employer, exemption will be governed by the provisions of sub-clause (ii) of clause (10A) of section 10. (4) Any payment received by an employee of the Central Government or a State Government, as cash equivalent of the leave salaryin respect of the period of earned leave at his credit at the time of his retirement on superannuation or otherwise, is exempt under sub-clause (i) of clause (10AA) of section 10. In the case of other employees, this exemption will be determined with reference to the leave to their credit at the time of retirement on superannuation, or otherwise, subject to a maximum of ten months' leave. This exemption will be further limited to the maximum amount specified by the Government of India Notification No. S.O. 588(E), dated 31-5-2002 at Rs. 3,00,000 in relation to such employees who retire, whether on superannuation or otherwise, after 1-4-1998. (5) Under section 10(10B), the retrenchment compensationreceived 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 provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an insurance policy issued on or after 1-4-2003 in respect of which the premium payable for any of the years during the term of the policy exceeds 20 per cent of the actual capital sum assured. However, any sum received under such policy on the death of a person would still be exempt. (8) Any payment from a Provident Fund to which the Provident Funds Act, 1925 (19 of 1925), applies ( or from any other provident fund set up by the Central Government and notified by it in this behalf in the Official Gazette). (9) Under section 10(13A) of the Income-tax Act, 1961, any special allowance specifically granted to an assessee by his employer to meet expenditure incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from income-tax to the extent as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. According to rule 2A of the Income-tax Rules, 1962, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be: (a) The actual amount of such allowance received by an employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to the extent as may be prescribed. However, the allowance referred to in (ii) above should not be in the nature of a personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to his place of posting or residence. The CBDT has prescribed guidelines for the purpose of clauses (i) and (ii) of section 10(14) 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), dated 24-4-2000 (F.No.142/34/99-TPL). The transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of duty is exempt to the extent of Rs. 800 per month vide Notification S.O. No. 395(E), dated 13-5-1998. (11) Under section 10(15)(iv)(i) of the Income-tax Act, interest payable by the Government on deposits made by an employee of the Central Government or a State Government or a public sector company from out of his retirement benefits, in accordance with such scheme framed in this behalf by the Central Government and notified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atment for himself or any member of his family from any doctor, not exceeding in the aggregate Rs.15,000 in a year. (e) as regards medical treatment abroad, the actual expenditure on stay and treatment abroad of the employee or any member of his family, or, on stay abroad of one attendant who accompanies the patient, in connection with such treatment, will be excluded from perquisites to the extent permitted by the Reserve Bank of India. It may be noted that the expenditure incurred on travel abroad by the patient/attendant, shall be excluded from perquisites only if the employee's gross total income, as computed before including the said expenditure, does not exceed Rs.2 lakhs. For the purpose of availing exemption on expenditure incurred on medical treatment, "hospital" includes a dispensary or clinic or nursing home, and "family" in relation to an individual means the spouse and children of the individual. Family also includes parents, brothers and sisters of the individual if they are wholly or mainly dependent on the individual. 5.3 Deductions under section 16 of the Act Entertainment allowance - A deduction is also allowed under clause (ii) of section 16 in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is 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 3-11-2005.] (c) by an employee to a Recognized Provident Fund; (d) by an employee to an approved superannuation fund. It may be noted that "contribution" to any Fund shall not include any sums in repayment of loan; (5) Any subscription :— (a) to any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf; (b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificates Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E), dated 3-11-2005.] (6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child, (a) for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both. (12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc. The deduction will also be allowable in respect of repayment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eligible issue of capital made by a public company or by any public finance institution , which is approved by the Board. (15) Subscription to any units of any mutual fund referred to in clause (23D) of section 10 and approved by the Board for this purpose. It may be clarified that the amount of premium or other payment made on an insurance policy [other than a contract for deferred annuity mentioned in sub-para (2)] shall be eligible for deduction only to the extent of 20 per cent of the actual capital sum assured. In calculating any such actual capital sum, the following shall not be taken into account: (i) the value of any premiums agreed to be returned, or (ii) any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy. B. As per section 80CCC, where an assessee being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pensionfrom the fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l other allowances and perquisites. The aggregate amount of deduction under sections 80C, 80CCC and 80CCD shall not exceed Rs.1,00,000 (Section 80CCE) D.Under section 80D, in the case of the following categories of persons, a deduction can be allowed for a sum not exceeding Rs.10,000 per annum to the extent payment is made by cheque out of their income chargeable to tax to keep in force an insurance on the health of the categories of persons mentioned below provided that such insurance shall be in accordance with a scheme framed in this behalf by— (a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 and approved by the Central Government in this behalf; or (b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999. The categories of persons are : (i) where the assessee is an individual, any sum paid 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o tax as the income of that previous year. B. The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139, in respect of the assessment year for which the deduction is claimed: In cases where the condition of disability 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 in the prescribed form and manner and a copy thereof is furnished along with the return of income. For the purposes of section 80DD,— (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 (58 of 2002) ; (b) "dependant" means— (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them; (ii) in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002). F. Under section 80E of the Act a deduction will be allowed in respect of repayment of interest on loan taken for higher education, subject to the following conditions : (i) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education. (ii) The deduction specified above shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to above is paid in full by the assessee , whichever is earlier. For this purpose— (a) "approved charitable institution" means an institution established for charitable purposes and notified by the Central Government under clause (2C) of section 10, or, an institution referred to in clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prescribed Authority. xv. The National Sports Fund to be set up by Central Government. xvi. The National Cultural Fund set up by the Central Government. xvii. The Fund for Technology Development and Application set by the Central Government. xviii. The National Trust for Welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple disabilities. H. Under section 80GG of the Act an assessee is entitled 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 assessee 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 assessee files the declaration in Form No.10BA. (Annexure VII ) (c) he will be entitled to a deduction in respect of house rent paid by him in excess of 10 per cent of his total income, subject to a ceiling of 25 per cent thereof or Rs. 2,000 per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG. (d) The assessee does not own : (i) any resi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the aforesaid deductions. In case the DDO is not satisfied about the genuineness of the employee's claim regarding any deposit/subscription/payment made by the employee, he should not allow the same, and the employee would be free to claim the deduction/rebate on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer. 6. Calculation of income-tax to be deducted 6.1 Salary income for the purpose of section 192 shall be computed as follows:— (a) First compute the gross salary as mentioned in para 5.1 excluding all the incomes mentioned in para 5.2; (b) Allow deductions mentioned in para 5.3 from the figure arrived at (a) above. (c) Allow deductions mentioned in para 5.4 from the figure arrived at (b) above ensuring that aggregate of the deductions mentioned in para 5.4 does not exceed the figure of (b) and if it exceeds, it should be restricted to that amount. This will be the amount of income from salaries on which income-tax would be required to be deducted. This income should be rounded off to the nearest multiple of ten rupees. 6.2 Income-tax on such income shall be calculated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng person with disability (but not severe disability) Rs. 7,000 3. Amount paid to LIC with regard to annuity for the maintenance of a dependant, being person with disability (but not severe disability) Rs. 50,000 4. GPF Contribution Rs. 25,000 5. LIP Paid Rs. 0,000 Computation of Tax Gross Salary Rs. 3,20,000 Less : Deduction u/s 80DD (Restricted to Rs. 50,000 only) Rs. 50,000 Taxable Income Rs. 2,70,000 Less : Deduction u/s 80C : Rs. GPF 25,000 LIP 10,000 Total 35,000 35,000 Total income Rs. 2,35,000 Income-tax thereon Rs. 22,000 Add : Surcharge Nil Add : Education Cess @2%: Rs. 440 Total tax Payable Rs. 22,400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable thereon 1. Salary + D.A. + C.C.A. Rs. 3,06,000 House Rent Allowance Rs. 1,20,000 2. Total Salary income Rs. 4,26,000 3. Less: House Rent allowance exempt u/s 10(13A): Least of: a. Actual amount of HRA received = Rs. 1,20,000 b. Expenditure of rent in excess of 10% of salary (including D.A. presuming that D.A. is taken for retirement benefit) (Rs. 1,44,000-Rs. 30,000) = Rs. 1,14,000 c. 50% of Salary(Basic+ DA)= Rs.1,50,000 Rs. 1,14,000 Gross Total Income : Rs. 3,12,000 Less : Deduction u/s 80C: Rs. GPF : 36,000 LIC : 4,500 Subscription to : infrastructure Rs. bonds : 20,000 Total : 60,000 Rs. 60,000 Total Income: Rs. 2,52,000 Tax on total income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quisites: : Rs. 1,43,040 Gross Total Income Rs. 7,19,040 (Rs. 5,76,000+Rs. 1,43,040) Less : Deduction u/s 80C : Rs. Provident Fund : 36,000 Subscription to NSC VIII Issue : 20,000 LIC : 5,000 Infrastructure Bonds : 30,000 Total: 91,000 Rs. 91,000 Total Income Rs. 6,28,040 Tax Payable Rs. 1,38,412 Surcharge : Nil Education Cess @ 2% Rs. 2,768 Total Tax Payable Rs. 1,41,180 Example 6 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of exemption under section 10(13A). Example 7 Income-tax calculation in the case of a male employee who claims loss under the head 'income from self-occupied house property'. Particulars : 1. Gross salary : Rs. 4,00,000 2. Housing Loan repaid (Principal) : Rs. 50,000 3. Interest payable on housing loan (Loan taken after 1-4-1999) : Rs. 1,60,000 4. Donation paid to National Children's Fund : Rs. 5,000 5. NSC Purchased : Rs. 10,000 6. GPF : Rs. 30,000 Computation of taxable income and tax thereon 1. Salary Income : Rs. 4,00,000 2. Income from house property Annual value Nil Interest payable on loan u/s 24 1,50,000 (Maximum allowable) : (-) Rs. 1,50,000 Gross total income : Rs. 2,50,000 Less : Deduction u/s 80G 50% of Rs. 5,000 Rs. 2,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 Tax payable Rs. 42,100 Add : Surcharge Nil Add : Education Cess @ 2% Rs. 842 Total Tax payable Rs. 42,942 Example 9 Income-tax calculation in the case of a male pensioner who is more than 65 years of age. (Rs.) Particulars Service Pension 1,80,000 Infrastructure bonds 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, 2002 [Not reproduced] Annexure III Form No. 12BA [See rule 26A(2)(b)] Statement showing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-I of the pension system. At the exit the individual would be mandatorily required to invest 40 per cent of pension wealth to purchase an annuity (from an IRDA-regulated life insurance company). In case of Government employees the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirement. The individual would receive a lump sum of the remaining pension wealth, which he would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80 per cent of the pension wealth. Architecture of the new pension system (iv) It will have a Central Record-keeping and Accounting (CRA) infrastructure, several Pension Fund Managers (PFMs) to offer three categories of schemes viz., options A, B and C. (v) The participating entities (PFMs and CRA) would give out easily understood information about past performance, so that the individual would be able to make informed choices about which scheme to choose. 2. The effective date for operationalisation of the new pension system shall be from 1st of Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X
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