9911796707
TMI BlogINCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961 DURING THE FINANCIAL YEAR 2009-2010X X X X Extracts X X X X X X X X Extracts X X X X ..... cation dated 4.10.2002 {Form No. 12BA (as amended)} 52-53 III. Board's Notification dated 12.1.2004 (Form No. 16AA) 54-58 IV. Board's Notification dated 26.8.2003 59-61 IVA. Deptt. of Eco. Affairs Notification dated 22.12.2003 62 VA. Board's Notification dated 24.11.2000 63 VB. Board's Notification dated 29.1.2001 64 VII. Form No. 10 B A 65 CIRCULAR NO.: 1/2010 F.No. 275/192/2009-IT (B) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes ..... New Delhi, dated the 11th January,2010 SUBJECT:INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2009-2010 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961. …………… Reference is invited to Circular No.08/2007 dated 5.12.2007 whereby the rates of deduction of income-tax from the payment of income under the head "Salaries" under Section 192 of the Income-tax Act, 1961, during the financial year 2008-2009, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2009-2010 and explains certain related provisions of the Income-tax Act. The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There will be no surcharge on income tax payments by individual taxpayers during FY 2009-10 (AY 2010-11). Education Cess on Income tax: The amount of income-tax shall be further increased by an additional surcharge (Education Cess on Income Tax) at the rate of two percent of the income-tax. Additional surcharge on Income Tax (Secondary and Higher Education Cess on Income-tax): From Financial Year 2007-08 onwards, an additional surcharge is chargeable at the rate of one percent of income-tax (not including the Education Cess on income tax). Education Cess, and Secondary and Higher Education Cess are payable by both resident and non-resident assessees. 3. SECTION 192 OF THE INCOME-TAX ACT,1961: BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM "SALARIES". Method of Tax Calculation: 3.1 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 2009-2010. The income-tax is required to be calculated on the basis of the rates given above and shall be deducted on average at the time of each payment. No tax will, however, be required to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is now required to furnish to the present/chosen employer details of the income under the head "Salaries" due or received from the former/other employer and also tax deducted at source there from, in writing and duly verified by him and by the former/other employer. The present/ chosen employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer). Relief When Salary Paid in Arrear or Advance: 3.5 Under sub-section (2A) of section 192 where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body is entitled to the relief under Sub-section (1) of Section 89, he may furnish to the person responsible for making the payment referred to in Para (3.1), such particulars in Form No. 10E 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. Explanation:- For this purpose "University means a University established or incorporated by or under a Central, State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total tax to be deducted. While taking into account the loss from House Property, the DDO shall ensure that the assessee files the declaration referred to above and encloses therewith a computation of such loss from House Property. (iii) Sub-section (2C) lays down 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 in form no. 12BA. (Annexure-II). Form no. 12BA alongwith form no. 16, as issued by the employer, are required to be produced on demand before the Assessing Officer in terms of Section 139C of the Income Tax Act. Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property 3.7(i) For the purpose of computing income / loss under the head `Income from House Property' in respect of a self-occupied residential house, a normal deduction of Rs.30,000/-is allowable in respect of interest on borrowed capital. However, a deduction on account of interest up to a maximum limit of Rs.1,50,000/- is available if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 balances due to employees, shall, in cases where sub-rule(1) of rule 9 of Part A of the Fourth Schedule to the Act applies, at the time when the accumulated balance due to an employee is paid, make there from the deduction specified in rule 10 of Part A of the Fourth Schedule. 3.10 Where any contribution made by an employer, including interest on such contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on the amount so paid shall be deducted by the trustees of the Fund to the extent provided in rule 6 of Part B of the Fourth Schedule to the Act. Salary Paid in Foreign Currency: 3.11 For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the prescribed rate of exchange. 4. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES: 1. 4.1. Under clause (i) of Section 204 of the Act the "persons responsible for paying" for the purpose of Section 192 means the employer himself or if the employer is a Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine. Furnishing of Certificate for Tax Deducted: 4.6 According to the provisions of section 203, every person responsible for deducting tax at source is required to furnish a certificate to the payee to the effect that tax has been deducted and to specify therein the amount deducted and certain other particulars. This certificate, usually called the "TDS certificate", has to be furnished within a period of one month from the end of the relevant financial year. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. In the case of employees receiving salary income (including pension), the certificate has to be issued in Form No.16. However, in the case of an employee who is resident in India and whose income from salaries does not exceed Rs.1,50,000/- , the certificate of deduction of tax shall be issued in Form No. 16AA ( Spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he return of income has been dispensed with, the TDS certificates will be now issued only for the purpose of personal record of the deductees subject to the condition that they may be required to produce the same on demand before the Assessing Officer in terms of section 139C, inserted by the Finance Act, 2007. The TDS claim made in the return of income is also required to be matched with the e-TDS returns furnished by the deductors. Assessing Officers may, if considered necessary, also write to the deductors for verification of the correctness of the taxes deducted or other particulars mentioned in the certificate. It has been decided for the proper administration of this Income-tax Act to allow the deductors, at their option, in respect of the tax to be deducted at source from income chargeable under the head Salaries to use their digital signatures to authenticate the certificates of deduction of tax at source in Form No. 16. The deductors will have to ensure that TDS certificates in Form No.16 bearing digital signatures have a control No. with log to be maintained by the employer (deductor). The deductor will ensure that its TAN and the PAN of the employee are correctly mention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 June following the last quarter of the financial year. The requirement of filing an annual return of TDS has been done away with w.e.f. 1.4.2006. The quarterly statement for the last quarter filed in Form 24Q (as amended by Notification No. S.O. 704(E) dated 12.5.2006) shall be treated as the annual return of TDS. It is now mandatory for all offices of the Government, companies, deductors who are required to get their accounts audited under section 44AB of the Income Tax Act or where the number of deductees' records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty to file quarterly statements of TDS on computer media only in accordance with the "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003" as notified vide Notification No. S.O.974 (E) dated 26.8.2003. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om a nationalized bank, the instructions contained in this circular shall apply in the same manner as they apply to salary-income. The deductions from the amount of pension under section 80C on account of contribution to Life Insurance, Provident Fund, NSC etc., if the pensioners furnish the relevant details to the banks, may be allowed. Necessary instructions in this regard were issued by the Reserve Bank of India to the State Bank of India and other nationalized Banks vide RBI's Pension Circular (Central Series) No.7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS) No.60/GA.64 (11CVL)-/92) dated the 27th April, 1992, and, these instructions should be followed by all the branches of the Banks, which have been entrusted with the task of payment of pensions. Further all branches of the banks are bound u/s 203 to issue certificate of tax deducted in Form 16 to the pensioners also vide CBDT circular no. 761 dated 13.1.98. New Pension Scheme The New Pension Scheme (NPS) has become operational since 1st Jan, 2004 and is mandatory for all new recruits to the Central Government Services from 1st January, 2004. Since then it has been opened to employees of State Governments, Private Sector and Self ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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". Definition of Salary: (3)"Salary" includes wages, fees, commissions, perquisites, profits in lieu of, or, in addition to salary, advance of salary, annuity or pension, gratuity, payments in respect of encashment of leave etc. It also includes the annual accretion to the employee's account in a recognized provident fund to the extent it is chargeable to tax under rule 6 of Part A of the Fourth Schedule of the Income-tax Act. Contributions made by the employer to the account of the employee in a recognized provident fund in excess of 12% of the salary of the employee, along with i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme therefore, includes the securities offered under such plan or scheme; (b) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called; (c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from the assessee in respect of such security or shares; (d) "fair market value" means the value determined in accordance with the method as may be prescribed; (e) "option" means a right but not an obligation granted to an employee to apply for the specified security or sweat equity shares at a predetermined price; The amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 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. If an accommodation is provided by an employer in a hotel the value of the benefit in such a case shall be 24% of the annual salary or the actual charges paid or payable to such hotel, whichever is lower, for the period during which such accommodation is provided as reduced by any rent actually paid or payable 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 concessional loans to employees or any member of his household. The value of perquisite arising from such loans would be the excess of interest payable at prescribed interest rate over interest, if any, actually paid by the employee or any member of his household. The prescribed interest rate would now be the rate charged per annum by the State Bank of India as on the 1st day of the relevant financial year in respect of loans of same type and for the same purpose advanced by it to the general public. Perquisite value would be calculated on the basis of the maximum outstanding monthly balance method. For valuing perquisites under this rule, any other method of calculation and adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act,1961 and at Rule 3 of Income Tax Rules,1962. The deductors may look into the above provisions carefully before they determine the perquisite value for deduction purposes. It is pertinent to mention that benefits specifically exempt u/s 10(13A), 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government or a State Government, as cash-equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement, whether 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 31.05.2002 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 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 ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in respect of the relevant period; or (b) The actual expenditure incurred in payment of rent in excess of 1/10 of the salary due for the relevant period; or (c) Where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.SO617(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). 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 13.5.98. (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 out of his retirement benefits, in accordance with such scheme framed in this behalf by the Central Government and notified in the Official Gazette is exempt from income-tax. By notification No.F.2/14/89-NS-II dated 7.6.89, as amended by notification No.F.2/14/89-NS-II dated 12.10.89, the Central Government has notified a scheme called Deposit Scheme for Retiring Government Employees, 1989 for the purpose of the said clause. (12) Any scholarship granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 u/s 16 of the Act Entertainment Allowance: A deduction is also allowed under clause (ii) of section 16 in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und; 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 Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05.] (6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child, (a) for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India; (b) for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to in clause (23D) of section 10 and as notified by the Central Government. [The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05.] (7) Any subscription made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both. [The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section 80C(2)(xvi)(a)]. (12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any 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 re-payment 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 institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature. (14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution. (15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company. (16) Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes. [The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006] (17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf. (18) Any inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he previous year and in other cases upto10% of his gross total income in the previous year. Further it has been specified that w.r.e.f 1/04/09 any amount received by the assessee from the new pension scheme shall be deemed not to have received in the previous year if such amount is used for purchasing an annuity plan in the previous year. Where any amount standing to the credit of the assessee in his account under such pension scheme, in respect of which a deduction has been allowed as per the provisions discussed above, together with the amount accrued thereon, if any, is received by the assessee or his nominee, in whole or in part, in any financial year,— (a) on account of closure or his opting out of such pension scheme; or (b) as pension received from the annuity plan purchased or taken on such closure or opting out, the whole of the amount referred to in clause (a) or clause (b) above shall be deemed to be the income of the assessee or his nominee, as the case may be, in the financial year in which such amount is received, and shall accordingly be charged to tax as income of that financial year. For the purposes of deduction under section 80CCD, "salary" includes dearne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DD, 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 approved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the assessee shall be allowed a deduction of a sum of fifty thousand rupees from his gross total income of that year. However, where such dependant is a person with severe disability, an amount of seventy-five thousand rupees shall be allowed as deduction subject to the specified conditions. The deduction under clause (b) of sub-section (1) shall be allowed only if the following conditions are fulfilled:- A.(i) the scheme referred to in clause (b) above provides for payment of annuity or lump sum amount for the benefit of a dependant, being a person with disability, in the event of the death of the individual in whos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultiple 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 Disabilities (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 "autism", "cerebral palsy", "multiple disabilities", "person with disability" and "severe disability" referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); (f) "person with disability" means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); (g) "person with severe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so; (d) "initial assessment year" means the assessment year relevant to the previous year, in which the assessee starts paying the interest on the loan. (e) relative", in relation to an individual, means the spouse and children of that individual or the student for whom the individual is the legal guardian G. Section 80G provides for deductions on account of donation made to various funds, charitable organizations etc. Generally 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 in cases where employees make donations to the Prime Minister's National Relief Fund, the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a higher deduction of one lakh rupees shall be allowable. Every individual 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, 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 this section, the expressions "disability", "medical authority", "person with disability" and "person with severe disability" shall have the same meaning as given in section 80DD (sub-para E of para 5.4 of this Circular). DDOs to satisfy themselves of the genuineness of claim: (21) The Drawing and Disbursing Officers should satisfy themselves about the actual deposits/ subscriptions / payments made by the employees, by calling for such particulars/information as they dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be payable during FY 2008-09. In Circular No. 09/2008 dated 29th Sept.2008 issued from this office it was stated that during 2008-09 the tax has to be deducted at source on this 40% of aggregate arrear during FY 2008-09.The OM,F.No-1//1/2008-IC, of the Implementation Cell of the Department of Expenditure, Govt of India, vide its order dated 25th August, 2009 has stated that the remaining 60% of the aggregate arrear (second installment of arrears) would be paid to the concerned Government servants during FY 2009-10. Such arrangements could be followed by State Governments also. In this regard, all the DDOs and PAOs as the case may be, in the Central/State Government and various organizations under them are advised to compute the correct tax liability of every employee on second installment of arrears drawn by him and immediately recover the full tax liability along with education cess thereon at the rates in force. The deduction of tax at source on such arrear payment should not be deferred in any circumstance. They should further ensure that the tax so recovered is paid to the account of Central Government account immediately as per the Income Tax Rules, 1962. The DDOs/PAOs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Army Headquarters, New Delhi 18. Air Headquarters, New Delhi 19. Naval Headquarters, New Delhi 20. Director-General of Posts & Telegraphs, New Delhi(10 copies) 21. Comptroller & Auditor General of India (50 copies) 22. Accountant General -I, Andhra Pradesh, Hyderabad 23. Accountant General-II, Andhra Pradesh, Hyderabad 24. Accountant General, Assam, Shillong 25. Accountant General-I, Bihar, Ranchi 26. Accountant General-II, Bihar, Patna 27. Accountant General-I, Gujarat, Ahmedabad 28. Accountant General-II, Gujarat, Rajkot 29. Accountant General, Kerala, Trivandrum 30. Accountant General, Madhya Pradesh, Gwalior 31. Accountant General, Tamil Nadu, Chennai 32. Accountant General-I, Maharashtra, Mumbai 33. Accountant General-II, Maharashtra, Nagpur 34. Accountant General, Karnataka, Bangalore 35. Accountant General, Orissa, Bhubneshwar 36. Accountant General, Punjab, Chandigarh 37. Accountant General, Himachal Pradesh, Simla 38. Accountant General, Rajasthan, Jaipur 39. Accountant General-I, II & III, Uttar Pradesh, Allahabad 40. Accountant General, West Bengal, Calcutta 41. Accountant General, Haryana, Chandigarh 42. Accountant General, Jammu & Kashmir, Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntroller of Accounts, CBDT, Lok Nayak Bhawan, Khan Market, New Delhi 73. State Bank of Patiala, (Head Office), The Mall, Patiala 74. State Bank of Bikaner and Jaipur, Head Office, Tilak Marg, 'C' Scheme Jaipur 75. State Bank of Hyderabad, Head Office, Gun Factory, Hyderabad 76. State Bank of Indore, 5 Yashwant Nivas Road, Indore. 77. State Bank of Mysore (Head Office), K.G.Road, Bangalore 78. State Bank of Saurashtra, Behind Satyanarayan Road, Bhavnagar, Gujarat 79. State Bank of Travancore, Post Box No.34, Trivandrum 80. N.S.Branch, Department of Economic Affairs, New Delhi 81. The Editory, 'The Income-tax Reporter' Company Law Institute of India (P) Ltd., 88, Thyagaraja Road, Thyagaraja Nagar, Chennai-600017 82. The Editor, Chartered Secretary, The Institute of Company Secretaries of India, 'ICSI House, 22, Institutional Area, Lodhi Road, New Delhi-110003 83. The Editor, "Taxation" 174, Jorbagh, New Delhi 84. The Editor, "The Tax Law Review" Post Box No.152, Jallandhar-144001 85. The Editor, "Taxmann" Allied Services (P)Ltd., 1871, Kucha Chelan, Khari Baoli, Delhi-110006 86. The Min. of Law (Deptt. of Legal Affairs), Shastri Bhawan New Delhi. 87. Food Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Add: Education Cess @2% 150/- Secondary and Higher Education Cess @1% 75/- Total Income Tax payable Rs. 7,725/- Rounded off to Rs. 7,730/- Example 3 For Assessment Year 2010-2011 Calculation of Income Tax in the case of a male employee where medical treatment expenditure was borne by the employer. Particulars: 1. Gross Salary Rs.3,00,000/- 2. Medical Reimbursement by employer on the treatment of self and dependent family member Rs. 30,000/- 3. Contribution of GPF Rs. 20,000/- 4. LIC premium Rs. 20,000/- 5. Repayment of House Building Advance Rs. 25,000/- 6. Tuition fees for two children Rs. 60,000/- 7. Investment in Unit-Linked Insurance Plan 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 Sec. 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 60,000/- Investment in Unit-Linked Insurance 20,000/- Plan Total 1,45,000/- Restricted to Rs. 1,00,000/- Rs. 1,00,000 Total Income: Rs. 2,15,000/- Tax Payable Rs. 5,500/- Add: Education Cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 8,40,000/- Rs. 8,40,000/- Valuation of perquisites (a) Perq. for flat: Lower of (15% of salary for ten months=Rs.1,05,000/-) and (actual rent paid=3,60,000) : Rs. 1,05,000/- (b) Perq. for hotel Lower of (24% of salary of 2 mths=33,600) and (actual payment =1,00,000) : Rs. 33,600/- (c) Perq for furniture @ 10% of cost : Rs. 20,000/- Rs. 1,58,600/- Less: Rent recovered from employee : Rs. 60,000/- Rs. 98,600/- (d) Add : perq. for free gas, elec. water : Rs. 40,000/- Total perquisites: Rs. 1,38,600/- Gross Total Income (8,40,000+1,38,600) Rs.9,78,600/- Less: Deduction u/s 80C: Provident Fund :42,000 ,LIC:10,000 , Subscription to Unit :50,000/- Linked Insurance Plan Total: Rs.1,02,000/- Restricted to Rs.1,00,000/- Rs.1,00,000/- Total Income Rs. 8,78,600/- Tax Payable Rs. 1,64,580/- Add: Surcharge Nil Education Cess @2% 3,291.6/- Secondary and Higher Education Cess @1% 1,645.8/- Total Income Tax payable Rs. 1,69,517.4/- Rounded off to Rs. 1,69,520/- Example 6 For Assessment Year 2010-2011 Illustrating Valuation of perquisite and calculation of tax in the case of a female employee of a Private Company posted at Delhi and repaying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assets by employees 14 Transfer of assets to employees 15 Value of any other benefit/amenity/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 9. Details of tax, - (a) Tax deducted from salary of the employee u/s 192(1) ……… (b) Tax paid by employer on behalf of the employee u/s 192(1A) ……… (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… ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifies the following Scheme for electronic filing of return of tax deducted at source, namely:- 1. Short title, commencement and application. - (1) This Scheme may be called the "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003". (2) It shall come into force on the date of its publication in the Official Gazette. (3) It shall be applicable to all persons filing returns of tax deducted at source on computer media under sub-section (2) of section 206 of the Income-tax Act, 1961. 2. Definitions. -In this Scheme, unless the context otherwise requires,- (1) "Act" means the Income-tax Act, 1961 (43 of 1961); (2) "Board" means the Central Board of Direct Taxes constituted under the Central Board of Revenues Act, 1963 (54 of 1963); (3) "computer media" means a floppy (3 ½ inch and 1.44 MB capacity) or CD-ROM, and includes on-line data transmission of electronic data to a server designated by e-filing Administrator for this purpose; (4) "e-deductor" means the person responsible for deduction of tax at source who is required to furnish e-TDS Return under this scheme; (5) "e-filing Administrator" means an officer not below the rank of Commissioner of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -filing Administrator for this purpose, he may transmit the electronic data of the e-TDS Return directly to such server and send Form No. 27A on paper format separately to the e-TDS Intermediary. 5. Procedure to be followed by e-TDS intermediary. - (1) The e-TDS Intermediary shall receive the e-TDS Return from e-deductors alongwith the declaration in Form No. 27A in paper format. (2) The e-TDS Intermediary shall perform format level validation and control checks on the e-TDS Returns received by him and on successful completion of the same, the e-filing Administrator shall issue provisional receipt to the e-deductor. (3) The e-TDS Intermediary shall upload the data on e-TDS Return on the server designated by the e-filing Administrator for the purpose of e-TDS Return and check whether the prescribed particulars relating to deposit of the tax deducted at source in bank and the permanent account number of the deductee have been given in the e-TDS Return. (4) On successful completion of the check, the data of e-TDS Return shall be transmitted by the e-TDS Intermediary to the e-filing Administrator together with the declaration in Form No.27A and the provisional receipt issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-filing Administrator. (3) The e-TDS Intermediary shall retain for a period of one year from the end of the relevant financial year in which the return is required to be filed, the information relating to deficiency memo and provisional receipts issued in respect of the returns filed through it. (4) The e-TDS Intermediary shall ensure confidentiality of information that comes to his possession during the course of implementation of this scheme, save with the permission of the edeductor, Assessing Officer or e-filing Administrator. (5) The e-TDS Intermediary shall ensure that all his employees, agents, franchisees, etc., adhere to all provisions of this scheme as well as all directions issued by the e-filing Administrator. 7. Powers of e-filing Administrator. -Without affecting the generality of the foregoing provisions, the e-filing Administrator shall - 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. Notification No.205/2003. (1) specify the procedures, data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orily required to invest 40 percent of pension wealth to purchase an annuity (from an IRDA-regulated life insurance company). In case of Government employees the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirment. The individual would received 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% 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. option 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 operationalization of the new pension system shall be form 1st of January, 2004. U.K. SINNHA, Jt. Secy. ANNEXURE-V A MINISTRY OF FINANCE (Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber S.O.1048(E), dated the 24th November 2000, namely:- In the said notification, in the Table, against serial numbers 1,2 and 3 under cloumn (3) relating to "Circumstances for eligibility" the words "to civilians" shall be omitted. (Notification No.22/F.No.142/29/99-TPL) T.K. SHAH Director ANNEXURE-VI FORM NO. 10BA (See rule 11B) DECLARATION TO BE FILED BY THE ASSESSEE CLAIMING DEDUCTION U/S 80 GG I/We……………………………………………………………… (Name of the assessee with permanent account number) do hereby certify that during the previous Year………….I/We had occupied the premise………………………….(full address of the premise) for the purpose of my/our own residence for a period of…………………..months and have paid Rs. ………………. In cash/through crossed cheque, bank draft towards payment of rent to Shri/Ms/M/s……………………….(name and complete address of the landlord). It is further certified that no other residential accommodation is owned by (a) me/my spouse/my minor child/our family (in case the assessee is HUF), at ………………….where I/we ordinarily reside/perform duties of officer or employment or carry on business or profession, or (a) me/us at any other place, being accommodation in my occupation, the val ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
