TMI BlogRates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2011-2012 and explains certain related provisions of the Income-tax Act.X X X X Extracts X X X X X X X X Extracts X X X X ..... essment Year 2012-2013) at the following rates: RATES OF INCOME-TAX A. Normal Rates of tax: 1. Where the total income does not exceed Rs. 1,80,000/-. Nil 2. Where the total income exceeds Rs. 1,80,000 but does not exceed Rs. 5,00,000/- 10 per cent of the amount by which the total income exceeds Rs. 1,80,000/- 3. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 8,00,000/-. Rs. 32,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-. 4. Where the total income exceeds Rs. 8,00,000/-. Rs. 92,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 8,00,000/-. B. Rates of tax for a woman, resident in India and below sixty years of age at any time during the financial year: 1. Where the total income does not exceed Rs. 1,90,000/-. Nil 2. Where the total income exceeds Rs. 1,90,000 but does not exceed Rs. 5,00,000/-. 10 per cent, of the amount by which the total income exceeds Rs. 1,90,000/- 3. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 8,00,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 2011-2012. The income-tax is required to be calculated on the basis of the rates given above subject to provisions of sec 206AA of the Income-tax Act and shall be deducted at the time of each payment. No tax will, however, be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds Rs. 1,80,000/- or Rs.1,90,000/- or Rs. 2,50,000/- or Rs. 5,00,000/-, as the case may be, depending upon the gender and age of the employee.(Some typical examples of computation of tax are given at Annexure-I ). Payment of Tax on Non-monetary Perquisites by Employer: 3.2 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant 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 or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956(3 of 1956), to be University for the purposes of the Act. With effect from 1/04/2010 (AY 2010-11), no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause ( i ) of clause ( 10C ) of section 10 (read with Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to above and encloses therewith a computation of such loss from House Property. Following details shall be obtained and kept by the employer in respect of loss claimed under the head " income from house property" separately for each house property: (A) Computation of income under the head " income from house property" specifying (a) Gross annual rent/value (b) Municipal Taxes paid, if any (c) Deduction claimed for interest paid, if any (d) Other deductions claimed (B) Address of the property (C) Amount of loan, if any; and (D) Name and address of the lender (loan provider) (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Accumulated Balance Under Recognised Provident Fund and contribution from Approved 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 to the Act. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days from the end of the month in which the deduction is made; or income-tax is due under sub-section (1A) of section 192. (c) Notwithstanding anything contained in (b) above, in special cases, the Assessing Officer may, with the prior approval of the Joint Commissioner, permit quarterly payment of the tax deducted under section 192 or section 194A or section 194D or section 194H for the quarters of the financial year specified to in column (2) of the Table below by the date referred to in column (3) of the said Table:- TABLE Sl. No. Quarter of the financial year ended on Date for quarterly payment (1) (2) (3) 1 30 th June 7 th July 2 30 th September 7 th October 3 31 st December 7 th January 4 31 st March 30 th April Mode of Payment of TDS 4.4.2. In the case of an office of the Government, where tax has been paid to the credit of the Central Government without the production of a challan, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by whatever name called to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s down that such person shall be liable to pay simple interest (i) at one percent for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted and (ii) at one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such 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 whole or any part of tax at source or fails to pay the whole or part of tax deducted, he shall be liable to pay, by way of penalty , a sum equal to the amount of tax not deducted or paid 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 fine. Furnishing of Certificate for Tax Deducted: 4.6.1 According to the provisions of section 203, every person responsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ductee has lost the original certificate so issued and makes a request for issuance of a duplicate certificate and such duplicate certificate is certified as duplicate by the deductor. 4.6.4. (i) Where a certificate is to be furnished in Form No. 16, the deductor may, at his option, use digital signatures to authenticate such certificates. (ii) In case of certificates issued under clause (i), the deductor shall ensure that (a) the conditions prescribed in para 4.6.1 above are complied with; (b) once the certificate is digitally signed, the contents of the certificates are not amenable to change; and (c) the certificates have a control number and a log of such certificates is maintained by the deductor. The digital signature are being used to authenticate most of the e-transactions on the internet as transmission of information using digital signature is failsafe. It saves time specially in organisations having large number of employees where issuance of certificate of deduction of tax with manual signature is time consuming (circular no 2 of 2007 dated 21-5-2007) Explanation. For the purpose of this rule, challan identification number (CIN) means the number c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificates, statements and other documents. Detailed instructions in this regard are available in this Department's Circular No.497 (F.No.275/118/ 87-IT(B) dated 9.10.1987). If a person fails to comply with the provisions of section 203A, he will be liable to pay, by way of penalty, under section 272BB, a sum of ten thousand rupees. Similarly, as per Section 139A(5B), it is obligatory for persons deducting tax at source to quote PAN of the persons from whose income tax has been deducted in the statement furnished u/s 192(2C), certificates furnished u/s 203 and all returns prepared and delivered as per the provisions of section 200(3) of the Income Tax Act, 1961. 4.7.2 All tax deductors/collectors are required to file the TDS returns in Form No.24Q (for tax deducted from salaries). As the requirement of filing TDS/TCS certificates has been done away with, the lack of PAN of deductees is creating difficulties in giving credit for the tax deducted. Tax deductors and tax collectors are, therefore, advised to quote correct PAN details of all deductees in the TDS returns for salaries in Form 24Q. Taxpayers liable to TDS are also advised to furnish their correct PAN with their deductors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties Depository Ltd (NSDL). These statements are required to be filed on or before the 15 th July, the 15 th October, the 15 th January in respect of the first three quarters of the financial year and on or before the 15 th May 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. 4.9.2. The statements referred above may be furnished in paper form or electronically in accordance with the procedures, formats and standards specified by the Director General of Income-tax (Systems) along with the verification of the statement in Form 27A. 4.9.3. It is now mandatory for all Govt. deductors or companies or other deductors who are required to get their accounts audited under section 44AB of the Income Tax Act or where the number of deductee's records in a statement for any quarter of the financial year are twenty or more to file, quarterly statements of TDS on computer media only in accordance with the "Electronic Filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould 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. 4.12 New Pension Scheme The New Pension Scheme(NPS) has become operational since 1 st Jan, 2004 and is mandatory for all new recruits to the Central Government Services from 1 st January, 2004. Since then it has been opened to employees of State Governments, Private Sector and Self Employed . The income received by the NPS trust is exempt. The NPS trust is exempted from the Dividend Distribution Tax and is also exempted from the Securities Transaction Tax on all purchases and sales of equities and derivatives. The NPS trust will also receive income without tax deduction at source. The above amendments are retrospectively effective from 1/4/09 (AY 2009-10) onwards 4.13. Where Non-Residents are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s notified vide Notification No. F.N. 5/7/2003- ECB PR dated 22.12.2003(enclosed as Annexure-IVA) referred to in section 80CCD (para 5.4(C) 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. 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 which is exempt, 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: I. The value of rent free accommodation provided to the employee by his employer; II. The value of any concession in the matter of rent in respect of any accommodation provided to the employee by his employer; III. The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases: (i) By a company to an employee who is a director of such company; (ii) By a company to an employee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to an employee to apply for the specified security or sweat equity shares at a predetermined price; VII. The amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh rupees; and VIII. The value of any other fringe benefit or amenity as may be prescribed. 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)Central Govt. State Govt. employees; and (ii)Others. For employees of the Central and State governments 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 government and the State government, the valuation of perquisite in respect of accommodation would be at pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 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 1 st 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under the Head "Salaries"(Exemptions) Any income falling within any of the following clauses shall not be included in computing the income from salaries for the purpose of Section 192 of the Act :- (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 case where the compensation is paid under any scheme which is approved in this behalf by the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 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 the assessee 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 the relevant period; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed and 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.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 Offici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the employer, of the amount spent by an employee in obtaining medical treatment for himself or any member of his family from any doctor, not exceeding in the aggregate Rs.15,000/- in an 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 from income from Salaries u/s 16 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children ; [The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05. (c) 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 Governmen t 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 (VIII th Issue) vide Notification S.O. No. 1560(E) dated 3.11.05.] (6) Any sum paid as contribution in the case of an individua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Housing Bank , as the Central Government may, by notification in the Official Gazette, specify in this behalf; (11) Any subscription made to any such deposit scheme, as the Central Government may, by notification 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. [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 he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee. Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes. It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, 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 subscr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 , he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed ten per cent of his salary in the previous year. The benefit of new pension scheme has been extended to any other employees (also self employed person) w.r.e.f 1/04/09 and deduction is allowed to employees upto 10% of salary in the previous year and in other cases upto 10% 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. It may be noted that the contribution made by the Central Government or any other employer, towards a pension scheme notified for section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deduction of upto Rs one lakh under section 80C, 80CCC and sub section (1) of Section 80 CCD. E. Section 80D provides for deduction available for health premia paid etc. In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified below payment of which is made by any mode, other than cash, in the previous year out of his income chargeable to tax. Where the assessee is an individual , the sum referred to shall be the aggregate of the following, namely: (a) the whole of the amount paid to effect or to keep in force an insurance on the health of the assessee or his family or any contribution made to the CGHS as does not exceed in the aggregate fifteen thousand rupees ; and (b) the whole of the amount paid to effect or to keep in force an insurance on the health of the parent or parents of the assessee as does not exceed in the aggregate fifteen thousand rupees . Explanation. For the purposes of clause (a), "family" means the spouse and dependent children of the assessee. Where the assessee is a Hindu undivided family , the sum referred to shall be the whole of the amount paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bscription to the scheme has been made; (ii) the assessee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability. However, if the dependant, being a person with disability, predeceases the assessee, an amount equal to the amount paid or deposited under sub-para(b) above shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and shall accordingly be chargeable to 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 medic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities Act, 1999 (44 of 1999); (g) "person with severe disability" means (i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or (ii) a person with severe disability referred to in clause (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); (h) "specified company" means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002).] G. 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf - Circular No. 2/2005, dated 12-1-2005. I. 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-VI) (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, whichev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy themselves about the actual deposits/ subscriptions / payments made by the employees, by calling for such particulars/ information as they deem necessary before allowing 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 follow:- (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 and compute the amount. (c) Allow deductions mentioned in para 5.4 from the figure arrived at (b) above ensuring that the relevant conditions are satisfied. The aggregate of the deductions subject to the threshold limits mentioned in para 5.4 shall not exceed the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and (v) Rs.20,00,000/-. (B) What will be the amount of TDS in case of above employees, if PAN is not submitted by them to their DDOs/Offices: Particulars Rupees (i) Rupees (ii) Rupees (iii) Rupees (iv) Rupees (i) Gross Salary Income (including allowances) 1,50,000 2,00,000 5,00,000 10,00,000 20,00,000 Contribution of G.P.F. 10,000 45,000 50,000 1,00,000 1,00,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Rupees (iii) Rupees (iv) Rupees (v) Gross Salary 1,50,000 2,00,000 5,00,000 10,00,000 20,00,000 Less: Deduction U/s 80C 10,000 45,000 50,000 1,00,000 1,00,000 Taxable Income 1,40,000 1,55,000 4,50,000 9,00,000 19,00,000 (A) Tax thereon Nil Nil 27,000 1,22,000 4,22,000 Add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyer on the treatment of self and dependent family member 30,000 3 Contribution of GPF 20,000 4 LIC Premium 20,000 5 Repayment of House Building Advance 25,000 6 Tuition fees for two children 60,000 7 Investment in Unit-Linked Insurance Plan 20,000 Computation of Tax S.No. Particulars Rupees 1 Gross Salary 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) (+) 15,000 2 Taxable income 3,15,000 Less : Deduction U/s 80C (i) GPF Rs.20,000/- (ii) LIC Rs.20,000/- (iii) Repayment of House Building Advance Rs.25,000/- (iv) Tuition fees for two children Rs.60,000/- (v) Investment in Unit-Linked Insurance Plan Rs.20,000/- Total =Rs.1,45,000/- Restricted to Rs. 1,00,000/- (-)1,00,000 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax payable 11,433 Rounded off to 11,430 Example 5 For Assessment Year 2012-2013 Illustrating valuation of perquisite and calculation of tax in the case of a male employee below age of sixty years of a private company in Mumbai who was provided accommodation in a flat at concessional rate for ten months and in a hotel for two months (With valid PAN furnished to employer). S.No. Particulars Rupees 1 Salary 7,00,000 2 Bonus 1,40,000 3 Free gas, electricity, water etc. (Actual bills paid by company) 40,000 4(a) Flat at concessional rate (for ten months). = Rs.3,60,00 3,60,000 4(b) Hotel rent paid by employer (for two months) 1,00,000 4(c) Rent recovered from employee. 60,000 4(d) Cost of furniture. 2,00,000 5 Subscription to Unit Linked Insurance Plan 50,000 6 Life Insurance Premium 10,000 7 Contribution to recognized P.F. 42,000 8 Investment in long term infrastructure bonds (80 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 House Rent Allowance 1,80,000 4 Special Duties Allowance 12,000 5 Provident Fund 60,000 6 LIP 10,000 7 Deposit in NSC VIII issue 30,000 8 Rent Paid by the employee for house hired by her 1,20,000 9 Repayment of House Building Loan (Principal) 60,000 10 Tuition Fees for three children (Rs.10,000 per child) 30,000 Computation of total income and tax payable thereon S.No. Particulars Rupees 1 Gross Salary (Basic+DA+HRA+SDA) 5,92,000 Less : House rent allowance exempt U/s 10 (13A) Least of: (a). Actual amount of HRA received. :Rs.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) :Rs . 80,000 (c). 50% of salary (including D.A) : Rs. 2,00,000 (-) 80,000 2 Gross Total Taxable Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 salary as per 17(3) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarterly e-TDS/TCS statement should be same as in the TAN database maintained by ITD (these details can be verified with the TIN-FC or the ITD web-site www.incometaxindia.gov.in). If they are different the deductor shall submit a TAN change request application to update the ITD TAN database or a copy of the acknowledgment of TAN change request already submitted. 1.1.10 Each branch or Drawing and Disbursement Officer (DDO) of a deductor/collector furnishing separate quarterly e-TDS/TCS statement should furnish the quarterly e-TDS/TCS statement quoting separate TAN issued to each branch/DDO respectively. 1.1.11 Quarterly e-TDS/TCS statement pertains to the period for which they are allowed to furnish. 1.1.12 The quarterly e-TDS/TCS statement has been successfully validated through the latest version of the FVU. 1.1.13 Control totals, TAN and name mentioned in the quarterly e-TDS/TCS statement match with those mentioned on Form 27A. 1.1.14 Computer media is virus free. Acceptance of Quarterly e-TDS/TCS Statements by e-TDS Intermediary (NSDL and TIN-FC branches) 2.1 ACCEPTANCE OF QUARTERLY E-TDS/TCS STATEMENT BY TIN-FC: After deductor/collector furnishes the quarterly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed by ITD; 2.1.2.8 TAN stated in quarterly e-TDS/TCS statement is not present in TAN Master database and deductor/collector does not submit any proof of TAN stated in the statement; 2.1.2.9 deductor/collector does not have a TAN; 2.1.2.10 name/address of deductor/collector displayed on TAN Master database does not match with name/address stated on Form 27A and deductor/collector does not provide TAN change request; 2.1.2.11 mismatch of control totals as per with Form 27A and as per e-file; 2.1.2.12 the quarterly statement has not been successfully passed through the latest version of FVU; 2.1.2.13 Quarterly e-TDS/TCS statements do not pertain to the period for which deductors/collectors are allowed to submit their statements. 2.1.2.14 Computer media is not virus free. In such cases, TIN-FC shall issue a pre-printed Non - Acceptance Memo citing reasons for non acceptance to the deductor/collector to carry out necessary corrections. In case of non-acceptance, TIN-FC shall return the computer media as well as any other documents furnished and physical Form 27A to the deductor/collector. No fee will be charged for the e-TDS/e-TCS statement that is not accepted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e account does not constitute pension investment, and would attract no special tax treatment. (iii) Individuals can normally exit at or after age 60 years for tier-I of the pension system. At the exit the individual would be mandatorily required to invest 40 percent of pension wealth to purchase an annuity (from an IRDA- regulated life insurance company). In case of Government employees the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-clause (i) of clause (18) of Section 10 of the Income tax Act, 1961 (43 of 1961)), the Central Government, hereby specifies the gallanty awards for the purposes of the said Section and for that purpose makes the following amendment in the notification of the Government of India in the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number S.O.1048(E), dated the 24 th 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. ANNEXURE-VIII 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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