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DEDUCTION OF TAX AT SOURCEINCOME-TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961

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..... tions are available at the website of the Income Tax Department- w ww.incometaxindia.gov.in . 2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2016 As per the Finance Act, 2016 , income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head Salaries for the financial year 2016-17 (i.e. Assessment Year 2017-18) at the following rates: 2.1 Rates of tax A. Normal Rates of tax: Sl. No. Total Income Rate of tax 1 Where the total income does not exceed ₹ 2,50,000/-. Nil 2 Where the total income exceeds ₹ 2,50,000/-but does not exceed ₹ 5,00,000/-. 10 per cent of the amount by which the total income exceeds ₹ 2,50,000/- 3 Where the total income exceeds ₹ 5,00,000/- but does not exceed ₹ 10,00,000/-. ₹ 25,000/- plus 20 per cent of the amount by which the total income exceeds ₹ 5,00,000/-. 4 Where the total income exceeds ͅ .....

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..... person referred to in sub-clause ( vii ) of clause ( 31 ) of section 2 of the Income-tax Act, having a total income exceeding one crore rupees, be increased by a surcharge for the purpose of the Union calculated at the rate of fifteen per cent of such income-tax Provided that in the case of persons mentioned above having total income exceeding one crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of one crore rupees by more than the amount of income that exceeds one crore rupees. 2.3.1 Education Cess on Income tax: The amount of income-tax including the surcharge if any, shall be increased by Education Cess on Income Tax at the rate of two percent of the income-tax. 2.3.2 Secondary and Higher Education Cess on Income-tax: An additional education cess is chargeable at the rate of one percent of income-tax including the surcharge if any, but not including the Education Cess on income tax as in 2.3.1. 3. SECTION 192 OF THE INCOME-TAX ACT, 1961 : BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM SALARIES : 3.1 Method of Tax Calculation: Eve .....

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..... ayable on ₹ 50,000/= (4.57% of 50,000) ₹ 2285/- Amount required to be deposited each month ₹ 190 ((Rs. 190.40) =2285/12) The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee. 3.3 Salary From More Than One Employer: Section 192(2) deals with situations where an individual is working under more than one employer or has changed from one employer to another. It provides for deduction of tax at source by such employer (as the tax payer may choose) from the aggregate salary of the employee, who is or has been in receipt of salary from more than one employer. The employee 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 therefrom, 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). 3.4 Relief When Salary Paid in Arrear or Advance: .....

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..... o account any loss only under the head Income from house property . Loss under any other head cannot be considered by the DDO for calculating the amount of tax to be deducted. 3.6 Computation of income under the head Income from house property : While taking into account the loss from House Property, the DDO shall ensure that the employee files the declaration referred 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 ) Gross annual rent/value ( b ) Municipal Taxes paid, if any ( c ) Deduction claimed for interest paid, if any ( d ) Other deductions claimed ( e ) Address of the property The DDO shall also ensure furnishing of the evidence or particulars in Form No. 12BB in respect of d .....

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..... The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest payable. In case a new loan is taken to repay the earlier loan, then the certificate should also show the details of Principal and Interest of the loan so repaid. 3.7 Adjustment for Excess or Shortfall of Deduction: The provisions of Section 192(3) 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. 3.8 Salary Paid in Foreign Currency: 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 Telegraphic transfer buying rate of such currency as on the date on which tax is required to be deducted at source ( see Rule 26). 4. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES: 4.1. As per Section 204( i ) of the Act, in the context of payments other than payments by the Central Government of the State Government the persons .....

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..... rquisites opted to be deposited by the employer 7TH DAY NEXT MONTH However, if a DDO applies before the jurisdictional Additional/Joint Commissioner of Income Tax to permit quarterly payments of TDS under section 192 , the Rule 30(3) allows for payments on quarterly basis and as per time given in Table below: Sl. No. Quarter of the financial year ended on Date for quarterly payment 1 30th June 7th July 2 30th September 7th October 3 31st December 7th January 4 31st March 30th April next Financial Year 4.4.2 Mode of Payment of TDS 4.4.2.1 Compulsory filing of Statement by PAO, Treasury Officer, etc in case of payment of TDS by Book Entry u/ s 200 (2A) : 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 [ Book Entry ], the Pay and Accounts Officer or the Treasury Off .....

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..... he Reserve Bank of India or branches of the State Bank of India or of any authorized bank; ( ii ) In case of a company and a person (other than a company), to whom provisions of section 44AB are applicable, the amount deducted shall be electronically remitted into the Reserve Bank of India or the State Bank of India or any authorised bank accompanied by an electronic income-tax challan (Rule125). The amount shall be construed as electronically remitted to the Reserve Bank of India or to the State Bank of India or to any authorized bank, if the amount is remitted by way of: ( a ) internet banking facility of the Reserve Bank of India or of the State Bank of India or of any authorized bank; or ( b ) debit card. {Notification No.41/2010 dated 31st May 2010} 4.5 Interest, Penalty Prosecution for Failure to Deposit Tax Deducted: 4.5.1 If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the cre .....

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..... unt number (TAN) of the deductor; ( c ) ( i ) Book identification number or numbers (BIN) where deposit of tax deducted is without production of challan in case of an office of the Government; ( ii ) Challan identification number or numbers (CIN*) in case of payment through bank. (*Challan identification number (CIN) means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and challan serial number given by the bank. ) ( d ) Receipt numbers of all the relevant quarterly statements of TDS (24Q). The receipt number of the quarterly statement is of 8 digit. Further as per Circular 04/2013 dated 17-04-2013 all deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall issue the Part A of Form No. 16, by generating and subsequently downloading it through TRACES Portal and after duly authenticating and .....

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..... site www.tdscpc.gov.in/ including online correction of statements (Form 24Q). ( b ) The employer should quote the gross amount of salary (including any amount exempt under section 10 and the deductions under chapter VI A) in column 321 (Amount paid/credited) of Annexure I of Form 24Q as per NSDL RPU (hereafter Return Preparation Utility). ( c ) The employer should quote the amount of salary excluding any amount exempt under section 10 in column 333 (Total amount of salary) of Annexure II of Form 24Q as per NSDL RPU. ( d ) TDS on Income (including loss from House Property) under any Head other than the head 'Salaries' offered for TDS (shown in column 339) can be shown in column 350 (Reported amount of TDS by previous employer, as per NSDL RPU. ( e ) Employer is advised to quote Total Taxable Income (Column 346) in Annexure II without rounding-off and TDS should be deducted and reported accordingly i.e. without rounding-off of TDS also. Exam .....

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..... he person responsible for paying such income i.e., the person responsible for deducting tax at source. The form and manner of such particulars are prescribed in Rule 26A, Form 12BA (Annexure II) and Form 16 of the Rules . Information relating to the nature and value of perquisites is to be provided by the employer in Form 12BA in case salary paid or payable is above ₹ 1,50,000/-. In other cases, the information would have to be provided by the employer in Form 16 itself. 4.6.4.2 An employer, who has paid the tax on perquisites on behalf of the employee as per the provisions discussed in para 3.2 of this circular, 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 16. 4.6.4.3 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 crucial responsibility of the employer, which is expected to be discharged in accordance with law and rules of valuation framed there under. Any false information, fabr .....

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..... 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 statements prepared and delivered as per the provisions of section 200(3) of the Act . 4.7.2 All tax deductors are required to file the TDS statements in Form No.24Q (for tax deducted from salaries). As the requirement of filing TDS certificates alongwith the return of income has been done away with, the lack of PAN of deductees is creating difficulties in giving credit for the tax deducted. Tax deductors are, therefore, advised to procure and quote correct PAN details of all deductees in the TDS statements for salaries in Form 24Q. Taxpayers are also liable to furnish their correct PAN to their deductors. Non-furnishing of PAN by the deductee (employee) to the deductor (employer) will result in deduction of TDS at higher rates u/s 206AA of the Act mention .....

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..... be treated as the annual return of TDS. Due dates of filing this statement quarterwise is as in the Table below. TABLE Dates of filing Quarterly Statements E-TDS Return 24Q Sl. No. Return for Quarter ending Due date for Government Offices Due date for Other Deductors 1 30th June 31st July 15th July 2 30th September 31st October 15th October 3 31st December 31st January 15th January 4 31st March 15th May 15th May 4.9.2 The statements referred above may be furnished in paper form or electronically under digital signature or alongwith verification of the statement in Form 27A of verified through an electronic process in accordance with the procedures, formats and standards specified by the Director General of Income‐tax (Systems). The procedure for furnishing the e-TDS/TCS statement is detailed at Annexure VI. 4.9 .....

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..... ( iii ) mandatory quote of permanent account number PAN of all deductees; ( iv ) furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be. ( v ) furnish particular of amounts paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax u/s 197 by the assessing officer of the payee. 4.10 TDS on Income from Pension: In the case of pensioners who receive their pension (not being family pension paid to a spouse) from 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 pensioner furnishes 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 v .....

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..... emuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as Salary . 5.2 DEFINITION OF SALARY , PERQUISITE AND PROFIT IN LIEU OF SALARY (SECTION 17): 5.2.1 Salary includes:- i. 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. ii. the portion of the annual accretion to the balance at the credit of the employee participating in a recognized provident fund as consists of {Rule 6 of Part A of the Fourth Schedule of the Act}: ( a ) 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, and ( b ) interest credited on the balance to the credit of the employee in so far as it is allowed at a rate exceeding such rate as may be fixed by Central Government. [w.e .....

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..... IV. Any sum paid by the employer in respect of any obligation which would otherwise have been payable by the assessee. V. Any sum payable by the employer, whether directly or through a fund, other than a recognized provident fund or an approved superannuation fund or other specified funds u/s 17, to effect an assurance on the life of an assessee or to effect a contract for an annuity. VI. The value of any specified security or sweat equity shares allotted or transferred , directly or indirectly, by the employer, or former employer , free of cost or at concessional rate to the employee and for this purpose, ( a ) specified security means the securities as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme; ( b ) sweat equity shares means e .....

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..... ers, 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 prescribed rates, as discussed below: ( a ) Where the accommodation provided to the employee is owned by the employer : Sl. No. Cities having population as per the 2001 census Perquisite 1 Exceeds 25 lakh 15% of salary 2 Exceeds 10 lakhs but does not exceed 25 lakhs 10% of salary 3 For other places 7.5 % of salary ( b ) Where the accommodation so provided is taken on lease/ rent by the employer: The prescribed rate is 15% of the salary or the actual amount of lease rental payable by the employer, whichever is lower, as reduced by any amount of rent paid by the employee. Meaning of 'Salary 'for the purpose of calcul .....

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..... ated in accordance with Table in A(ii)(a) above, as if the accommodation is owned by the employer. C. Furnished Accommodation in a Hotel: The value of perquisite shall be determined on the basis of lower of the following two: 1. 24% of salary paid or payable in respect of period during which the accommodation is provided; or 2. Actual charges paid or payable by the employer to such hotel, for the period during which such accommodation is provided as reduced by any rent actually paid or payable by the employee. However, nothing in (C) shall be taxable if following two conditions are satisfied : 1. The hotel accommodation is provided for a total period not exceeding in aggregate 15 days in a previous year, and 2. Such accommodation is provided on an employee's transfer from one place to another place. It may be clarified that while services provided as an integral part of the accommodation, need not be valued separ .....

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..... or any member of his household if the expenses on maintenance and running of motor car are met or reimbursed by the employer). However, the value of perquisite will be ₹ 2400/-(plus ₹ 900/-, if chauffeur is also provided) per month if the cubic capacity of engine of the motor car exceeds 1.6 litres. ( d ) ₹ 600/- (plus ₹ 900/-, if chauffeur is also provided) per month (In case the motor car is used partly in performance of duties and partly for private or personal purposes of the employee or any member of his household if the expenses on maintenance and running of motor car for such private or personal use are fully met by the employee). However, the value of perquisite will be ₹ 900/- (plus ₹ 900/-, if chauffeur is also provided) per month if the cubic capacity of engine of the motor car exceeds 1.6 litres. (2) If the motor car or any other automotive conveyance is owned by the employee but the actual running and maintenance charges are met or reimbursed by the employer, the method of valuation of perquisite value is different and as below: ( a ) .....

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..... ded 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 ₹ 1000/- p.m. The value of perquisite shall be reduced by the amount, if any, paid or recovered from the employee. VI Carriage of Passenger Goods [Rule 3(6)]: The value of any benefit or amenity resulting from the provision by an employer, who is engaged in the carriage of passengers or goods, to any employee or to any member of his household for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by such employer for the purpose of transport of passengers or goods shall be taken to be the value at which such benefit or amenity is offered by such employer to the public as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity. This will not apply to the employees of any airline or the railways. VII Interest free or concessional loans [Rule 3(7 .....

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..... employee is on official tour and the expenses are incurred in respect of any member of his household accompanying him, the amount of expenditure with respect to the member of the household shall be a perquisite. IX Value of Subsidized / Free food / non-alcoholic beverages provided by employer to an employee[Rule 3(7)(iii)]: Value of taxable perquisite is calculated as under: Expenditure incurred by the employer on the value of food / non-alcoholic beverages including 'paid vouchers which are not transferable and usable only at eating joints' XXX Less: Fixed value of a sum of ₹ 50/- per meal XXX Less: Amount recovered from the employee XXX XXX Balance amount is the taxable as perquisites on the value of food provided to the employees XXX Note : Exemption is given in following situations : 1. Tea/snacks provided in working hours. 2. Food non-alcoholic bever .....

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..... was incurred wholly and exclusively for official purpose. Note: (1) Health club, sport facilities etc. provided uniformly to all classes of employee by the employer at the employer's premises and expenditure incurred on them are exempt. (2) The initial one-time deposits or fees for corporate or institutional membership, where benefit does not remain with a particular employee after cessation of employment are exempt. Initial fees / deposits, in such case, is not included. XII Use of assets [Rule 3(7)(vii)]: It is common practice for a movable asset (other than those referred in other sub rules of rule 3) owned by the employer to be used by the employee or any member of his household. This perquisite is to be charged at the rate of 10% of the original cost of the asset as reduced by any charges recovered from the employee for such use. However, the use of Computers and Laptops would not give rise to any perquisite. XIII Transfer of assets [Rule 3(7)(viii)]: Often an employee or member of his household benefits from the transfer of movable asset (not being shares or securities) at no cost or at a cost less than its market value from the employer. Th .....

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..... y the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. Keyman insurance policy shall have the same meaning as assigned to it in section 10( 10D ); III. any amount due to or received, whether in lump sum or otherwise, by any assessee from any person- (A) before his joining any employment with that person; or (B) after cessation of his employment with that person. 5.3 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 :- 5.3.1 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) after retirement .....

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..... te or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act, is exempt under section10(10A)(i). As regards payments in commutation of pension received under any scheme of any other employer, exemption will be governed by the provisions of section 10(10A)(ii). Also, any payment in commutation of pension from a fund referred to in section 10(23AAB) is exempt under section 10(10A)(iii). 5.3.4 Any payment received by an employee of the 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 Section 10(10AA)(i). 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 ₹ 3,00,000/- in relation to such employees who retire .....

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..... vernment may by notification in the Official Gazette, specify in this behalf. The exemption of amount received under VRS has been extended to employees of the Central Government and State Government and employees of notified institutions having importance throughout India or any State or States. It may also be noted that where this exemption has been allowed to any employee for any assessment year, it shall not be allowed to him for any other assessment year. Further, if relief has been allowed under section 89 for any assessment year in respect of amount received on voluntary retirement or superannuation, no exemption under section 10(10C) shall be available. 5.3.7 Any sum received under a Life Insurance Policy (Sec 10(10D) , including the sum allocated by way of bonus on such policy other than the following is exempt under section 10(10D): ( i ) any sum received under section 80DD(3) or section 80DDA(3); or ( ii ) any sum received under a Keyman insurance policy; or ( iii ) any sum received under an .....

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..... ( i ) where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or ( ii ) where such accommodation is situated in any other places, 40% of the salary due to the employee for the relevant period. For this purpose, Salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee. Though incurring actual expenditure on payment of rent is a pre- .....

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..... 00 p. m. or ₹ 3200 p.m. (for a person who is blind or deaf and dumb or is orthopaedically handicapped with disabilities of lower extremes) vide notification S.O.No. 395(E) dated 13.05.98 r/w S.O. No. 1002 (E) dated 13.04.2015 S.O. No. 2604 (E) dated 23.09.2015. 5.3.11 Under Section 10(15)(iv)(i) of the 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. 5.3.12 Any scholarship granted to meet the cost of education is not to be included in total income as per provisions of section 10(16) of the Act. 5.3.13 Section 10(18) provides for exemption of any income by way of pension received by an individual who has been in the service of the Central Go .....

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..... gate ₹ 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 ₹ 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. It is pertinent to mention that benefits specifically exempt u/s 10(13A), 10(5), 10(14), 17 etc. of the Act would continue to be exempt. These inc .....

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..... Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual. (2) Any payment made to effect or to keep in force a contract for a deferred annuity , not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; (3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary; (4) Any contribution made : ( a ) by an individual to any Provident Fun .....

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..... 319(E), dated 25-4-2012 ] (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 section 10 (23D) 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 to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify; [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New .....

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..... e 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 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 ce .....

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..... 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 subscribed only in eligible issue of capital of any company. (16) .....

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..... an employee deduction of an amount paid or deposited 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 pension from the Fund referred to in section 10(23AAB). However, the deduction shall exclude interest or bonus accrued or credited to the employee's account, if any and shall not exceed ₹ 1,50,000. However, if any amount is standing to the credit of the employee in the fund referred to above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the interest or bonus accrued or credited to this account due to the reason of- ( i ) Surrender of annuity plan whether in whole or part; ( ii ) Pension received from the annuity plan. then the amount so received during the Financial Year shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax. Where any amount paid or deposited by the employee has been taken into ac .....

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..... charged to tax. Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C. Further it has been specified that w.e.f 01.04.09 any amount received by the employee from the New Pension Scheme shall be deemed not to have been received in the previous year if such amount is used for purchasing an annuity plan in the same previous year. It is emphasized that as per the s ection 80CCE the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) shall not exceed ₹ 1,50,000/-. The deduction allowed under section 80 CCD(1B) is an additional deduction in respect of any amount paid in the NPS upto ₹ 50,000/-. However, the contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD(2) shall be excluded from the limit of ₹ 1,50,000/- provided under this section. 5.5.4 Deduction in respect of investment made under an equity savings scheme (Section 80 CCG): Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notifie .....

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..... de of payment Allowable Deduction (in Rs.) 1 Employee or his family* the whole of the amount paid to effect or to keep in force an insurance on the health of the employee or his family or any contribution made to the CGHS or such other scheme as may be notified by Central Government (Finance Act 2013) any mode other than cash Aggregate allowable is ₹ 25,000/ (Rs 30000/- for senior and very senior citizen) 2 any payment on account of preventive health check-up of the employee or family, [restricted to ₹ 5000/-; cash payment allowed here] any mode including cash 3 Whole of the amount paid on account .....

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..... 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. 5.5.6 Deductions in respect of expenditure on persons or dependants with disability 5.5.6.1 Deductions in respect of maintenance including medical treatment of a dependent who is a person with disability (section 80DD): Under section 80DD , where an employee, 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 othe .....

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..... defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein. 2. Further in cases where the condition of disability is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO. 3. For the purposes of sections 80DD and 80 U some of the terms defined are as under:- ( a ) Administrator means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 ; ( b ) dependant means- ( i ) in .....

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..... ( 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; 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; ( 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. 5.5.7. Deduction in respect of medical treatment, etc. (Section 80DDB): Section 80DDB allows a deduction in case of employee, who is resident in India, during the previous year, of any amount actually paid for the medical treatment of such disease or ailment as may be specified in the rules 11DD (1) for himself or a dependant. The deduction allowed is equal to the amount actually paid is .....

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..... b ) financial institution means a banking company to which the Banking Regulation Act, 1949 applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf; ( c ) higher education means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so; 5.5.9 Deductions on respect of donations to certain funds, charitable institutions, etc. (Section 80G): Section 80G provides for deductions on account of donation made to various funds , charitable organizations etc. 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 employ .....

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..... any deduction under section 80GG. The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent. 5.5.11 Deductions in respect of certain donations for scientific research or rural development (Section 80 GGA): Section 80GGA allows deduction from total income of employee in respect of donations of any sum as given in the Table below: Sl. No. Donations made to persons Approval / Notification under section Authority granting approval/ Notification 1 A research association which has as its object the undertaking of scientific research or to a University, college or other institution to be used for scientific research u/s 35(1)(ii) Central Government 2 A research association which has as its object the undertaking of research in social science or statistical .....

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..... ation from the employee that he has no income from Profits and gains of business or profession . 5.5.12 Deduction in respect of interest on deposits in savings account (Section 80TTA): Section 80TTA has been introduced from the Financial Year 2012-13 and it allows to an employee from his gross total income if it includes any income by way of interest on deposits ( not being time deposits ) in a savings account, a deduction amounting to: ( i ) in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and ( ii ) in any other case, ten thousand rupees. The deduction is available if such savings account is maintained in a ( a ) banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act); ( b ) co-operative society engaged in carrying on the business of banking (including a co-operative land .....

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..... case where the accumulated balance due to an employee participating in a recognized provident fund is includible in his total income owing to the provisions of Rule 8 of Part A of Fourth Schedule not being applicable at the time of payment of accumulated balance due to the employee, deduct income tax thereon @ 10% if the amount of such payment or aggregate of such payment exceeds ₹ 50,000/-. In case the employee does not provide his/her PAN No., then the deduction will have to be made at maximum marginal rate. 8. DDOS TO SATISFY THEMSELVES ABOUT THE GENUINENESS OF CLAIM: 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 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 .....

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..... quent deductions during the same financial year. 10. MISCELLANEOUS: 10.1 These instructions are not exhaustive and are issued only with a view to guide the employers to understand the various provisions relating to deduction of tax from salaries. Wherever there is any doubt, reference may be made to the provisions of the Income-tax Act, 1961, the Income-tax Rules, 1962, the Finance Act 2016, the relevant circulars / notifications, etc. 10.2 In case any assistance is required, the Assessing Officer/the Local Public Relation Officer of the Income-tax Department may be contacted. 10.3 These instructions may be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/ State Governments. 10.4 Copies of this Circular are available with the Director of Income-tax (Public Relations, Printing Publications and Official Language), 6th Floor, Mayur Bhavan, Connaught Place, New Delhi-110 001 and at the following websites: www.finmin.nic.in www.incometaxindia.gov.in (Sandeep Singh) Under Secretary to the Govt. of India - Circular - Trade Notice - Public Notice - Instructions - Office or .....

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