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TMI BlogIncome-tax Deduction from salaries during the Financial Year 2019-20 under section 192 of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... ATES OF INCOME-TAX AS PER FINANCE ACT, 2019: As per the Finance (No.2) Act, 2019, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head "Salaries" for the financial year 2019-20 (i.e. Assessment Year 2020-21) 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/-. 5 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/-. ₹ 12,500/- plus 20 per cent of the amount by which the total income exceeds ₹ 5,00,000/-. 4 Where the total income exceeds ₹ 10,00,000/-. ₹ 1,12,500/- plus 30 per cent of the amount by which the total income exceeds ₹ 10,00,000/- B. Rates of tax for every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year: Sl No Total Income Rate of tax 1 Where the total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e" "(excluding the income under the provisions of section 111A and 112A)" exceeding five crore rupees, at the rate of thirty-seven per cent of such income-tax: (e) having a total income (including income under the provisions of section 111A and 112A) exceeding two crores rupees,but is not covered under clauses (c) and (d), shall be applicable at the rate of fifteen percent of such income tax: Provided that in case where total income includes any income chargeable under section 111A and 112A of the Income Tax Act, the rate of surcharge on the amount of income tax computed in respect of that part of income shall not exceed fifteen percent. Provided that in the case of persons mentioned above having total income exceeding,- (a) fifty lakh rupees but not 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 fifty lakh rupees by more than the amount of income that exceeds fifty lakh rupees; (b) one crore rupees but does not exceed two crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of tax mentioned in para 3.2 above, tax is to be determined at the average of income tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "salaries", including the value of perquisites for which tax has been paid by the employer himself. 3.2.2 Illustration: The income chargeable under the head "salaries" of an employee below sixty years of age for the year inclusive of all perquisites is ₹ 6,00,000/-, out of which, ₹ 50,000/- is on account of non-monetary perquisites and the employer opts to pay the tax on such perquisites as per the provisions discussed in para 3.2 above. STEPS: Income Chargeable under the head -"Salaries" inclusive of all perquisites ₹ 6,00,000/- Tax on Total Salary (including Cess) ₹ 33,800/- Average Rate of Tax [(33, 800/6,00,000) X 100] 5.63/% Tax payable on ₹ 50,000/= (5.63% of 50,000) ₹ 2815 Amount required to be deposited each month ₹ 235= 2815/12 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 worki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on regarding Income under any other head: (i) Section 192(2B) enables a taxpayer to furnish particulars of income under any head other than "Salaries" ( not being a loss under any such head other than the loss under the head ― Income from house property‖) received by the taxpayer for the same financial year and of any tax deducted at source thereon. The particulars may now be furnished in a simple statement, which is properly signed and verified by the taxpayer in the manner as prescribed under Rule 26B(2) of the Rules and shall be annexed to the simple statement. The form of verification is reproduced as under: I,………………………….. (name of the assessee), do declare that what is stated above is true to the best of my information and belief. It is reiterated that the DDO can take into 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. It may be noted that loss under the head "Income from house property" can be set off only up to ₹ 2.00 lakh with the income under any other hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed. Hence, it is necessary for the DDO to have the completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee. (b) Further any prior period interest for the FYs upto the FY in which the property was acquired or constructed (as reduced by any part of interest allowed as deduction under any other section of the Act) shall be deducted in equal installments for the FY in question and subsequent four FYs. (c) 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. As discussed in para 4.6.5 section 192(2D) read with rule 26C makes it mandatory for the DDO to obtain following details/evidences in respect of Interest deductible. (i) Interest payable or paid (ii) Name of the lender (iii) Address of the lender (iv) PAN or Aadhaar number as the case may be,of the lender PAN or Aadhaar number as the case may be, of the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government account is as under: a) In case of an Office of Government: Sl No. Description Time up to which to be deposited. 1 Tax deposited without Challan [Book Entry] SAME DAY 2 Tax deposited with Challan 7TH DAY NEXT MONTH 3 Tax on perquisites opted to be deposited by the employer. 7TH DAY NEXT MONTH b) In any case other than an Office of Government Sl No. Description Time up to which to be deposited. 1 Tax deducted in March 30th APRIL NEXT FINANCIAL YEAR 2 Tax deducted in any other month 7TH DAY NEXT MONTH 3 Tax on perquisites 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 paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecified in Table in para 4.4.1 above, into any office of the 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. {Rule 30(7)} 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 credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201 and shall be deemed to be an assessee-in-de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 verifying it, in respect of all sums deducted on or after the 1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of Form No 16 shall have a unique TDS certificate number. The deductor shall generate 'Part B (Annexure)' of Form No. 16 from the Traces website and issue to the deductee after due authentication and verification along with the Part A of the Form No. 16. It may be noted that under the new TDS procedure, TAN of deductee/ PAN or Aadhaar number, as the case may be,of the deductee and receipt number of TDS statement filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad 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. Example: Total Taxable Income Total Taxable Income (Rounded Off) TDS to be Deducted TDS Deducted/ Reported after rounding-off of income Short Deduction ₹ 1350094 ₹ 1350090 ₹ 235028.20 ₹ 235028 ₹ 1.20 4.6.2. If an assessee is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the assessee. 4.6.3. Authentication by Digital Signatures: (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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l year immediately following the financial year in which the income was paid and taxes deducted. If he fails to issue these certificates to the person concerned, as required by section 192(2C), he will be liable to pay,by way of penalty, under section 272A(2)(i), a sum which shall be ₹ 100/- for every day during which the failure continues. As per Section 139C of the Act, the Assessing Officer can require the taxpayer to produce Form 12BA along with Form 16, as issued by the employer. 4.6.5 DDOs empowered to obtain evidence of proof or particulars of the prescribed claim (including claim for set-off of loss) under the section 192(2D): DDOs have been authorized u/s 192 to allow certain deductions, exemptions or allowances or set-off of certain loss as per the provisions of the Act for the purpose of estimating the income of the assessee or computing the amount of tax deductible under the said section. The evidence /proof /particulars for some of the deductions/exemptions/allowances/set-off of loss claimed by the employee such as rent receipt for claiming deduction in HRA, evidence of interest payments for claiming loss from self-occupied house property, etc. is not availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to furnish PAN by employee (Section 206AA): 4.8.1 Section 206AA in the Act makes furnishing of PAN or Aadhaar number as the case may be,by the employee compulsory in case of receipt of any sum or income or amount, on which tax is deductible. If employee (deductee) fails to furnish his/her PAN or Aadhaar number as the case may be,to the deductor , the deductor has been made responsible to make TDS at higher of the following rates: i) at the rate specified in the relevant provision of this Act; or ii) at the rate or rates in force; or iii) at the rate of twenty per cent. The deductor has to determine the tax amount in all the three conditions and apply the higher rate of TDS. However, where the income of the employee computed for TDS u/s 192 is below taxable limit, no tax will be deducted. But where the income of the employee computed for TDS u/s 192 is above taxable limit, the deductor will calculate the average rate of income- tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to be deducted at the average rate. Health and Education cess @ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucted at source [on or after 1.07.2012] he shall be liable to pay, by way of fee a sum of ₹ 200 for every day during which the failure continues. However, the amount of such fee shall not exceed the amount of tax which was deductible at source. This fee is mandatory in nature and to be paid before furnishing of such statement. 4.9.5 Rectification of mistake in filing TDS Statement: A DDO can also file a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered earlier. 4.9.6 Penalty for failure in furnishing statements or furnishing incorrect information (section 271H): If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) or furnishes an incorrect statement, in respect of tax deducted at source [on or after 1.07.2012], he shall be liable to pay, by way of penalty a sum which shall not be less than ₹ 10,000/- but which may extend to ₹ 1,00,000/-. However, the penalty shall not be levied if the person proves that after paying TDS with the fee and interest, if any, to the credit of Central Government, he had delivered such statem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders are passed, the refund can be issued to the employer as the tax has been borne by it [Circular No. 707 dated 11.07.1995]. 4.11.2 In respect of non-residents, the salary paid for services rendered in India shall be regarded as income earned in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India. 5. COMPUTATION OF INCOME UNDER THE HEAD "SALARIES" 5.1 INCOME CHARGEABLE UNDER THE HEAD "SALARIES": (1) The following income shall be chargeable to income-tax under the head "Salaries" : (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not; (b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him. (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year. (2) For the removal of doubts, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 who has a substantial interest in the company; iii) By an employer (including a company) to an employee, who is not covered by (i) or (ii) above and whose income under the head "Salaries" (whether due from or paid or allowed by one or more employers), exclusive of the value of all benefits and amenities not provided by way of monetary payment, exceeds ₹ 50,000/-. [What constitutes concession in the matter of rent have been prescribed in Explanations 1 to 4 below section 17(2)(ii) of the Act] 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thers, 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 calculation of perquisite in respect of Residential Accommodation: a. Basic Salary; b. Dearness Allowance, or Dearness Pay if it enters into the computation of superannuation or retirement benefit of the employees; c. Bonus; d. Commission; e. All other taxable allowances (excluding the portion not taxable); and f. Any monetary payment which is chargeable to tax (by whatever name called). Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for which the employer makes payment or reimburses the employee shall be valued as a perquisite as per the residual clause. In other words, composite tariff for accommodation will be valued as per the Rules and any other charges for other facilities provided by the hotel will be separately valued under the residual clause. D. However, the value of any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site or a dam site or a power generation site or an off-shore site will not be treated as a perquisite if: (i) such accommodation is located in a ―remote area" or (ii) where it is not located in a ―remote area", the accommodation is of a temporary nature having plinth area of not more than 800 square feet and should not be located within 8 kilometers of the local limits of any municipality or cantonment board. A project execution site here 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. II Perquisite on Motor car provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable to tax if the car is used wholly and exclusively for official purposes. However following compliances are necessary: * The employer has maintained complete details of the journey undertaken for official purposes; * The employer gives a certificate that the expenditure was incurred wholly for official duties. However if the motor car is used partly for official or partly for private purposes then the amount of perquisite shall be the actual expenditure incurred by the employer as reduced by the amounts in c) referred to in (1) above. Normal wear and tear of the motor shall be taken at 10 % per annum of the actual cost of the motor car. III Personal attendants etc. [Rule 3(3)]: The value of free service of all personal attendants including a sweeper, gardener and a watchman is to be taken at actual cost to the employer. Where the attendant is provided at the residence of the employee, full cost will be taxed as perquisite in the hands of the employee irrespective of the degree of personal service rendered to him. Any amount paid by the employee for such facilities or services shall be reduced from the above amount. IV Gas, electricity & water for household consumpt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 adjustment otherwise adopted by the employer shall not be relevant. However, small loans up to ₹ 20,000/- in the aggregate are exempt. Loans for medical treatment of diseases specified in Rule 3A are also exempt, provided the amount of loan for medical reimbursement is not reimbursed under any medical insurance scheme. Where any medical insurance reimbursement is received, the perquisite value at the prescribed rate shall be charged from the date of reimbursement on the amount reimbursed, but not repaid against the outstanding loan taken specifically for this purpose. VIII Perquisite on account of travelling, touring, accommodation and any other expenses paid for or reimbursed by the employer for any holiday availed [Rule 3(7)(ii)]: The value of perquisite on account of travelling, touring, accommodation and an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Expenditure on use for official purposes XXX Less : Amount, if any, recovered from the employee XXX XXX Amount taxable as perquisite XXX However if the amount is incurred wholly and exclusively for official purposes it will be exempt if the following conditions are fulfilled i) Complete details of such expense, including date and nature of expenditure, is maintained by the employer. ii) Employer gives a certificate that the same was incurred wholly and exclusively for official purpose. XII Club Expenditure [Rule 3(7)(vi)]: Any annual or periodical fee for Club facility and any expenditure in a club by the employee (or any member of his household), which is paid or reimbursed by the employer is taxable on the following basis: Amount of expenditure incurred by the employer XXX Less : Expenditure on use for official purposes XXX Less : Amount, if any, recovered from the employee XXX XXX Amount taxable as perquisite XXX However, if the amount is incurred wholly and exclusively for official purposes it will be exempt if the following conditions are fulfilled i) Complete details of such expense, including date and nature of expenditure and its business expediency is mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erquisite under section 17(2). It is further clarified that the method regarding valuation of perquisites are given in section 17(2) of the Act and in rule 3 of the Rules. The deductors may look into the above provisions carefully before they determine the perquisite value for deduction purposes. 5.2.3 'Profits in lieu of salary' shall include I. the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto; II. any payment (other than any payment referred to in clauses (10), (10A), (10B), (11), (12) (13) or (13A) of section 10 due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the defence service is exempt. Gratuity received in cases other than those mentioned above, on retirement, termination etc is exempt up to the limit as prescribed by the Board. Presently the limit is ₹ 20 lakhs w.e.f. 29.03.2018 [Notification No. 16/2019/F. No. 200/8/2018-ITA-I dated 08.03.2019] 5.3.3 Any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all- India services or to the members of the defence services or to the members of the civil services of a State 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orated or under a Central, State or Provincial Act, or, an Institution declared to be a University under section 3 of the University Grants Commission Act, 1956; g) Any Indian Institute of Technology within the meaning of Section 3 (g) of the Institute of Technology Act, 1961; h) Such Institute of Management as the Central Government 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 rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rules, the quantum of exemption allowable on account of grant of special allowance to meet expenditure on payment of rent shall be the least of the following: (a) the actual amount of such allowance received by the assessee in respect of the relevant period i. e. the period during which the accommodation was occupied by the assesse during the financial year; or (b) the actual expenditure incurred in payment of rent in excess of one-tenth of the salary due for the relevant period; or (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification SO No.403(E) dt 24.4.2000 (F.No.142/34/99-TPL). Rule 2BB has been amended and the exemption in respect of transport allowance for financial year 2018-19 shall be available upto ₹ 3200 per month only to the person who is blind or orthopedically handicapped with disabilities of lower extremities, to meet the his expenditure for the purpose of commuting between the place of the residence and the place of his duties. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure 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 include benefits like house rent allowance, leave travel concession, travel expense allowance on tour and transfer, daily allowance to meet tour expenses as prescribed, medical facilities subject to conditions. 5.3.15 In this connection it is to be noted that as per sec. 10 (14) read with rule 2BB any allowance granted to meet the cost of travel on tour or on transfer includes any sum paid in connection with transfer, packing and transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u 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 Fund to which the Provident Fund Act, 1925 applies; (b) to any provident 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 or advance; (5) Any sum paid or deposited during the year as a subscription :- (a) in the name of employee or a girl child of that employee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Central Government, may, by notification in the Official Gazette, specify in this behalf; [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005] The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C. (9) Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in section 10(23D), or, by the Administrator or the specified company defined in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf; [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005] (10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf; (11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property. Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly. (13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Regulatory and Development Authority Act, 2013 (23 of 2013). B. Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract for a deferred annuity the amount of any premium or other payment made is restricted to: Policy issued before 1st April 2012 20% of the actual capital sum assured Policy issued on or after 1st April 2012 10% of the actual capital sum assured Policy issued on or after 1st April 2013 * - In cases of persons with disability or person with severe disability as per Sec 80 U or suffering from disease or ailment as specified in rules made under Sec 80DDB 15% of the actual capital sum assured *Introduced by Finance Act 2013 Actual capital sum assured in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account - i. the value of any premium agreed to be returned, or ii. any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person. 5.5.2 Deduction in respect of contribution to certain pension funds (Section 80CCC) Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed both under sub-section (1) and sub-section (1B) of section 80CCD. As per Section 80CCD(2), where any contribution in the said pension scheme is made by the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% [increased to 14% from financial year 2019-20 if the amount is contributed by the Central Government] of his salary. Subject to provisions of section 10 (12A) and section 10 (12B) discussed in para 5.3.7, if any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above, and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of (i) Closure or opting out of the pension scheme or (ii) Pension received from the annuity plan purchased and taken on such closure or opting out then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax. Further, the amount received by the nominee, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot exceed ₹ 25,000. Withdrawal of deduction - If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed. This deduction is allowed for three consecutive assessment years beginning with the AY in which the listed equity shares or units were first acquired. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any other year. The deduction under this section for F.Y. 2018-19 shall be allowed to an employee who has claimed deduction under this section for F.Y 2016-17 if he is otherwise eligible to claim deduction as per provisions of this sections. 5.5.5 Deduction in respect of health insurance premia paid, etc. (Section 80D) Particulars Case-1 Case-2 Case-3 Self & Family (no one of them is a senior citizen) Parents (no one of them is a senior citizen) Self & Family (no one of them is a senior citizen) Parents (atleast one of them is a senior citizen) Self & Family (atleast one of them is a senior citizen) Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 employee shall be allowed a deduction of a sum of ₹ 75,000/- from his gross total income of that year. However, where such dependant is a person with severe disability, an amount ₹ 1,25,000/- shall be allowed as deduction subject to the specified conditions. The deduction under (b) above shall be allowed only if the following conditions are fulfilled:- (i) the scheme referred to in (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 whose name subscription ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year; (c) ―disability‖ shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 and includes ―autism‖, ―cerebral palsy‖ and ―multiple disability‖ referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 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 or such other medical authority a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o one lakh rupees is allowed For the purpose of this section, in the case of an employee, "dependant" means individual, the spouse, children, parents, brothers and sisters of the employee or any of them, dependant wholly or mainly on the employee for his support and maintenance. Vide Notification SO No. 2791(E) dated 12.10.2015, Rules 11DD has been amended to do away with the requirement of furnishing a certificate in Form 10-I. A prescription from a specialist as specified in the Rules containing the name and age the patient, name of the disease/ailment along with the name, address, registration number & qualification of the specialist issuing the prescription would now be required. 5.5.8 Deduction in respect of interest on loan taken for higher education (Section 80E): Section 80E allows deduction in respect of payment of interest on loan taken from any financial institution or any approved charitable institution for higher education for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or his children or the student for whom he is the legal guardian. The deduction shall be allowed in computing the total income f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in respect of an immovable property. The amount of this deduction shall not exceed ₹ 1,50,000/- and it shall be allowed in computing the total income of the individual for the assessment year 2020-21 and subsequent assessment years. Where a deduction under this section is allowed for any interest referred to in this section, no deduction shall be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year. 5.5.10 80EEB Section 80EEB introduced by the Finance (No.2) Act, 2019 ( No. 23 of 2019), allows deduction from gross total income of an individual in respect of the interest payable on loan taken by him from any financial institution for the purpose of purchase of an electric vehicle if the loan has been sanctioned by the financial institution during the period from 01.04.2019 to 31.03.2023. For the purposes of this section,- (a) "electric vehicle" means a vehicle which is powered exclusively by an electric motor whose traction energy is supplied exclusively by traction battery installed in the vehicle and has such electric regenerative braking system, which during braking provides for the conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to him which qualifies for exemption under section 10(13A) of the Act; (b) the employee files the declaration in Form No.10BA. (Annexure X) (c) The employee does not own: (i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or (ii) at any other place, any residential accommodation which is in the occupation of the employee, the value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be. (d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or ₹ 5,000/- per month, whichever is less. The total income for working out these percentages will be computed before making 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 thems ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of donation and a receipt from the person to whom donation has been made and ensure that the approval/notification has been issued by the right authority. DDO must ensure a self-declaration from the employee that he has no income from "Profits and gains of business or profession". 5.5.14 Deduction in respect of interest on deposits in savings account (Section 80TTA): Section 80TTA allows to an employee, not being a senior citizen 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 car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NNUATION FUND: 7.1 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 therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act. The accumulated balance is treated as income chargeable under the head ―Salaries‖. 7.2 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. TDS should be at the average rate of tax at which, the employee was liable to be taxed during the preceding three years or during the period, if that period is less than three years, when he was member of the fund. The deductor shall remain liable to deduct tax on any sum paid on account of returned contributions (including interest, if any) even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due and payable to the employee is not liable for TDS under section 192 A. 8. DDOs TO OBTAIN EVIDENCE/PROOF OF CLAIMS: For the purpose of estimating income of the assesse or computing tax deductions, section 192(2D) provides that person responsible for paying (DDOs) shall obtain from the assessee evidence or proof or particular of claims such as House rent Allowance (where aggregate annual rent exceeds one lakh rupees); Deduction of interest under the head "Income from house property" and deduction under Chapter VI-A as per the prescribed form 12BB laid down by Rule 26C of the Rules. Further, as per section 192 (2D) read with the rule 26C, it is mandatory for the DDOs to obtain details/evidence in respect of claim of exemption for leave travel concession or assistance before allowing the said exemption. The relevant form for furnishing details by employee is Form 12BB. 9. CALCULATION OF INCOME-TAX TO BE DEDUCTED: 9.1 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 including all the incomes mentioned in para 5.2 and excluding the income mentioned in para 5.3. b) Allow deduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 at the following websites: www.finmin.nic.in & www.incometaxindia.gov.in Hindi version will follow. (Naveen Kapoor) Under Secretary to the Govt. of India ANNEXURE-I SOME ILLUSTRATIONS Example 1 For Assessment Year 2020-21 (A) Calculation of Income tax in the case of an employee (Male or Female) below the age of sixty years and having gross salary income of: i) ₹ 2,50,000/- , ii) ₹ 6,00,000/- , iii) ₹ 10,50,000/- iv) ₹ 55,50,000/-. and v) ₹ 1,10,50,000/- (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 (v) Gross Salary Income (including allowances) 2,50,000 6,00,000 10,50,000 55,50,000 1,10,50,000 Contribution of G.P.F. 45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). S.No. Particulars Rupees 1 Gross Salary 5,55,000 2 Medical Reimbursement by employer on the treatment of self and dependent family member 35,000 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 30,000 8 Interest Income on Savings Account 8,000 9 Interest Income on Time Deposit 15,000 Computation of Tax S.No. Particulars Rupees 1 Gross Salary 5,55,000 2 Add: Perquisite in respect of reimbursement of Medical Expenses 35,000 3 Less: Standard deduction u/s 16(ia) 50,000 4 Income from Other Sources i) Interest Income on Savings Account ₹ 8,000 ii) Interest Income on Time Deposit ₹ 15,000 23,000 5 Gross Total Income 5,63,000 6 a. Less: Deduction U/s 80C (i) GPF ₹ 20,000/- (ii) LIC ₹ 20,000/- (iii) Repayment of House Building Advance ₹ 25,000/- (iv) Tuition fees for two children ₹ 60,000/- (v) Investment in Unit-Linked Insurance Plan ₹ 30,000/- Total =₹ 1,55,000/- Restricted to Rs. 1,50,000/- b. Less: Deduction u/s 80TTA on Interest Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 7,50,000 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 month). @ ₹ 36000/month 3,60, 000 4(b) Hotel rent paid by employer (for two month) 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 COMPUTATION OF TOTAL INCOME AND TAX PAID THEREON: S.No. Particulars Rupees 1 Salary 7,50,000 2 Bonus 1,40,000 3 Total Salary(1+2) for Valuation of Perquisites 8,90,000 Valuation of perquisites 4(a) Perquisite for flat(Cities having population>25 lakh as per 2000 census) Lower of (15% of salary for 10 months=₹ 1,05,000/-) and (actual rent paid= ₹ 3,60,000) i.e. ₹ 1,05,000 1,38,600 4(b) Perquisite for hotel : Lower of (24% of salary of 2 months=₹ 33,600) and (actual payment= ₹ 1,00,000) i.e. ₹ 33,600 4(c) Perquisites for furniture @ 10% of cost (10% of ₹ 2,00,000) ₹ 20,000 4(c)(i) Total of [4(a)+(b)+(c)] (1,05,000+ 33,600+ 20,000) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes Rebate of ₹ 12500 as per Section 87A) Nil 7 Add: Health & Education Cess @ 4%. Nil 8 Total Income Tax payable Nil 9 Rounded off to Nil @ or Aadhaar number, as the case may be Example 7 For Assessment Year 2020-21 A. Calculation of Income tax in the case of a retired employee above the age of sixty years but below the age of 80 years and having gross pension of: iv) ₹ 5,00,000/- v) ₹ 8,50,000/-, vi) ₹ 13,00,000/-. 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) Gross Pension 5,00,000 8,50,000 13,00,000 Contribution of P.P.F. 70,000 1,00,000 1,50,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Rupees (iii) Gross Pension 5,00,000 8,50,000 13,00,000 Less: Standard deduction u/s 16(ia) 50,000 50,000 50,000 Less: Deduction U/s 80C 70,000 1,00,000 1,50,000 Taxable Income 3,80,000 7,00,000 11,00,000 Tax thereon (includes Rebate of ₹ 12500 as per Section 87A Nil 50,000 1,40,000 Add: Health & Educat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (₹ 13,000 x 7) 91,000 Bonus 7,200 Club facility (₹ 700 x 7) Rupees 4,900 H.R.A. (₹ 2,800 x 7) 19,600 Less : Exempt u/s 10(13A) 15,400 4,200 Employer's Contribution to U.R.P.F. 1,07,300 (b) From PQR Ltd. Rupees Basic pay (₹ 18,000 x 5) 90,000 H.R.A. (₹ 1,600 x 5) 8,000 Less : Exempt u/s 10(13A) 8,000 Club Facility (₹ 1,100 x 5) 5,500 Facility of Car (not taxable as perquisite) 15,400 Employer's Contribution to R.P.F. 95,500 Gross Salary 2,02,800 Less: Standard deduction u/s 16(ia) 40,000 Net Salary 1,62,800 2. Income from Others Sources 1,35,000 Gross Total Income 2,97,800 Less : Deduction u/s 80C : Contribution to LIC/PPF/NSC ₹ 20,000 : Contribution to RPF ( ₹ 2000 x 5) ₹ 10,000 30,000 Total Income 2,67,800 Computation of Tax Liability Tax payable on ₹ 2,67,800 8,90 Less : Rebate u/s 87A 8,90 Net Income-tax payable Nil Add : Health & Education Cess @ 4%. Nil Total Tax Payable Nil Example 10 1. Computation of Taxable Salary and allowances, Deduction for Interest on Housing Loan and Deduction u/s 80C. Mr. X, a Central Govt. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Life Insurance Premium 10, 500 - Repayment of HDFC Loan 95,000 - Deposit in Public Provident Fund 10,000 1,77,900 1,50,000 Restricted to a maximum of Taxable Income 3,30,600 Computation of Tax Liability Tax payable 4,030 Less : Rebate u/s 87A 4,030 Net Income-tax payable Nil Add : Health & Education Cess @ 4%. Nil Total Tax Payable Nil ANNEXURE-II FORM NO.12BA {See rule 26A(2)(b)} Statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof 1) Name and address of employer : 2) TAN 3) TDS Assessment Range of the employer : 4) Name, designation and PAN or Aadhaar number, as the case may be,of employee : 5) Is the employee a director or a person with : substantial interest in the company (where the employer is a company) 6) Income under the head "Salaries" of the employee : (other than from perquisites) 7) Financial Year : 8) Valuation of Perquisites S.No Nature of perquisite (see rule 3) Value of perquisite as per rules (Rs.) Amount, if any recovered from the employee (Rs.) Amount of perquisite chargeable to tax Col(3) - Col(4) (Rs.) (1) (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... landlord (iii) Address of the landlord (iv) Permanent Account Number or Aadhaar number, as the case may be, of the landlord Note: Permanent Account Number or Aadhaar number, as the case may be, shall be furnished if the aggregate rent paid during the previous year exceeds one lakh rupees 2 Leave travel concessions or assistance 3 Deduction of interest on borrowing: (i) Interest payable/paid to the lender (ii) Name of the lender (iii) Address of the lender (iv) Permanent Account Number or Aadhaar number, as the case may be, of the lender (a) Financial Institutions (if available) (b) Employer (if available) (c) Others 4 Deduction under Chapter VI-A (A) Section 80C,80CCC and 80CCD (i) Section 80C (a) ……………….. (b) ……………….. (c) ……………….. (d) .…………….. (e) ……………….. (f) ……………….. (g) ……………….. (ii) Section 80CCC (iii) Section 80CCD (B) Other sections (e.g. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Form 24G on TIN website. Book identification Number (BIN) is generated for each ‗DDO record with valid TAN' reported in Form 24G, which is further disseminated to the AOs on email ID mentioned in Form 24G. AOs need to communicate the BIN details to respective DDOs. BIN is to be quoted by the DDOs in quarterly e-TDS/TCS statements. BIN consists of receipt number of Form 24G. DDO serial number and date of transfer voucher. The AO is required to furnish Form 24G within ten days from the end of the month in respect of tax deducted by the deductors and reported to him for that month. Only one regular Form 24G for a ‗month-FY' can be submitted. 1.1 Correction in Form 24G: AO can file a correction Form 24G for any modification or cancellation of Form 24G accepted at TIN central system. Preparation and validation of correction Form 24G is in line with regular form 24G. The validated Form 24G correction file (.fvu file) copied on a CD/pen drive is to be submitted along with the provisional receipt of original Form 24G and SSR to TIN-FC. On successful acceptance of correction Form 24G at the TIN-FC, an acknowledgement containing 15 digit Token no. is provided to the AO. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax in a bank), the relevant PAO / CDDO / DTO or an equivalent office of the government (herein after called as AO in this document) is required to file Form 24G on monthly basis. 2. Who is the relevant PAO/CDDO/DTO who is liable for filing Form 24G? A relevant PAO/CDDO/DTO is that office to whom the Deductor/DDO (TAN holder) reports remittance of TDS/TCS through book adjustment. Generally, the Central Government DDOs report TDS through book entry to their respective Pay and Accounts Officers (PAOs) and the State Government DDOs report TDS through book entry to their respective District Treasury Officers(DTOs). Such PAOs and DTOs are required to file Form 24G on monthly basis. There are also cases of Cheque Drawing and Disbursing Officers (CDDOs) who report TDS through book entry directly to State AG. For example, PWD, Forest Department etc. Such CDDOs are also required to file Form 24G on monthly basis. Schematic Diagram at Annexure-III clarifies the person responsible for filing Form 24G in different scenarios. 3. Can the same office/officer also act as DDO and AO? Ordinarily, the PAO office is the one to whom the DDO reports the TDS and therefore, both should be from d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. What are the functionalities available with AO Account? Through the AO Account, the AO can view the status of Form No. 24G filed, obtain BIN (Book Identification Number) details, update AO profile and upload Form No. 24G. The status tracking is based on AIN and concerned Provisional Receipt Number (PRN) of Form 24G. 10. Can the AO furnish Form No. 24G in paper form? No. Form 24G is to be filed only in electronic form. 11. Can the AO submit the electronically prepared Form No.24G at the Income Tax Office? No. Electronically prepared Form No.24G can only be submitted at TIN-FC or online. 12. What does Form 24G contain? * Every Form 24G should be prepared in accordance with the data structure prescribed by the Income Tax Department (ITD). Form 24G contains- * Details of the AO filing Form 24G (AIN, name, demographic information, contact details). * Category of AO (Central / State Government) along with details of ministry / state. * Statement details (month and year for which Form 24G is being filed). * Payment summary; nature of deduction wise (TDS - Salary /TDS Non-salary / TDS - Non-salary Non-resident / TCS). * DDO wise payment details (TAN of DDO, name, demog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and using Form 24G Preparation Utility, please read the instructions provided in "Help‟ in the Form 24G Preparation Utility. This utility can be used for preparation of Form 24G with upto 75,000 records. Form 24G Preparation Utility (version 1.2) should be used for regular and correction statements. 16. What is File Validation Utility (FVU)? The AO should pass the Form 24G (Regular/Correction) file generated using Preparation Utility through the File Validation Utility (FVU) to ensure format level accuracy of the file. This utility is also freely downloadable from TIN website. In case the Form 24G contains any errors, the AO should rectify the same. After rectifying the errors, user should pass the rectified Form 24G through the FVU. This process should be continued till an error-free Form 24G is generated. Form 24G (regular/correction) prepared from F.Y. 2005-06 onwards can be validated using this utility. The Form 24G FVU is a Java based utility. JRE (Java Run-time Environment) [versions: SUN JRE: 1.4.2_02 or 1.4.2_03 or 1.4.2_04 or IBM JRE: 1.4.1.0] should be installed on the computer where the Form 24G FVU is being installed. JRE is freely downloadable from http:// ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... What are the different kinds of correction statements allowed? There are two different types of correction statements that can be furnished by the AO. These are listed below. * M (Modify) -: For any modification in the existing Form 24G statement. * X (Cancel) -: For cancellation of an existing Form 24G statement. For preparation of correction statement, the receipt number of the original statement and receipt number of the previous statement is mandatory. In case of first correction, PRN of original statement should be provided in field ―Receipt number of Original Statementǁ and also in the field ―Receipt number of Previous Statement ―. In case a correction statement has already been filed earlier, PRN of original statement should be provided in field "Receipt number of Original Statement" and PRN of last correction to be mentioned in field "Receipt number of Previous Statement". 20. What is M -Type of Correction Statement? This type of correction statement is to be furnished by AO, if it wishes to update any of its details like its name, address, Responsible person details, category, Ministry, State or deletion and addition of DDO (Drawing & D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the BIN? PAOs have to disseminate the BINS to respective DDOs. While preparing the quarterly TDS/TCS statement, DDO has to quote the said BIN details, if tax has been paid through transfer voucher (book adjustment). BINs generated for a particular 24G are mailed to the AO on the e-mail id provided in Form 24G. In addition, AO may also download the BIN details through AO login at TIN site. 25. Under what circumstances will BIN be generated? * BIN will be generated for valid TAN-DDO records added in Form 24G correction statement. * BIN will be generated for DDO records where invalid TANs/TAN not present in Income Tax Department database is updated with a valid TAN. * New BIN will not be generated for any update made in TAN name, demographic and contact details, amount of Tax deducted and remitted or nature of deduction. * BIN details will not be generated for deleted DDO records. 26. What is the utility of BIN? The BIN details and amount of TDS reported in the quarterly TDS/TCS Statement filed by the DDO will be matched with the respective details filed in Form No.24G filed by the PAO for verification purpose. 27. Are there instances where BIN details and amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TCS Statement filed by the DDO will be matched with the details filed in Form No.24G filed by the PAO for verification purpose. (b) Any wrong information reported by the DDOs in TDS/TCS Statement may lead to mismatch due to which credit to the respective deductee will not be available in the deductee's Form 26AS. (c) Further details are available at TIN website www.tin-nsdl.com and ITD website www.incometaxindia.gov.in. 31. What is the format of Form 16/16A to be issued to the deductees? It is mandatory to download and generate the Form 16/16A from the TRACES portal only. Deductor is allowed to issue manually only part ‗B' of Form 16 for salary details. 32. Is there any scenario where the DDO is also required to obtain the AIN? Yes, if the deductor is in the capacity of CDDO and directly reports tax deduction through transfer voucher to State AG, in that case CDDO is required to obtain the AIN and file 24G for the respective book adjustment entries and then also required to file the TDS/TCS statement as a TAN holder. For example in the case of Executive Engineer in state Government who are making payments to the contractors after deducting the TDS/TCS through chequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correction, add/update of challan information, add/update of salary detail, add/update/movement of deductee row etc. can be done in the statements filed by the deductors, with or without the digital signatures. For further details, kindly refer the matrix below: Default Summary View Personal Information Challan Correction (Unmatched, Matched Deductee + Deductee Movement PAN Correction (Annex.I) PAN Correction (Annex. II) Add Challan to statement Interest, Levy Payment Modify/ Add deductee rows Delete/ Add salary deducted rows Online Correction (with digital signature, 2013-14 onwards) Y Y Y Y Y Y Y Y Y Online Correction (with digital signature, prior to 2013- 14 onwards) Y Y Y N N Y Y N N Online Correction (without digital signature, 2013-14 onwards) Y N Y N N Y Y N N Online Correction (without digital signature, prior to 2013- 14 onwards) Y N Y N N Y Y N N For more information, deductors are advised to refer to e-tutorials/FAQs available on TRACES portal. Online correction entails no charges and does away with the requirement of downloading conso file and visiting TIN-FCs. 2.1.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to procure Digital Signature Certificate (DSC) for online upload of e-TDS statement/return. After registration on TIN website, an authorization letter by the Deductor/DDO should be provided on the letter head of the organisation to NSDL. Once application is approved by NSDL, user ID is created and intimated to Deductor/DDO on their registered email ID provided at the time of registration. Preparation and validation of e-TDS statement is in line with regular e-TDS statement/return (submitted at TIN-FC).Deductor/DDO can login with its user ID and DSSC and upload the validated e-TDS file (.fvu file) generated by the FVU to the TIN website. On successful acceptance of e-TDS statement/return at TIN, an acknowledgement containing a unique 15 digit token no. and 8 digit receipt number is generated and displayed. There is no need to submit physical form 27A in online upload. Deductor/DDO can view the status of e-TDS statement/return on TIN website. No charges are applicable for online upload of e-TDS statement/return. 4.1 Correction of e-TDS statement/return online at TIN website: Deductor/DDO can file a correction e-TDS statement/return for any modification in e- TDS statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through exactly the above procedures. However, the employee would be free to withdraw part or all of the ‗second tier' of his money anytime. This withdrawable 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 retirement. The individual would receive a lump-sum of the remaining pension wealth, which he would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth. Architecture of the new Pension System (i) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do- 15. President's Home Guards and Civil Defence Medal for Gallantry -do- 16. Home Guard and Civil Defence Medal for Gallantry -do- (Notification no. 1156/F.No. 142/29/99-TPL) T.K. SHAH Director ANNEXURE IX MINISTRY OF FINANCE Department of Revenue Central Board of Direct Taxes New Delhi, the 29th January,2001 S.O.81(E)- In exercise of the powers conferred by sub-clause (i ) of clause (18) of Section 10 of the Income -tax Act, 1961 (43 of 1961)), the Central Government, hereby specifies the gallantry 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 24th November 2000, namely:- In the said notification, in the Table, against serial numbe₹ 1,2 and 3 under column (3) relating to ―Circumstances for eligibilityǁ the words ―to civiliansǁ shall be omitted. (Notification No.22/F.No.142/29/99-TPL) T.K. SHAH Director ANNEXURE-X FORM NO. 10BA (See rule 11B) DECLARATION TO BE FILED BY THE ASSESSEE CLAIMING DEDUCTION U/S 80 GG I/We…& ..... 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