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TMI BlogINCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2020-21 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 ..... of Income-tax Act, 1961 and the Income-tax Rules, 1962 respectively unless otherwise specified. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income-tax Department - www.incometaxindia.gov.in. 2. Rates of income-tax as per Finance Act, 2020 : As per the Finance Act, 2020, income-tax is required to be deducted under section 192 of the Act from income chargeable under the head "Salaries" for the financial year 2020-21 (i.e., assessment year 2021-22) 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 Rs. 2,50,000. Nil 2 Where the total income exceeds Rs. 2,50,000 but does not exceed Rs. 5,00,000. 5 per cent. of the amount by which the total income exceeds Rs. 2,50,000. 3 Where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000. Rs. 12,500 plus 20 per cent. of the amount by which the total income exceeds Rs. 5,00,000. 4 Where the total income exceeds Rs. 10,00,000. Rs. 1,12,500 plus 30 per cent. of the amount by which the total income exceeds Rs. 10,00,000. B. Rates of tax for every individual, being a resident in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant to the assessment year. The concessional rates of tax provided under section 115BAC are subject to the condition that the total income shall be computed without specified exemptions or deductions, set off of loss and additional depreciation. The concessional rates of tax under section 115BAC are given in table below : Sl. No. Total income Rate of tax 1. Up to Rs. 2,50,000 Nil 2. From Rs. 2,50,001 to Rs. 5,00,000 5 per cent. 3. From Rs. 5,00,001 to Rs. 7,50,000 10 per cent. 4. From Rs. 7,50,001 to Rs. 10,00,000 15 per cent. 5. From Rs. 10,00,001 to Rs. 12,50,0000 20 per cent. 6. From Rs. 12,50,001 to Rs. 15,00,000 25 per cent. 7. Above Rs. 15,00,000 30 per cent. 2.3 Surcharge on income-tax : The amount of income-tax computed in accordance with the preceding provisions of this Paragraph, or the provisions of section 111A or section 112 or section 1I2A or the provisions of section 115BAC of the Income-tax Act shall be increased by a surcharge for the purposes of the Union, calculated in the case of every individual or Hindu undivided family or association of persons or body of individuals whether incorporated or not or even artificial juridical person r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one crore rupees ; (c) two crore rupees but does not exceed five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of two crore rupees by more than the amount of income that exceeds two crore rupees ; (d) five crore rupees, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax and surcharge on a total income of five crore rupees by more than the amount of income that exceeds five crore rupees. 2.4 Health and Education Cess "Health and Education Cess" shall be levied at the rate of four per cent. of income-tax including surcharge wherever applicable. No marginal relief shall be available in respect of such cess. 3. Section 192 of the Income-tax Act, 1961 : Broad scheme of tax deduction at source from "salaries" : 3.1 Method of Tax Calculation : Every person who is responsible for paying any income chargeable under the head "Salaries" shall deduct income-tax on the estimated income of the assessee under the head "Salaries" for the financial year 2020-21. The income-tax is required to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctible, i.e., at the time of payment of income chargeable under the head "Salaries" to the employee. 3.2.1 Computation of average income-tax : For the purpose of making the payment of tax mentioned in para 3.2 above, tax is to be determined at the average of income-tax computed on the basis of rate in force for the financial year, on the income chargeable under the head "Salaries", including the value of perquisites for which tax has been paid by the employer himself. 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 Rs. 6,00,000, out of which, Rs. 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 Rs. 6,00,000 Tax as per normal rates on total salary (including cess) Rs. 33,800 Average rate of tax [(33,800/6,00,000) × 100] 5.63 per cent. Tax payable on Rs. 50,000 = (5.63 per cent. of 50,000) Rs. 2,815 Amount required to be deposited each month Rs. 235 = 2,815/12 The tax so p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under section 10(10C) in respect of such, or any other, assessment year. 3.5 Information 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 3 above (a) The acquisition or construction of the house should be completed within 5 years from the end of the FY in which the capital was borrowed. 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 up to 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 instalments 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/evidence in respect of interest deductible. (i) Interest payable or paid (ii) Name of the lend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before him in Form No. 13 by the employee ; then the DDO should take into account such certificate and deduct tax on the salary payable at the rates mentioned therein. (see rule 28AA). The Unique Identification Number of the certificate is required to be reported in Quarterly Statement of TDS (Form 24Q). 4.3. Deposit of tax deducted : Rule 30 prescribes time and mode of payment of tax deducted at source to the account of Central Government. 4.4.1. Due dates for payment of TDS : Prescribed time of payment/deposit of TDS to the credit of Central Government account is as under : 4.4.1.1 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 4.4.1.2.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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Ministries is responsible for filing of Form No. 24G on monthly basis. The person responsible for filing Form No. 24G in case of State Government Departments is shown at Annexure V. The procedure of furnishing Form No. 24G is detailed in Annexure IV. PAOs/DDOs should go through the FAQs therein to understand the correct process to be followed. 4.4.2.2 Payment by an income-tax challan : (i) In case the payment is made by an income-tax challan, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it, within the time specified 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 (rule 125). 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of delay shall be 0.75% for every month or part thereof. Further, no penalty shall be levied and no prosecution shall be sanctioned in respect of such amount for the period of delay. 4.6 Furnishing of certificate for tax deducted (section 203) : 4.6.1. Section 203 requires the DDO to furnish to the employee a certificate in Form 16 detailing the amount of TDS and certain other particulars. Rule 31 prescribes that Form 16 should be furnished to the employee by 15th June after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. Through the Taxation and Other Law (Relaxation of Certain Provisions) Act, 2020 (No. 38 of 2020), the due date for furnishing Form 16 for FY 2019-20 to the employee has been extended up to August 15, 2020. A copy of Form 16 is enclosed. The certificate in Form 16 shall specify (a) Valid permanent account number (PAN) or Aadhaar number, as the case may be, of the deductee ; (b) Valid tax deduction and collection account number (TAN) of the deductor ; (c) (i) Book identification number or numbers (BIN) where deposit of tax dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of NSDL Conso File, Justification Report and Form 16/16A as well as viewing of annual tax credit statements (Form 26AS). Each deductor is required to register in the Traces portal Form 16/16A issued to deductees should mandatorily be generated and downloaded from the TRACES portal. Certain essential points regarding the filing of the Statement and obtaining TDS certificates are mentioned below : (a) TDS certificate (Form 16) would be generated for the deductee only if valid PAN or Aadhaar number as the case may be is correctly mentioned in the Annexure II of Form 24Q in Quarter 4 filed by the deductor. Moreover, employers are advised to ensure in Form 16 that the status of "matching" with respect to "Form 24G/OLTAS" is "F". If the status of matching other than "F" kindly take necessary action promptly to rectify the same. It is pertinent to mention here that certain facilities have been provided to the deductors at website 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtaining to perquisites, etc. (section 192(2C) : 4.6.4.1 As per section 192(2C) the responsibility of providing correct and complete particulars of perquisites or profits in lieu of salary given to an employee is placed on the 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 Rs. 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 valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mandatory quoting of PAN or Aadhaar number as the case may be and TAN : 4.7.1 Section 203A of the Act makes it obligatory for all persons responsible for deducting tax at source to obtain and quote the Tax deduction and collection Account Number (TAN) in the challans, TDS-certificates, statements and other documents. Detailed instructions in this regard are available in this Department's Circular No. 497 (F. No. 275/118/87-IT(B) dated October 1, 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 or Aadhaar number as the case may be, of the persons from whose income tax has been deducted in the statement furnished under section 192(2C), certificates furnished under section 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 along with the return of income has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entres authorized by DGIT (Systems) which is currently managed by M/s. National Securities Depository Ltd. (NSDL) or at www.incometaxindiaefiling.gov.in after registering as deductor. Particulars of e-TDS Intermediary at any of the TIN Facilitation Centres are available at http ://www.incometaxindia.gov.in and http ://tin-nsdl.com portals. The requirement of filing an annual return of TDS has been done away with effect from April 1, 2006. The quarterly statement for the last quarter filed in Form 24Q (as amended by Notification No. S.O. 704(E) dated May 12, 2006) shall be treated as the annual return of TDS. Due dates of filing this statement quarter-wise is as in the Table below. Table : Due dates of filing quarterly statements in Form 24Q Sl. No. Date of ending of quarter of financial year Due date 1 30th June 31st July of the financial year 2 30th September 31st October of the financial year 3 31st December 31st January of the financial year 4 31st March 31st May of the financial year immediately following the financial year in which the deduction is made Through Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No. 38 of 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any, to the credit of Central Government, he had delivered such statement before the expiry of one year from the time prescribed for delivering the statement. 4.9.7 At the time of preparing statements of tax deducted, the deductor is required to : (i) mandatory quote his tax deduction and collection account number (TAN) in the statement ; (ii) mandatory quote his permanent account number (PAN) or Aadhaar number as the case may be, in the statement except in the case where the deductor is an office of the Government (including State Government). In case of Government deductors "PANNOTREQD" to be quoted in the e-TDS statement ; (iii) mandatory quote of permanent account number PAN or Aadhaar number as the case may be, 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 under section 197 by the Assessing Officer of the payee. 4.10 TDS on income from pension : In the case of pensioners who receive their pension ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployer, if not charged to income-tax for any earlier previous year. (2) For the removal of doubts, it is clarified that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due. Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as "Salary". 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 per cent. of the salary of the employee, and (b) interest credited on the balance to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied 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 therefore, includes the securities offered under such plan or scheme ; (b) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called ; (c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from the assessee in respect of such security or shares ; (d) "fair market value" means the value determined in accordance with the method as may be pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 lakhs 10 per cent. of salary 3 For other places 7.5 per cent. of salary (b) Where the accommodation so provided is taken on lease/rent by the employer : The prescribed rate is 15 per cent. 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). Salary from all employers shall be taken into consideration in respect of the period during which an accommodation is provided. Where on account of the transfer of an employee from one place to another, he is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odation 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 provided by the employer (rule 3(2)) : (I) If an employer provides motor car facility to his employee, the value of such perquisite shall be : (a) Nil, if the motor car is used by the employee wholly and exclusively in the performance of his official duties. However following compliances are necessary : • The employer has maintained complete details of the journey un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 (I) above. Normal wear and tear of the motor shall be taken at 10 per cent. 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 and water for household consumption (rule 3(4)) : The value of perquisite in the nature of gas, electricity and water shall be the amount paid by the employer. Where the supply is made from the employer's own resources, the manufacturing cost per unit incurred by the employer would be taken for the valuation of perquisite. Any amount paid by the employee for such facilities or services shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and adjustment otherwise adopted by the employer shall not be relevant. However, small loans up to Rs. 20,000 in the aggregate are exempt. Loans for medical treatment 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 any other expenses paid for or reimbursed by the employer for any holiday availed of by the employee or any member of his household, other than leave travel concession (as per section 10(5)), shall be the amount of the expenditure incurred by the employer in that behalf. However, any amount recovered from or paid by the employee shall be reduced from the perquisite va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial 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 maintained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical reimbursement is to be taken as perquisite 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 clause (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 rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said Press note. Further, as this exemption is in lieu of the exemption provided for LTC fare, in case of an employee who has exercised an option to pay income-tax under concessional tax regime under section 115BAC of the Income-tax Act shall not be entitled for this exemption. It has also been mentioned that the DDOs shall allow income-tax exemption subject to fulfilment of the specified conditions after obtaining copies of invoices of specified expenditure incurred during the specified period. 5.3.2 Death-cum-retirement gratuity or any other gratuity is exempt to the extent specified from inclusion in computing the total income under section 10(10). Any death-cum-retirement gratuity received under the revised Pension Rules of the Central Government or, as the case may be, the Central Civil Services (Pension) Rules, 1972, 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 civil services of a State or holders of civil posts und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpensation exempt is the sum calculated on the basis provided in section 25F(b) of the Industrial Disputes Act, 1947 or any amount not less than Rs. 50,000 as the Central Government may by notification specify in the Official Gazette, whichever is less. These limits shall not apply in the case where the compensation is paid under any scheme which is approved in this behalf by the Central Government, having regard to the need for extending special protection to the workmen in the undertaking to which the scheme applies and other relevant circumstances. The maximum limit of such payment is Rs. 5,00,000 where retrenchment is on or after January 1, 1997 as specified in Notification No. 10969 dated June 25, 1999. 5.3.6 Under section 10(10C), any payment received or receivable (even if received in instalments) by an employee of the following bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempt from income-tax to the extent that such amount does not exceed Rs. 5,00,000 : (a) A public sector company ; (b) Any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, any sum received under such policy referred to in (iii), (iv) and (v) above, on the death of a person would be exempt. Under section 10(12A) of the Act, any payment from the National Pension System Trust to an assessee on closure of his account or on his opting out of the pension scheme referred to in section 80CCD to the extent it does not exceed sixty per cent. from financial year 2019-20 (as amended by Finance (No. 2) Act, 2019), of the total amount payable to him at the time such closure of his opting out of the scheme shall be exempt. Under section 10(12B) of the Act, any payment from the National Pension System Trust to an employee under the pension scheme referred to in section 80CCD, on partial withdrawal made out of his account in accordance with the terms and conditions, specified under the Pension Fund Regulatory and Development Authority Act, 2013 and the regulation made thereunder, to the extent it does not exceed twenty-five per cent. of the amount of contribution made by him shall be exempt. 5.3.8 Any payment from a provident fund to which the Provident Funds Act, 1925, applies or from any other provident fund set up by the Central Government and notified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce or benefit granted to an employee to meet the expenses wholly, necessarily and exclusively incurred in the performance of his duties as prescribed under rule 2BB subject to the extent to which such expenses are actually incurred for that purpose. (ii) Any allowance granted to an employee either to meet his personal expenses at the place of his posting or at the place he ordinarily resides or to compensate him for the increased cost of living, which may be prescribed and to the extent as may be prescribed. However, the allowance referred to in (ii) above should not be in the nature of a personal allowance granted to the assessee to remunerate or compensate him for performing duties of a special nature relating to his office or employment unless such allowance is related to his place of posting or residence. It is further clarified that any allowance granted to an employee which is not exempted under section 10(14) read with rule 2BB or the sum of allowance exceeding the amount prescribed under rule shall be chargeable to tax under the head income from salary. For example no exemption is provided in rule 2BB for the training allowance paid for the posting in any training insti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any medical treatment provided to an employee or any member of his family, in any hospital maintained by the employer ; (b) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or of any member of his family : (i) in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees ; (ii) in respect of the prescribed diseases or ailments as provided in rule 3A(2) of the Rules in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines as provided in rule 3A(1) of the Rules ; (c) premium paid by the employer in respect of medical insurance taken for his employees (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority) or reimbursement of insurance premium to the employees who take medical insurance for themselves or for their family members (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority) ; (d) As regards medical treatment abroad, the actual expenditure on stay and treatmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty ; (d) Any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit subject to the condition that the free conveyance is not provided by the employer. 5.4 Deductions under section 16 of the Act 5.4.1 Standard deduction under section 16(ia) : From financial year 2019-20, a deduction of fifty thousand rupees or the amount of salary whichever is less shall be allowed as standard deduction. 5.4.2 Entertainment allowance [section 16(ii)] : A deduction is also allowed under section 16(ii) in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee, who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees whichever is less. No deduction on account of entertainment allowance is available to non-Government employees. 5.4.3 Tax on employment (section 16(iii)) : The tax on empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the year as a subscription :-- (a) in the name of employee or a girl child of that employee including a girl child for whom the employee is the legal guardian in any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf ; [The Central Government has since notified the scheme "Sukanya Samriddhi Account" vide Notification No. GSR 863(E) dated December 2, 2014] (b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. (c) [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification No. S.O. 1560(E) dated November 3, 2005 and National Saving Certificate (IXth Issue) vide Notification No. G.S.R. 848(E), dated November 29, 2011, publishing the National Savings Certificates (IXth Issue) Rules, 2011 G.S.R. 868(E), dated December 7, 2011, specifying the National Savings Certificates IX Issue as the class of Savings Certificates F No. 1-13/2011-NS-II r/w amendment Notification No. GSR 319(E), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf ; (11) Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both. [The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification No. S.O. 37(E), dated January 11, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee. Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes. It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature. (14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution. (15) Subscription to any units of any mutual fund referred to in clause (23D) of section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally 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) Section 80CCC allows 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived 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 the death of the assessee, on closure or opening of the pension not be deemed to be the income of the nominee. 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 with effect from April 1, 2009 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 section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and section 80CCD(1) shall not exceed Rs. 1,50,000. The deduction allowed under section 80CCD(1B) is an additional deduction in respect of any amount paid in the NPS up to Rs.50,000. However, the contribution made by the Central Government or any other employer to a pension scheme under section 80CCD(2) shall be excluded from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Case-2 Case-3 Self and Family (no one of them is a senior citizen) Parents (no one of them is a senior citizen) Self and Family (no one of them is a senior citizen) Parents (at least one of them is a senior citizen) Self and Family (at least one of them is a senior citizen) Parents (at least one of them is a senior citizen) Medical Insurance, etc.* 25,000 25,000 25,000 50,000 50,000 50,000 Medical Expenditure# 50,000 50,000 50,000 Maximum deduction allowable 25,000 25,000 25,000 50,000 50,000 50,000 Aggregate amount of deduction allowable under section 80D 50,000 75,000 1,00,000 * Includes (i) contribution to the Central Government Health Scheme/notified scheme for self and family ; and (ii) amount paid for preventive health check-up up to Rs. 5,000 # Allowable only if no amount is paid for medical insurance. Note 1 : The payment for preventive health check-up can only be made in cash, other payments must be made by non-cash mode. Note 2 : Finance Act, 2018 amended section 80D of the Act to provide that in case of single premium health insurance policy having cover of more than one year, the deduction shall be allowed on proportionate basis for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred 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 to the scheme has been made ; (ii) the employee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability. However, if the dependant, being a person with disability, predeceases the employee, an amount equal to the amount paid or deposited under sub-para (b) above shall be deemed to be the income of the employee of the previous year in which such amount is received by the employee and shall accordingly be chargeable to tax as the income of that previous year. 5.5.6.2 Deductions in respect of a person with disability (section 80U) : Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of Rs. 75,000. However, where such individual is a person with se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qual Opportunities, Protection of Rights and Full Participation) Act, 1995 or such other medical authority as may, by notification, be specified by the Central Government for certifying "autism", "cerebral palsy", "multiple disabilities", "person with disability" and "severe disability" referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 ; (f) "person with disability" means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 ; (g) "person with severe disability" means-- (i) a person with eighty per cent. or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 ; or (ii) a person with severe disability referred to in clause (o) of section 2 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me for the financial year in which the employee starts paying the interest on the loan taken and immediately succeeding seven financial years or until the financial year in which the interest is paid in full by the employee, whichever is earlier. For the purpose of this section-- (a) "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority under section 10(23C), or an institution referred to in section 80G(2)(a) ; (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 Deduction in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctrical energy ; (b) "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies, or any bank or banking institution referred to in section 51 of that Act and includes any deposit taking non-banking financial company or a systemically important non-deposit taking non-banking financial company as defined in clauses (e) and (g) of Explanation 4 to section 43B. The amount of this deduction shall not exceed Rs. 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. 5.5.11 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 Lieutena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence of actual payment of rent. 5.5.13 Deductions in respect of certain donations for scientific research or rural development (section 80GGA) : 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 under section 35(1)(ii) Central Government 2. A research association which has as its object the undertaking of research in social science or statistical research or to a University, college or other institution to be used for research in social science or statistical research under section 35(1)(iii) Central Government 3. An association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35CCA furnishes the certificate under section 35CCA(2) Prescribed Authority under rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 51 of that Act) ; (b) co-operative society engaged in carrying on the business of banking (including a co-operative land mortgage bank or a co-operative land development bank) ; or (c) Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898. For this section, "time deposits" means the deposits repayable on expiry of fixed periods. 5.5.15 Deduction in respect of interest on deposits in case of senior citizens (Section 80TTB) : Section 80TTB introduced by Finance Act, 2018 allows deduction to a senior citizen from his gross total income in respect of income by way of interest on deposits with-- (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 mortgage bank or a co-operative land development bank) ; or (c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898. The amount of deduction in respect of above interest on deposit is as under :- (i) in a case where the amount of such income does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any) even if a fund or part of a fund ceases to be an approved superannuation fund. 7.3 As per section 192A of the Act, with effect from June 1, 2015 the trustees of the EPF Scheme, 1952 framed under section 5 of the EPF and Misc. Provisions Act, 1952 or any person authorized under the scheme to make payment of accumulated balance due to employees, shall, in a 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 at 10 per cent. if the amount of such payment or aggregate of such payment exceeds Rs. 50,000. In case the employee does not provide his/her PAN or Aadhaar number as the case may be, or provides an invalid PAN or Aadhaar number as the case may be, then the deduction will have to be made at maximum marginal rate. The rule 8 of Part-A of Fourth Schedule excludes the following accumulated balance due and becoming payable to the employee from the total income : (i) If, he has rendered continuous service with his employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 192 shall be computed as follows : (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 deductions mentioned in para 5.4 from the figure arrived at (a) above and compute the amount to arrive at net salary of the employee. (c) Add income from all other heads "House property", "Profits and gains of business or profession", Capital gains and Income from other Sources to arrive at the gross total income as shown in the form of simple statement mentioned at para 3.5. However it may be remembered that no loss under any such head is allowable by DDO other than loss under the head "Income from house property" to the extent of Rs. 2 lakhs. (d) Allow deductions mentioned in para 5.5 from the figure arrived at (c) above ensuring that the relevant conditions are satisfied. The aggregate of the deductions subject to the threshold limits mentioned in para 5.5 shall not exceed the amount at (b) above and if it exceeds, it should be restricted to that amount. This will be the amount of total income of the employee on which income-tax would be required to be deducted. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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. 45,000 50,000 1,00,000 1,00,000 1,00,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Rupees (iii) Rupees (iv) Rupees (v) Gross Salary 2,50,000 6,00,000 10,50,000 55,50,000 1,10,50,000 Less: Standard deduction u/s 16(ia) 50000 50000 50000 50000 50000 Less: Deduction U/s 80C 45,000 50,000 1,00,000 1,00,000 1,00,000 Taxable Income 1,55,000 5,00,000 9,00,000 54,00,000 1,09,00,000 (A) Tax Thereon Nil Nil* 92,500 14,32,500 30,82,500 Surcharge 1,43,250 4,62,375 Add: Health & Education Cess @ 4%. Nil Nil 3700 63,030 1,41,795 Total tax payable Nil Nil 96,200 16,38,780 36,86,670 @or Aadhaar number, as the case may be, * After rebate of Rs.12500 u/s 87A # It may be noted that tax liability may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. Example 2 For Assessment Year 2021-22 Calculation or Income Tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs Account Rs.8,000 ii) Interest Income on Time Deposit Rs.15,000 23,000 5 Gross Total Income 5,63,000 6 a. Less: Deduction U/s 80C (i) GPF Rs.20,000/- (ii) LIC Rs.20,000/- (iii) Repayment of House Building Advance Rs.25,000/- (iv) Tuition fees for two children Rs.60,000/- (v) Investment in Unit-Linked Insurance Plan Rs.30,000/- Total = Rs.1,55,000/- Restricted to Rs.1,50,000/- b. Less: Deduction u/s 80TTA on Interest Income on savings account (restricted to Rs.10,000/- - available only on Savings account interest) Rs.8000 Total deduction available Rs.1,58,000/- 1,58,000 7 Total Income 4,05,000 8 Income Tax thereon/payable (includes Rebate of Rs 12500 as per Section 87A) Nil* 9 Add: Health & Education Cess @ 4%. Nil 10 Total Income Tax payable Nil @or Aadhaar number, as the case may be. #It may be noted that tax liability may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. Example 4 For Assessment Year 2021-22 Illustrative calculation of House Rent Allowance U/s 10 (13A) in respect of residential accommodation situated in Delhi in case of an employee below the age of sixty y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X 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) Perquisites for flat (Cities having population>25 lakh as per 2000 census) Lower of (15% of salary for 10 months = Rs.1,05,000/-) and (actual rent paid = Rs.3,60,000) i.e. Rs.1,05,000 4(b) Perquisites for hotel: Lower of (24% of salary of 2 months = Rs.33,600) and (actual payment = Rs.1,00,000) i.e. Rs.33,600 4(c) Perquisites for furniture @ 10% of cost (10% of Rs.2,00,000) Rs.20,000 4(c)(i) Total of [4(a)+(b)+(c)] (1,05,000+33,600+20,000) Rs.158,600 Less: rent recovered (-) Rs. 60,000 = Rs. 98,600 4(d) Add Perquisites for free gas, electricity, water etc. Rs.40,000 (+) Rs.98,600 [4(c)(i)]= Rs.1,38,600 Total Perquisites 1,38,600 5 Gross Total Income (Rs.8,40,000+1,38,600) 10,28,600 6 Less: Standard deduction u/s 16(ia) 50,000 7 Gross Total Income 9,78,600 8 Less: Deduction U/s 80C: (i) Provident Fu (80C) : 42,000 (ii) LIC (80C) : 10,000 (iii) Subscription to Unit-Linked Insurance Plan (80C) : 50,000/- Total= 1,02,000 Restricted to Rs.1,02,000 u/s 80C 1,02,000 9 Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss pension of: iv) Rs.5,00,000/- v) Rs.8,50,000/-, vi) Rs.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: Standards 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 Rs.12500 as per Section 87A) Nil 50,000 1,40,000 Add: Health & Education Cess @ 4% Nil 2,000 5,600 Total tax payable Nil 52,000 1,45,600 @ or Adhaar number, as the case may be. # It may be noted that tax liability may bot be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. Example 8 For Assessment Year 2021-22 A. Calculation of Income tax in the case of a retired employee above the age of 80 years and having gross pension o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,300 (b) From PQR Ltd. Rupees Basic pay (1,800×5) 90,000 H.R.A (Rs.1,600×5) 8,000 Less: Exempt u/s 10(13A) 8,000 Club facility (Rs.1,100×5) 5,500 Facility of Car (not taxable at 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 Other Sources 1,35,000 Gross Total Income 2,97,800 Less: Deduction u/s 80C : Contribution to LIC/PPF/NSC Rs.20,000 : Contribution to RPF (Rs.2000×5) Rs.10,000 30,000 Total Income 2,67,800 Computation of Tax Liability Tax payable on Rs.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 # It may be noted that tax liability may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. 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. Officers in Delhi, is receiving Basic Pay Rs.40,000, DA at prescribed rates, transport allowances @ Rs.3600+DA thereon, and HRA (e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity 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 # It may be noted that tax liability may not be the same in case the taxpayer opts for concessional tax regime under section 115BAC of the Act. 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 I) Name and address of employer : 2) TAN 3) TDS Assessment range of the employer: 4) Name, designation and PAN or Aadhaar number 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) (3) (4) (5) 1 Accommodation 2 Cars/Other automotive 3 Sweeper, gardener, watchman or pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount Number or Aadhaar number, as the ease may be, of the landlord Note: Permanent Account Number or Aadhaar number, 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 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. 80E, 80G, 80TTA, etc.) under Chapter VI-A. (i) section ………………… ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erated 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. The AO can view the status of Form 24G on TIN website. 2. Online upload or Form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 different offices. However, where the DDO and AO are the same, as in the case of CD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (LTD). 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, demographic details, total tax deducted and remitted to the Government account (A.G. / Pr.CC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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://java.sun.com and http://www.ibm.com/developerworks/java/jdk or you can request your computer vendor (hardware) to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Statement' 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 & Disbursing Officer) etc. Modifications in AIN (Account office Identification Number), Financial Year and Month are not allowed. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails, 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 TDS reported in TDS/TCS statements do not match with that reported in Form 24G? What are the consequences of such mismatch? (i) Instances of wrong/in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 cheque are liable to file Form 26Q for reporting such TDS transactions. They will be required to obtain the AIN and file form 24G for monthly reporting of these book a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Deductee 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 Y Y 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 With effect from 1st January, 2015, TRACES will be providing a correction window of 7 days from date of processing at CPC-TDS (generally 2 days after date of filing of statement). This facility will enable the filer to correct PAN errors and challan mismatch cases identified by CPC-TDS and avoiding of issuance of demand notices. Therefore, deductors are advised to check the processing status promptly so as to utilize this facility. 2.1.3 Deductor/DDO can also file a correction e-TDS statement for any modification in the e-TDS statement. Correction statement can be prepared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 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/return accepted at TIN central system. Correction statement/return can be prepared by using the TDS consolidated file only, available at the CPC-TDS portal www.tdscpc.gov.in through TAN 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 DSC and upload the validated e-TDS file (.fvu file) generated by the FVU to the TIN website. On successful acceptance of correction e-TDS statement/return at TIN, an acknowledgement containing a unique 15 digit token number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ife 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/she 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 and C. (ii) The participating entities (PFMs and CRA) would give out easily understood information about past performance, so that the individual would be able to make informed choices about which scheme to choose. 2. The effective date for operationalization of the new pension system shall be form 1st of January, 2004. U.K. SINHA, Jt. secy. ANNEXURE-VIII MINISTRY OF FINANCE Department of Revenue (Central Board of Direct Taxes) Notification New Delhi, the 24th November, 2000 INCO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Table, against serial numbers 1,2 and 3 under column (3) relating to 'Circumstances for eligibility' the words 'to civilians' shall be omitted. (Notification No.22/F.No.142/29/99-TPL) T.K. SHAH Director ANNEXURE-X FORM NO. 10BA (See rule 11B) DECLARATION TO BE FILED BY THE ASSESSEE CLAIMING DEDUCTION U/S 80 GG 1/We ……………………………………………………………………………. (Name of the assessee with permanent account number or Aadhar number) do hereby certify that during the previous Year ………………….. I/We had occupied the premise…………………………(full address of the premise) for the purpose of my/our own residence for a period of …………………………. months and have paid Rs. ……………………………… In cash/through crossed cheque, bank draft towards payment of r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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