TMI BlogINCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2022-23 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961.X X X X Extracts X X X X X X X X Extracts X X X X ..... unless otherwise specified. The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax Department- www.incometaxindia.gov.in. As per section 192(1) of the Act, any person responsible for paying any income chargeable under the head Salaries shall, at the time of payment, deduct income-tax on the amount payable at the average rate of income-tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under the head of Salary income for that financial year. The section also provides that a person responsible for paying any income chargeable under the head Salaries shall furnish to the person to whom such payment is made a statement giving correct and complete particulars of perquisites or profits in lieu of salary provided to him and the value thereof. 1. Definition of salary , perquisite and profit in lieu of salary (section 17) 1.1 What is salary? As per section 15 of the Act, the following incomes are chargeable to income-tax under the head Salaries - (a) any salary due from an employer or a former employer to an assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Salaries . Therefore, provisions of section 192 of the Act are not applicable. Hence, DDOs are not required to deduct TDS on family pension paid to person. 1.2 What is a Perquisite? As per Section 17(2) of the Act, perquisites include: i) The value of rent-free accommodation provided to the employee by his employer; ii) The value of any concession in the matter of rent in respect of any accommodation provided to the employee by his employer; iii) The value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases: a) By a company to an employee who is a director of such company; b) By a company to an employee who has a substantial interest in the company; c) By an employer (including a company) to an employee, who is not covered by (a) or (b) 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 or amenities not provided for by way of monetary payment, exceeds Rs.50,000/-. [What constitutes concession in the matter of rent have been prescribed in Explanations 1 to 4 below section 17(2)(ii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in clause (vii) above to the extent it relates to the contribution referred to in the said clause which is included in total income; and (viii) the value of any other fringe benefit or amenity as prescribed in Rule 3. However, the following are not included as perquisite,- (i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer; (ii) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family- (a) 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; (b) in respect of the prescribed diseases or ailments, in any hospital approved by the Principal Chief Commissioner or Chief Commissioner having regard to the prescribed guidelines; [(c) in respect of any illness relating to COVID-19 subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf. This has been inserted as amendment through Finance Act 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 income does not exceed Rs. 3,00,000/- Nil; 2 Where the total income exceeds Rs. 3,00,000 but does not exceed Rs. 5,00,000/- 5 per cent of the amount by which the total income exceeds Rs. 3,00,000/-; 3 Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- Rs. 10,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-; 4 Where the total income exceeds Rs. 10,00,000/- Rs. 1,10,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act) exceeding five crore rupees, at the rate of thirty-five per cent of such income-tax; and (e) having a total income (including the income by way of dividend or income under the provisions of section 111A, section 112 and section 112A) exceeding two crore rupees, but is not covered under clauses (c) and (d), shall be applicable at the rate of fifteen per cent. of such income-tax: Provided that in case where the total income includes any income by way of dividend or income chargeable under section 111A, section 112 and section 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 per cent.: Provided further 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 incomet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 per cent 7 Above Rs. 15,00,000 30 percent Such person is required to exercise the option in the prescribed manner along with the return of income to be furnished under section 139(1) of the Act for the previous year relevant to the assessment year. The concessional rates of tax provided under section 115BAC are subject to the condition that the total income of the individual or HUF shall be computed without any exemption or deduction specified under clause (i) of sub-section (2) of section 115BAC and without set off of any loss specified in clause (ii) of sub-section 2 of the said section. Further, surcharge on income-tax as contained in Para 2.2 shall be applicable in case of person opting for concessional tax regime. Furthermore, in case of a person having income from business or profession, such person is required to exercise the option in prescribed manner on or before the due date specified under such-section (1) of section 139 of the Act for any previous year relevant to assessment year commencing on or after 01.04.2021 and such option once exercised shall apply to subsequent assessment years. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BAC of the Act. The intimation so made to the deductor shall be only for the purpose of TDS during the previous year and cannot be modified during that year. (CBDT Circular No. C1 of 2020 dated 13.04.2020) No tax, however, will be required to be deducted at source in a case unless the estimated salary income including the value of perquisites is taxable after giving effect to the exemptions, deductions and relief as applicable. (Some typical illustrations of computation of tax are given at Annexure-I). 3.2 Payment of Tax on Perquisites by Employer Perquisite may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. Perquisites may be in the form of cash or in the form of kind, but will always form part of the salary. Perquisites are divided in two parts i.e. monetary perquisites and non-monetary perquisites. Monetary perquisites are taxable for all employees and non-monetary perquisites are taxable in the hands of specified employees. The following employees are deemed as specified employees: 1) A director-employee 2) An employee who has substantial interest (i.e. beneficial owner of equity shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns where an individual is working under more than one employer or has changed from one employer to another. It provides for deduction of tax at source by such employer (as the tax payer/employee may choose) from the aggregate salary of the employee, who is or has been in receipt of salary from more than one employer. The employee is now required to furnish to the present/chosen employer details of the income under the head Salaries due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer . The present/chosen employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer). 43.5 Relief When Salary Paid in Arrear or Advance 3.5.1 Section 89 of the Act provides for relief to an assessee to whom salary is being paid in arrear or advance as a result of which, his total income is assessed at a higher rate than that at which it would otherwise have been assessed. Such an assessee can make an application to the Assessing Officer who shall grant relief in the prescribed manner. Rule 21A of the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Rs. 2.00 lakh with the income under any other head of income in view of the amendment to section 71 of the Act vide Finance Act, 2017. Hence, loss under the head Income from house property in excess of Rs. 2.00 lakh is to be ignored for calculating the amount of tax deduction. 3.7 Computation of income under the head Income from house property Section 192(2D) enables the person responsible for making the payment, to obtain the evidence or proof of the prescribed claims, including claim for set-off of loss. While taking into account the loss from House Property, the DDO shall ensure that the employee files the declaration referred to above and encloses therewith a computation of such loss from house property. Following details shall be obtained and kept by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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 of the lender PAN or Aadhaar number, as the case may be, of the lender being financial institution or employer, is to be provided if it is available with the employee. However, in case of other lenders, obtaining of PAN or Aadhaar number is mandatory by the DDO. 3.8 Adjustm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y TDS rate. However as per section 192 , the tax deduction shall be made at the average rate of income tax on the amount payable, computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income under the head of Salary for that financial year. The rates as per different income slabs are specified in the First Schedule to the Finance Act. In the case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements shall also be considered. 4.2 Deduction of Tax at Nil or Lower Rate If the jurisdictional TDS officer of the employer issues a certificate of No Deduction or Lower Deduction of Tax under section 197 of the Act, in response to the application filed 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 As per section 200 of the Act, any person responsible for deducting any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een paid to the credit of the Central Government without the production of a challan [ Book Entry ], the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person, by whatever name called, to whom the deductor reports about the tax deducted and who is responsible for crediting such sum to the credit of the Central Government, shall‐ (a) submit a statement in Form No. 24G under section 200 (2A) on or before the 30th day of April where statement relates to the month of March; and in any other case, on or before 15 days from the end of relevant month to the agency authorized by the Principal Director General of Income‐tax (Systems) [TIN Facilitation Centres currently managed by M/s National Securities Depository Ltd] in respect of tax deducted by the deductors and reported to him for that month; and (b) intimate the number (hereinafter referred to as the Book Identification Number or BIN) generated by the agency to each of the deductors in respect of whom the sum deducted has been credited. BIN consist of receipt number of Form 24G, DDO sequence number in Form No. 24G and date on which tax is deposited. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of such tax in accordance with the provisions of section 201, and shall also be liable to penal action u/s 221 of the Act. Further Section 201(1A) provides that such person shall be liable to pay simple interest at the rate of one per cent for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and at the rate of one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Such interest shall be paid before furnishing the statement in accordance with the provisions of subsection (3) of section 200. 4.5.2 In case any person, including the principal officer of a company fails to deduct the whole or any part of the tax on the sum paid to a payee or on the sum credited to the account of a payee but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, the interest shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such payee. 4.5.3 Where an order is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 4.6.4 It may be noted that under the new TDS procedure, TAN of deductor/ PAN or Aadhaar number of the deductee and receipt number of TDS statement filed by the deductor act as unique identifier for granting online credit of TDS to the deductee. Hence due care should be taken in filling these particulars. Due care should also be taken in indicating correct CIN/ BIN in TDS statement. 4.6.5 If the DDO fails to issue these certificates to the person concerned, as required by section 203, he/she will be liable to pay, by way of penalty, under section 272A(2)(g), a sum which shall be Rs.500/- for every day during which the failure continues. How ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 9. TDS certificate (Form16) 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 is 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). [Note: TRACES is a web-based application of the Income-tax Department that provides an interface to all stakeholders associated with TDS administration. It enables viewing of challan status, downloading of NSDL Conso File, Justification Report and Form 16 / 16A as well as viewing of annual tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the statement. m. Permanent Account Number of landlord shall be mandatorily furnished where the aggregate rent paid during the previous year exceeds one lakh rupees. n. Permanent Account Number of lender shall be mandatorily furnished where the housing loan, on which interest is paid, is taken from a person other than a Financial Institution or the Employer. 4.6.9 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 clause (i), the deductor shall ensure that a) the conditions prescribed in para 4.6.1 above are complied with; b) once the certificate is digitally signed, the contents of the certificates are not amenable to change; and c) the certificates have a control number and a log of such certificates is maintained by the deductor. The digital signature is being used to authenticate most of the e-transactions on the internet as transmission of information using digital signature is failsafe. It saves time specially in organisations having large number of empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpowered 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 available to the DDO. To bring certainty and uniformity in this matter, 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); Leave Travel Concession or Assistance; 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. Form 12BB is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of this Act; or ii) at the rate or rates in force; or iii) at the rate of twenty per cent 4.9.2 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. 4.10 Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS] 4.10.1 The person deducting the tax (employer in case of salary income), is required to file duly verified Quarterly Statements of TDS in Form 24Q for the periods [details in Table below] of each financial year, to the TIN Facilitation Centres authorized by Pr.DGIT (Systems) which is currently managed by M/s National Securities Depository Ltd (NSDL) or at www.incometaxindiaefiling.gov. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x deducted at source [on or after 1.07.2012] he/she shall be liable to pay, by way of fee a sum of Rs. 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. 4.12 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. 4.13 Penalty for failure to furnishing statements or furnishing incorrect information (section 271H) Under section 271H of the Act, 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/she shall be liable to pay, by way of penalty, a sum which shall not be less than Rs. 10,000/- but which may extend to Rs 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 Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24Q only. 4.14.2 Under section 194P of the Act, the specified bank shall compute the total income of specified senior citizen and deduct income tax on the basis of rates in force. As per clause (2) of section 194P, the provisions of section 139 will not apply to specified senior citizen for the assessment year for which tax has been deducted. The specified senior citizen has been defined as an individual resident in India who has attained age of 75 years or more and who is having income of the nature of pension and no other income except the income of the nature of interest received or receivable from any account maintained by such individual in the same specified bank in which he is receiving his pension income. Further the specified senior citizen has to furnish declaration in Form 12BBA (Rule 26D). 4.14.3 The declaration in Form no. 12BBA is to be furnished in paper form duly verified. The specified bank shall, after giving effect to the deduction allowable under Chapter VI-A and rebate allowable under section 87A, compute the total income of such specified senior citizen for the relevant assessment year and deduct income-tax on such total income on the basis of the rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecame due to him. (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year. (2) For the removal of doubts, it is clarified that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due. Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as Salary . 5.2 Value of Perquisites as per Rule 3 The value of perquisites provided directly or indirectly by the employer to the employee or to any member of household of employee, for the purpose of computing the income chargeable under the head Salaries for that employee shall be determined on the basis of Rule 3 of the Income-tax Rules 1962. The provisions of Rule 3 are as follows: - A. Residential Accommodation provided by the employer [Rule 3(1)] As per rule 3 of the Income-tax Rules 1962, accommodation includes a house, flat, farm house or part thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (2) or proviso to clause (2) of section 17; (f) lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments; 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/she 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 accommodation which has the lower value for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodation. b) Furnished accommodation: The accommodation is divided into two categories: (i) Accommodation provided by the Central Government or any State governments: The value of perquisite shall be as determined for unfurnished accommodation and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) the accommodation is of a temporary nature having plinth area of not more than 800 square feet and is not located within 8 kilometers of the local limits of any municipality or cantonment board. 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. B. 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 determined as follows: a) If the motor car is used by the employee wholly and exclusively in the performance of his official duties, the value of perquisite shall be taken as Nil. However, following compliances are necessary: The employer has maintained complete details of the jour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of expenditure incurred thereon for official purposes; The employer gives a certificate that the expenditure was incurred wholly and exclusively for performance of official duties. (b) Such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee or any member of his household, the value of perquisite shall be the actual amount of expenditure incurred by the employer as reduced by the amount of Rs. 1800/- (plus Rs. 900/-, if chauffeur is also provided) per month for motor car where cubic capacity of engine does not exceed 1.6 litres, and if the cubic capacity of engine of the motor car exceeds 1.6 litres, reduced by Rs. 2400/- (plus Rs. 900/-, if chauffeur is also provided) per month. However, following compliances are necessary: The employer has maintained complete details of the journey undertaken which may include date of journey, destination, mileage and the amount of expenditure incurred thereon for official purposes; The employer gives a certificate that the expenditure was incurred wholly and exclusively for performance of official duties. (III) Where any other automotive c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyer'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 be reduced from the perquisite value. (E) Free or concessional education [Rule 3(5)]: Perquisite on account of free or concessional education for any member of the employee s household shall be determined as the sum equal to the amount of expenditure incurred by the employer in that behalf, or where such educational institution is maintained and owned by the employer or where free educational facilities for such member of employee s household is provided in any other institution by reason of his being in employment of that employer, the value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality. The value of perquisite shall be reduced by the amount, if any, paid or recovered from the employee. In case where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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/her household, other than travel concession or assistance (as per clause 5 of section 10), 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 value so determined. Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public. Where the employee is on official tour and the expenses are incurred in respect of any member of his/her household accompanying him, the amount of expenditure with respect to the member of the household shall be a perquisite. Where the employee is on official tour which is extended as a vacation, the value of such fringe benefit sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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. (L) Club Expenditure [Rule 3(7)(vi)] The value of perquisite for the reimbursement or payment done by the employer for any expenditure incurred (including annual and periodical fees) by the employee (or any member of his/her household) in a club, shall be the amount which is paid or reimbursed by the employer, as reduced by the any amount paid or recovered from the employee. In case of corporate membership by the employer, the value of perquisite shall not include the initial fees paid for acquiring such corporate membership. However, if the amount is incurred wholly and exclusively for business 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 the employer. ii) Employer gives a certificate that the same was incurred wholly and exclusively for official purpose. Note: Use of health club, sport facilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved by the Government for the purposes of medical treatment of its employees; in respect of the prescribed diseases in any hospital approved by the Principal Chief Commissioner or Chief Commissioner. in respect of any illness relating to COVID-19 subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in this behalf. This has been inserted as amendment through Finance Act 2022 with retrospective effect from 01.04.2020 and thus accordingly, applies in relation to the assessment year 2020-2021 and subsequent assessment years. The conditions have been notified vide CBDT Notification No. [S.O. 3703(E)] 90/2022 dated: 05.08.2022. (c) any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force health insurance of such employee under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority (IRDA) for the purposes of clause (ib) of sub-section (1) of section 36 (d) any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his/her health or the health of any member of his f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them, wholly or mainly dependent on the individual. It may also be noted that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel. As discussed in para 4.6.5 section 192 (2D) read with the rule 26C makes it mandatory for the DDO 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. 5.3.2 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 under a State or to the employees of a local authority or any payment of retiring gratuity received under the Pension Code or Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption in respect of leave encashment in case of a non-Government employee at the time of retirement will be lower of the following amounts : Period of earned leave standing to the credit in the employee s account at the time of retirement average monthly salary. Average monthly salary 10 (i.e., 10 months average salary). Maximum amount as specified by the Central Government, i.e., Rs. 3,00,000. Leave encashment actually received at the time of retirement. Salary for the purpose of computation of exemption will include basic salary, dearness allowance forming part of salary while computing retirement benefits and commission based on fixed percentage of turnover achieved by the employee. If an employee receives leave salary from more than one employer in the same year, then the maximum amount of exemption under section 10(10AA)(ii) cannot exceed the amount specified by the Central Government (i.e., Rs. 3,00,000). Where any employee has claimed exemption of leave salary under this section in any earlier year(s), then in case of such employee, the ceiling limit (i.e., Rs. 3,00,000) shall be reduced by the amount of exemption earlier claimed. 5.3.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any other assessment year. Further, if relief has been allowed under section 89 for any assessment year in respect of amount received on voluntary retirement or superannuation, no exemption under section 10(10C) shall be available. 5.3.7 Any sum received under a Life Insurance Policy [Sec 10(10D)], including the sum allocated by way of bonus on such policy other than the following is exempt under section 10(10D): i) any sum received under section 80DD(3) or section 80DDA(3); or ii) any sum received under a Keyman insurance policy; or iii) any sum received under an insurance policy issued on or after 1.4.2003, but on or before 31-03-2012, in respect of which the premium payable for any of the years during the term of the policy exceeds 20 percent of the actual capital sum assured; or iv) any sum received under an insurance policy issued on or after 1.4.2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10 percent of the actual capital sum assured; or v) any sum received under an insurance policy issued on or after 1.4.2013 in cases of persons with disability or person with severe disability as per Sec 80U or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of an income by way of interest accrued during the previous year in the account of a person to the extent it relates to the amount or the aggregate of amounts of contribution made by that person exceeding prescribed threshold limit (two lakh and fifty thousand rupees) in any previous year in that fund, on or after the 1st day of April, 2021 and computed in prescribed manner. Second proviso to clause (11) of section 10 provides that if the contribution by such person in a fund in which there is no contribution by the employer of such person, the threshold limit would be five lakhs rupees. Rule 9D of the Income-tax Rules, 1962 provides for the calculation of taxable interest relating to contribution in a provident fund or recognized provident fund, exceeding specified limit. 5.3.9 The accumulated balance due and becoming payable to an employee participating in a recognized provided fund, to the extent provided in rule 8 of Part A of the Fourth Schedule to the Act is exempt under clause (12) of section 10 of the Act. With effect from 1st April, 2022, the exemption under the said clause will not be applicable to the income by way of interest accrued during the previous year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 10(14) provides for exemption of the following allowances:- i. Any special allowance 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/she 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 exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5.3.16 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 transportation of personal effects on such transfer shall be exempt. Also, any allowance, whether, granted on tour or 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 shall be exempt. 5.3.17 Vide Notification no. G.S.R. 415(E) dated 26.06.2020, rule 2BB has been amended so as to provide that in case of an assessee opting for concessional taxation regime under section 115BAC of the Act shall be entitled exemption only in respect of the following allowances: (a) Transport Allowance granted to an employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall also be allowed as a deduction in computing the income under the head Salaries . 5.5 Deductions Under Chapter VI-A of the Act In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income: 5.5.1 Deduction in respect of Life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. (section 80C) A . Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.1,50,000/-: (1) Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual or a HUF. (2) Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or any child, a. for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India; b. for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to section 10 (23D) and as notified by the Central Government. [ The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05 .] (7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify; [The Central Government has since notified New Jeevan Dhara. New Jeevan Dhara-I, New52 Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05, Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006, Jeevan Akshay-VI vide Notification S.O. No. 1184(E) dated 19.05.2010 and Jeevan Akshay-VII vide Notification S.O. No. 5056(E) dated 06.12.2021] (8) Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the Administrator or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en chargeable to tax under that head) where such payments are made towards or by way of any installment or part payment of the amount due under any self- financing or other scheme of any Development Authority, Housing Board or other authority engaged in the construction and sale of house property on ownership basis. The deduction is allowable on any instalment or part payment of the amount due to any company or co-operative society of which the assessee is a shareholder or member towards the cost of house property allotted to him. The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Central Government or any State Government, or any bank, including a cooperative bank, or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a coop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes. [ The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006 ] (17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf. (18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004. (19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981. (20) Any contribution by employee of the Central Government to a specified account of the pension scheme referred to in section 80CCD - (a) for a fixed period of not less than three years; and (b) which is in accordance with the scheme as may be notified by the Central Government in the Official Gazette for the purposes of this clause. Explanation.-For the purposes of this clause, specified account means an additional account referred to in sub-section (3) of section 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited 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. 5.5.3 Deduction in respect of contribution to pension scheme of Central Government (Section 80CCD): Section 80CCD(1) allows an employee, being an individual employed by the Central Government on or after 01.01.2004 or being an individual employed by any other employer, or any other assessee being an individual, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified vide Notification F. N. 5/7/2003- ECB PR dated 22.12.2003 National Pension System-NPS or as may be notified by the Central Government. However, the deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites) in the case of an employee and 20% of his gross total income in any other case. As per section 80CCD(1B), an assessee referred to in 80CCD(1) shall be allowed a deduction in computation of his income, of the whole of the amount paid or deposited in the previous year in his account under the pension sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity plan in the same previous year. Subject to provisions of section 10 (12A) and section 10 (12B) as 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 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 w.e.f 01.04.09 any amount received by the employee from the New Pension Scheme shall be deemed not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the number of years for which health insurance cover is provided, subject to the monetary limits specified above. Here i) family means the spouse and dependent children of the employee. ii) Senior citizen means an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year. 1. The DDO must ensure that the medical insurance referred to above shall be in accordance with a scheme made in this behalf by- (a) the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 and approved by the Central Government in this behalf; or (b) any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999. 2. Lump sum payment of health insurance premium. In case, a lump sum amount is paid to effect or to keep in forc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such scheme has been discontinued; (b) the assessee nominates either the dependent, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependent, being a person with disability. However, if the dependent, 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. The assessee, claiming a deduction shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the return of income under section 139 in the assessment year in which the deduction is claimed. However, no deduction shall be allowed for any assessment year relating to any previous year beginning after the expiry of the previous year during which the said certificate of disability had expired, unless a new certificate in the prescribed form and manner, is obtained. b. Deductions in respect of a person with disability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igher 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/she is the legal guardian. The deduction shall be allowed in computing the total income 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 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 conversion of vehicle kinetic energy into electrical 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 deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled 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 Rs. 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 themselves in this regard by insisting on production of evidence of actual payment of rent. 5.5.12 Deductions in respect of certain donations for scientific research or rural development (Section 80 GGA): Section 80GGA allows deduction from total income of employee in respect of donations of any sum as given in the Table below: Sl No Donations made to persons Approval /Notification under Section Authority granting approval/Notification 1. A research association which has as its object the undertaking of scientific research or to a university, college or other instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has gross total income which includes income which is chargeable under the head Profits and gains of business or profession . ii) The amount of donation exceeds Rs. 2000 unless such sum is paid by any mode other than cash. The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of 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/she has no income from Profits and gains of business or profession . 5.5.13 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to individual taxpayers, resident in India, who are in lower income bracket, i.e. having total income not exceeding Rs 5,00,000/-. The amount of rebate available under section 87A is Rs 12,500/- or the amount of tax payable, whichever is less from financial year 2019-20. 7. TDS on payment of accumulated balance under recognized provident fund and contribution from approved superannuation 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 F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee includes any amount transferred from his individual account in any other recognized provident fund(s) maintained by his former employer(s), then in computing the period of continuous service the period or periods of continuous services rendered under former employer(s) shall be counted for the purposes of (i) and (ii) above. Under the above four situations at (i) to (iv), the accumulated balance due and payable to the employee is not liable for TDS under section 192A . 8. DDOs to obtain evidence/proof of claims: For the purpose of estimating income of the assessee 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 h e ad 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous deduction can be adjusted by increasing or decreasing the amount of subsequent deductions during the same financial year. 10. Miscellaneous: 10.1 These instructions are not exhaustive and are issued only with a view to guide the employers to understand the various provisions relating to deduction of tax from salaries. Wherever there is any doubt, reference may be made to the provisions of the Income-tax Act, 1961 , the Income-tax Rules, 1962, the Finance Act,2022 (No.6 of2022), the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (No. 38 of 2020), the relevant circulars 1 notifications, etc. 10.2 In case any assistance is required, the Assessing Officer/the Local Public Relation Officer of the Income-tax Department may be contacted. 10.3 These instructions may be brought to the notice of all Disbursing Officers and Undertakings including those under the control of the Central/State Governments. 10.4 Copies of this Circular are available at the following websites: www.finmin.nic.in www.incometaxindia.gov.in Hindi version will follow. (Kalpana Singh) AddI. CIT(OSD) (IT-Budget), CBDT ANNEXURE-I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 2023-24 Calculation of Income Tax in the case of an employee below the age of sixty years having a handicapped dependent (With valid PAN@ furnished to employer). S.No. Particulars Rupees 1 Gross Salary 4,70,000 2 Amount spent on treatment of a dependent, being person with disability (but not severe disability) 7000 3 Amount paid to LIC with regard to annuity for the maintenance of a dependent, being person with disability (But not severe disability) 60,000 4 GPF Contribution 25,000 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Rs 8,000 ii) Interest Income on Time Deposit Rs 15,000 23,000 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Salary + Dearness Allowance + House Rent Allowance 3,50,000+2,00,000+1,40,000 = 6,90,000 7,40,000 2 Total Salary Income 7,40,000 3 Less: Standard deduction u/s 16(ia) 50,000 4 Less: House Rent allowance exempt U/s 10(13A): Least of: (a) Actual amount of HRA received= 1,40,000 (b) Expenditure of rent in excess of 10% of salary (including D.A. presuming that D.A. is taken for retirement benefit) (1,44,000-55,000) = 89,000 (c) 50% of Salary(Basic+ DA) = 2,75,000 [Bombay/Kolkata/Delhi/Chennai] or 40% of salary (Basic + DA) in case of other cities 89,000 Gross Total Income 6,01,000 Less: Deduction U/s 80C (i) GPF Rs.36,000/- (ii) LIC Rs. 4,000 (iii) Investment in Unit-Linked Insurance Plan Rs.50,000/- Total =Rs.90,000/- 90,000 5 Total Income 5,11,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4(a) Perquisite for flat (Cities having population 25 lakh as per 2001 census) 15% of salary for 10 months=Rs.1,05,000/- 1,38,600 4(b) Perquisite 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: Perquisite for free gas, electricity, water etc. Rs.40,000 (+) Rs 98,600 [4(c)(i)] = Rs 1,38,600 Total perquisites 5 Gross Total Income (Rs.8,40,000+ 1,38,600) 9,78,600 6 Less: Standard deduction u/s 16(ia) 50,000 7 Gross Total Income 9,28,600 8 Less: Deduction U/s 80C: (i). Provident Fund (80C) : 42,000 (ii) LIC (80C) : 10,000 (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in excess of 10% of salary (Including D.A.) assuming D.A. is included for retirement benefits (1,20,000- 55,000) : Rs. 65,000 (iii) 50% of salary (including D.A) : Rs. 2,75,000 65,000 Less : Standard deduction u/s 16(ia) 50,000 Gross Total Taxable Income 6,27,000 4 Less: Deduction U/s 80C (i) Provident Fund : 60,000 (ii) LIP : 10,000 (iii) NSC VIII Issue : 30,000 (iv) Repayment of HBA : 60,000 (v) Tuition Fees (Restricted to two children) : 20,000 Total : 1,80,000 Restricted to 1,50,000 1,50,000 5 Total Income 4,77,000 6 Income Tax thereon/payable (includes Rebate as per Section 87A) Nil 7 Add: Health Education Cess @ 4%. Nil 8 Total Income Tax payable Nil 9 Ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.5,50,000/-, ii) Rs.8,50,000/- , iii) 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 5,50,000 8,50,000 13,00,000 Contribution of P.P.F. 80,000 1,20,000 1,50,000 Computation of Total Income and tax payable thereon Particulars Rupees (i) Rupees (ii) Rupees (iii) Gross Pension 5,50,000 8,50,000 13,00,000 Less: Standard deduction u/s 16(ia) 50,000 50,000 50,000 Less: Deduction U/s 80C 80,000 1,20,000 1,50,000 Taxable Income 4,20,000 6,80,000 11,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income from Salary Basic Pay @ Rs 40,000 p.m (March to June '22) 1,60,000 @ Rs 41,200 p.m * (July 2022 to Feb 2023) 3,29,600 4,89,600 Dearness Allowance(assumed) 1.3.2021 to 30.06.2022 @ 7% i.e., Rs 40,000 p.m 11,200 1.7.2021 to 31.12.2022 @ 9% i.e. Rs 41,200 p.m 22,248 1.1.2022 to 28.02.2023 @ 11%i.e.Rs.41,200 p.m 9,064 5,32,112 House Rent Allowance 1,17,504 6,49,616 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 :he/she alth 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 1) Name and address of employer : 2) TAN 3) TDS Assessment Range of the employer : 4) Name, designat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 Stock options (non- qualified options) 17 Other benefits or amenities 18 Total value of perquisites 19 Total value of Profits in lieu of salary as per 17(3) 9. Details of tax, - (a) Tax deducted from salary of the employee u/s 192(1) ..... (b) Tax paid by employer on behalf of the employee u/s 192(1A) ..... (c) Total tax paid ...... (d) Date of payment into Government treasury ...... DECLARATION BY EMPLOYER I ......... s/o ......... working as ........ (designation) do hereby declare on behalf of .......... (name of the employer) that the information given above is based on the books of account, documents and other relevant records or information available with us and the details of value of each such perquisite are in accordance with section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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) .. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Validation Utility (FVU) which is freely available on TIN website. Once file is validated through FVU, '.fvu file' in CD/DVD/Pen Drive along with physical Statement Statistic Report (SSR) signed by the AO, to be furnished at TIN-FCs. On successful acceptance of 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. 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (PAOs)/District Treasury Officers (DTOs)/Cheque Drawing and Disbursing Officers(CDDOs) 1. Under what income tax rule should Form 24G be filed? Income-tax Department Notification no. 41/2010 dated May 31, 2010 amended the Income Tax Rule 30 which mandates that in case of an office of the Government, where tax has been paid to the credit of Central Government without the production of a challan (associated with deposit of 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Form 24G. 8. How to register for online facility? Registration for AO Account is mandatory for filing Form No. 24G online through TIN website, www.tin-nsdl.com. Registration AO Account is required once only. AO required to submit the Form No. 24G at TIN-FC at least once to comply with the Know Your Customer (KYC) norms for registration of the AO Account. After registration, it is optional for AO either to submit the Form No.24G in CD/Pen drive at TIN-FC or online. 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dows platform(s) Win 2K Prof. / Win 2K Server/ Win NT 4.0 Server/ Win XP Prof. To run the 'Form 24G Preparation Utility', click on the '24GRPU.bat' file. If JRE is not installed on the computer, then on clicking '24GRPU.bat', a message will be displayed. In such cases, install JRE and try again. If appropriate version of JRE is installed, then the 'Form 24G Preparation Utility' will be displayed. 15. What are the steps to download and install Form 24G Preparation Utility? For assistance in downloading 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agmented statements are expected to be filed (i.e. separate statements giving details for deductions under different form type with respect to the same AIN, FY and month). However, any mistake made in an original accepted statement can be rectified by submitting a 'correction statement'. For correction, the latest version of the RPU should be downloaded from TIN website. Form 24G corrections can also be uploaded directly at the TIN website. For direct upload at TIN Central system, AO has to first register AIN at TIN website and upload the Form 24G correction. 19. 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 Statement' and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The quoting of BIN has been made mandatory w.e.f 01st February, 2012. BIN is a unique number to verify the claim of TDS deposited without production of challan. As it is a verification key, it is advised that valid BIN disseminated by AO to the respective DDO should be correctly filled in TDS statement. 23. When is BIN generated? On processing of accepted Form 24G statement, BIN is generated for each DDO record (with valid TAN) present in Form 24G statement. BIN are generated at TIN Central System and intimated to the PAOs with details of TAN and Form Type. 24. What do the PAO and DDO have to do with 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 generate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the credit of the Central Government. ii. To report to PAOs/DTOs/CDDOs, the details of tax deducted and credited to the Central Government account through book adjustment. iii. To quote BIN in the quarterly TDS/TCS Statement (24Q, 26Q, etc) for the tax deducted and credited through book adjustment. iv. Filing of TDS/TCS statement (24Q, 26Q etc) within the due date. v. To download Form 16/26A from TRACES website (www.tdscpc.gov.in) and timely issuance of the same to the deductees. 30. What are the consequences of non-quoting of BIN details in quarterly TDS/TCS statement? (a) BIN details and amount of TDS reported in the quarterly TDS/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 downlo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ductor 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 adjustment entries and file quarterly TDS statements as TAN holder by quoting the corresponding BINs. Person Responsible for filing Form No. 24G in case of State Govt. Departments POINT NO.4.9 OF DRAFT CIRCULAR OF DEDUCTION OF TAX AT SOURCE FROM SALARIES U/S 192 OF THE INCOME TAX ACT, 1961 FINANCIAL YEAR 2015-16- PROCEDURE OF PREPARATION OF QUARTERLY STATEMENT OF DEDUCTION OF TAX UNDER SECTION 200(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Online Correction (withoutdigital 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 vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment/return online at TIN website: Deductor/DDO is required 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 letterhe/shead 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 correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service. Government will make no contribution into this account. These assets would be managed 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/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) i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NaoSena Medal - do - 11. VayuSena Medal - do - 12. Fire Services Medal for Gallantry When awarded for acts of courage or conspicuous gallantry and Supported by certificate issued to this effect by the lasthe/shead of Department. 13 President's Police Fire Services Medal for Gallantry -do- 14. President's Fire Services Medal for Gallantry -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 of Section 10 of the Income tax Act, 1961 (43 of 1961)), the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(TDS) Assessment year Period with the Employer Address : From To City : Pin code : Summary of amount paid/credited and tax deducted at source thereon in respect of the employee Quarter(s) Receipt Numbers of original quarterly statements of TDS under sub-section (3) of section 200 Amount paid/credited Amount of tax deducted (Rs.) Amount of tax deposited/remitted(Rs. ) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total (Rs.) I. DETAILS OF TAX DEDUCTED AND DEPOSITED IN THE CENTRAL GOVERNMENT ACCOUNT THROUGH BOOK ADJUSTMENT(The deductor to provide payment wise details of tax deducted and deposited with respect to the deductee) Sl.No Tax Deposited in respect of the deductee (Rs.) Book Identification Number (BIN) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) Value of perquisites under section 17(2)(as per Form No 12BA, wherever applicable) Rs. ... c) Profits in lieu of salary under section 17(3) (as per Form No. 12BA, wherever applicable) Rs. ... d) Total Rs. ... e) Reported total amount of salary received from other employer(s) 2. Less: Allowances to the extent exempt under section 10 a) Travel concession or assistance under section 10(5) Rs. ... b) Death-cum-retirement gratuity under section 10(10) Rs. ... ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Rs. ... c) Tax on employment under section 16(iii) Rs. ... 5. Total amount of deductions under section 16 [4(a)+4(b)+4(c)] Rs. ... 6. Income chargeable under the head Salaries [(3+1(e)-51 Rs. ... 7. Add: Any other income reported by the employee under as per section 192(2B) Rs. ... a) Income (or admissible loss) from house property reported by employee offered for TDS Rs. ... b) Income under the head Other Sources offered for TDS 8. Total amount of other income reported by the employee [7(a)+7(b)1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. ... Rs. ... j) Deduction in respect of interest on deposits in savings account under section 80TTA Rs. ... Rs. ... Rs. ... k) Amount deductible under any other provision(s) of Chapter VI-A Rs. ... Rs. ... Rs. ... Section... Rs. ... Rs. ... Rs. ... Section... Rs. ... Rs. ... Rs. ... Section... Rs. ... Rs. ... Rs. ... Section... Rs. ... Rs. ... Rs. ... S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 194P A. Whether opting for taxation u/s 115BAC? [YES/NO] 1. Gross Salary _a)_ Pension as per provisions contained in clause (ii) of section 17(1) Rs. ... 2. Total amount of salary received Rs. ... 3. Less: Deductions under section 16 a) Standard deduction under section 16(ia) Rs. ... b) Tax on employment undersection 16(iii) Rs. ... 4. Total amount of deductions under section 16 [3(a)+3(b)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Deduction in respect of donations to certain funds, charitable institutions, etc. under section 80G Rs. ... Rs. ... Rs. ... g) Deduction in respect of interest on deposits in savings account under section 80TTB Rs. ... Rs. ... Rs. ... h) Amount deductible under any other provision(s)of chapter VI-A section ... Rs. ... Rs. ... Rs. ... section ... Rs. ... Rs. ... Rs. ... section ... Rs. ... Rs. ... Rs. ... section ... Rs. ... Rs. ... Rs. ... section ... Rs. . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The deductor shall furnish the address of the Commissioner of Income-tax (TDS) having jurisdiction as regards TDS statements of the assessee. 4. If an assessee is employed under one employer only during the year, certificate in Form No. 16 issued for the quarter ending on 31st March 2021 of the financial year shall contain the details of tax deducted and deposited for all the quarters of the financial year. 5. (i) If an assessee is employed under 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. (ii) Part B (Annexure-I) of the certificate in Form No.16 may be issued by each of the employers or the last employer at the option of the assessee. (iii) Part B (Annexure-II) of the certificate in Form 16 may be issued by the specified bank to a specified senior citizen. 6. In Part A, in items I and II, in the column for tax deposited in respect of deductee, furnish total amount of tax, surcharge and health and education cess. 7. Deductor shall duly fill details, where available, in item numbers 2(f) and 10(k) before fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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