TaxTMI 
TaxTMI 
INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2005-2006 UNDER SECTION 192 OF THE INCOME-TAX
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....al year 2005-2006 (i.e. Assessment Year2006-2007) at the following rates: RATES OF INCOME-TAX A. Normal Rates of tax : 1. Where the total income does not exceed Rs.1,00,000. Nil 2. Where the total income exceeds Rs. 1,00,000 but does not exceed Rs. 1,50,000. 10 per cent of the amount by which the total income exceeds Rs. 1,00,000. 3. Where the total income exceeds Rs. 1,50,000 but does not exceed Rs. 2,50,000. Rs. 5,000 plus 20 per cent of the amount by which the total income exceeds Rs.1,50,000. 4. Where the total income exceeds Rs. 2,50,000. Rs. 25,000 plus 30 per cent of the amount by which the total income exceeds Rs. 2,50,000. B. Rates of tax for a woman, resident in India and below sixty-five years of age : 1. Where the total income does not exceed Rs.1,35,000. Nil 2. Where the total income exceeds Rs. 1,35,000 but does not exceed Rs.1,50,000. 10 per cent of the amount by which the total income exceeds Rs. ....
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....ted salary income including the value of perquisites, for the financial year exceeds Rs.1,00,000/- or Rs.1,35,000/- or Rs.1,85,000/-, as the case may be, depending upon the age and gender of the employee.(Some typical examples of computation of tax are given at Annexure-I). Payment of Tax on Non-monetary Perquisites by Employer: 3.2 An option has been given to the employer to pay the tax on non-monetary perquisites given to an employee. The employer may, at his option, make payment of the tax on such perquisites himself without making any TDS from the salary of the employee. The employer will have to pay such tax at the time when such tax was otherwise deductible i.e. at the time of payment of income chargeable under the head salaries to the employee. Computation of Average Income Tax: 3.3 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. ILLUSTRATION: Suppose that the income chargea....
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....Central, State or Provincial Act, and includes an institution declared under section 3 of the University Grants Commission Act, 1956(3 of 1956), to be University for the purposes of the Act. Furnishing of Declaration by Taxpayer in Form 12C 3.6 (i) Sub-section (2B) of section 192 enables a taxpayer to furnish particulars of income under any head other than "Salaries" and of any tax deducted at source thereon in the prescribed form No.12C (Annexure II). (Form no. 12C has since been omitted from the Income Tax Rules. However, the particulars may now be furnished in a simple statement, which is properly verified by the taxpayer in the same manner as in Form 12C.) (ii) Such income should not be a loss under any such head other than the loss under the head "Income from House Property" for the same financial year. The person responsible for making payment (DDO) shall take such other income and tax, if any, deducted at source from such income, and the loss, if any, under the head "Income from House Property" into account for the purpose of computing tax deductible under section 192 of the Income-tax Act. However, this sub-section shall not in any case have the effect of reducing ....
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....for conversion of a part or whole of the capital borrowed, which remains to be repaid as a new loan. 3.7(ii)The essential conditions necessary for availing higher deduction of interest of Rs.1,50,000/- are that the amount of capital must have been borrowed on or after 01.4.1999 and the acquisition or construction of residential house must have been completed within three years from the end of the financial year in which capital was borrowed. There is no stipulation regarding the date of commencement of construction. Consequently, the construction of the residential house could have commenced before 01.4.1999 but, as long as its construction/acquisition is completed within three years, from the end of the financial year in which capital was borrowed the higher deduction would be available in respect of the capital borrowed after 1.4.1999. It may also be noted that there is no stipulation regarding the construction/ acquisition of the residential unit being entirely financed by capital borrowed on or after 01.4.1999.The loan taken prior to 01.4.1999 will carry deduction of interest up to Rs.30,000/ only. However, in any case the total amount of deduction of interest on borrowed ca....
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..... 147 dated 28.10.1974.) Deposit of Tax Deducted: 4.4. According to the provisions of section 200, any person deducting any sum in accordance with the provisions of Section 192 or paying tax on non-monetary perquisites on behalf of the employee under Section 192(1A), shall pay the sum so deducted or tax so calculated on the said non-monetary perquisites, as the case may be, to the credit of the Central Government in prescribed manner (vide Rule 30 of the Income-tax Rules,1962). In the case of deductions made by, or, on behalf of the Government, the payment has to be made on the day of the tax-deduction itself. In other cases, the payment has to be made within one week from the last day of month in which deduction is made. Penalty for Failure to Deposit Tax Deducted: 4.5 If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201. Sub-sec....
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.... of salary above Rs.1,50,000/-. In other cases, the information would have to be provided by the employer in Form 16 itself. In either case, Form 16 with Form 12BA or Form 16 by itself will have to be furnished within a period of one month from the end of relevant financial year. An employer, who has paid the tax on perquisites on behalf of the employee as per the provisions discussed in paras 3.2 and 3.3, 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. The obligation cast on the employer under Section 192(2C) for furnishing a statement showing the value of perquisites provided to the employee is a serious responsibility of the employer, which is expected to be discharged in accordance with law and rules of valuation framed thereunder. Any false information, fabricated documentation or suppression of requisite information will entail consequences therefore provided under the law. The certificates in form no.12BA and form no. 16 are to be issued on tax-deductor's own stationery within one ....
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.... at any of the TIN Facilitation Centres, particulars of which are available at www.incometaxindia.gov.in and at http://tin.nsdl.com . If a person fails to furnish the annual return in due time, he shall be liable to pay by way of penalty under section 272A, a sum which shall be Rs.100/- for every day during which the failure continues. However, this sum shall not exceed the amount of tax which was deductible at source. 4.9. A return filed on the prescribed computer readable media shall be deemed to be a return for the purposes of section 206 and the Rules made thereunder, and shall be admissible in any proceeding thereunder, without further proof of production of the original, as evidence of any contents of the original. Challans for Deposit of TDS: 4.10. While making the payment of tax deducted at source to the credit of the Central Government, it may be ensured that the correct amount of income-tax is recorded in the relevant challan. It may also be ensured that the right type of challan is used. The relevant challan for making payment of tax deducted at source from salaries is challan no. ITNS-281. Where the amount of tax deducted at source is credited to the Central Go....
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.... in India. It has been specifically provided in the Act that any salary payable for rest period or leave period which is both preceded or succeeded by service in India and forms part of the service contract of employment will also be regarded as income earned in India. New Procedure for TDS Returns and Quarterly Statements with effect from 1st of April, 2005: 4.16. a) The person deducting the tax (employer in case of salary income), is required to file Quarterly Statements for the periods ending on 30^th June, 30^th September, 31^st December and 31^st March of each financial year, duly verified, to the Director General of Income Tax (Systems) or M/s National Securities Depository Ltd (NSDL).These statements are required to be filed on or before the 15^th July, the 15^th October, the 15^th January in respect of the first three quarters of the financial year and on or before the 15^th Junefollowing the last quarter of the financial year. b) The Quarterly Statements are be filed on computer media only in accordance with rule 31A of the Income-tax Rules, 1962. In case of failure in filing of the Quarterly Statement, the person deducting the tax shall be liable for a pena....
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.... excess of 12% of the salary of the employee, along with interest applicable, shall be included in the income of the assessee for the previous year. Any contribution made by the Central Government to the account of the employee under the New Pension Scheme as notified vide Notification No. F.N. 5/7/2003- ECB&PR dated 22.12.2003 (copy enclosed as Annexure-VA) and referred to in section 80CCD (para 5.4(E) of this Circular) shall also be included in the salary income. Other items included in salary, profits in lieu of salary and perquisites are described in Section 17 of the Income-tax Act. The scope of the term profit in lieu of salary has been amended so as not to include interest on contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. For the purposes of this sub-clause, the expression Keyman insurance policy shall have the meaning assigned to it in clause (10D) of section 10. It may be noted that, since salary includes pensions, tax at source would have to be deducted from pension also, if otherwise called for. However, no tax is required to be deducted from the commuted portion of pension as explained in cla....
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....he employer, the prescribed rate is 20% 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. For furnished accommodation, the value of perquisite as determined by the above method shall be increased by- i) 10% of the cost of furniture, appliances and equipments, or ii) where the furniture, appliances and equipments have been taken on hire, by the amount of actual hire charges payable. - as reduced by any charges paid by the employee himself. The scope of the word "accommodation" has been widened to include a house, flat, farm house, hotel accommodation, motel, service apartment guest house, a caravan, mobile home, ship etc. 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....
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.... 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. III Gas, electricity & water: For free supply of gas, electricity and water for household consumption, the rules provide that the amount paid by the employer to the agency supplying the amenity shall be the value of perquisite. 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 be reduced from the above amount. IV Free or concessional education: Perquisite on account of free or concessional education shall be valued in a manner assuming that such expenses are borne by the employee, and would cover cases where an employer is running, maintaining or directly ....
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....his household benefits from the transfer of movable asset (not being shares or securities) at no cost or at a cost less than its market value from the employer. The difference between the original cost of the movable asset (not being shares or securities) and the sum, if any, paid by the employee, shall be taken as the value of perquisite. In case of a movable asset, which has already been put to use, the original cost shall be reduced by a sum of 10% of such original cost for every completed year of use of the asset. Owing to a higher degree of obsolescence, in case of computers and electronic gadgets, however, the value of perquisite shall be worked out by reducing 50% of the actual cost by the reducing balance method for each completed year of use. Electronic gadgets in this case means data storage and handling devices like computer, digital diaries and printers. They do not include household appliance (i.e. white goods) like washing machines, microwave ovens, mixers, hot plates, ovens etc. Similarly, in case of cars, the value of perquisite shall be worked out by reducing 20% of its actual cost by the reducing balance method for each completed year of use. VIII. Employee Sto....
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....ement gratuity or any other gratuity which is exempt to the extent specified from inclusion in computing the total income under clause (10) of Section 10. (3) Any payment in commutation of pension received under the Civil Pension(Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the civil services of the Union, or holders of civil posts/posts connected with defence, under the Union, or civil posts under a State, or to the members of the all India services/Defence Services, or, to the employees of a local authority or a corporation established by a Central, State or Provincial Act, is exempt under sub-clause (i) of clause (10A) of Section 10. As regards payments in commutation of pension received under any scheme of any other employer, exemption will be governed by the provisions of sub-clause (ii) of clause (10A) of section 10. (4) Any payment received by an employee of the Central Government or a State Government, as cash-equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement on superannuation or otherwise, is exempt under sub-clause(i) of clause (10AA) of Section....
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.... It may also be noted that where this exemption has been allowed to any employee for any assessment year, it shall not be allowed to him for any other assessment year. The exemption of amount received under VRS has been extended to employees of the Central Government and State Government employees and employees of notified institutions having importance throughout India or any State or States. (7) Any sum received under a Life Insurance Policy, including the sum allocated by way of bonus on such policy other than: i) any sum received under sub-section (3) of section 80DD or sub-section (3) of section 80DDA or, ii) any sum received under Keyman insurance policy or, iii) any sum received under an insurance policy issued on or after 1.4.2003 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. However, any sum received under such policy on the death of a person would still be exempt. (8) any payment from a Provident Fund to which the Provident Funds Act, 1925 ( 19 of 1925), applies ( or from any other provident fund set up by the Central Government and notified b....
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....g Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent. (10) Clause (14) of section 10 provides for exemption of the following allowances :- (i) Any special allowance or benefit granted to an employee to meet the expenses 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. The CBDT has prescribed guidelines for the purpose of clauses (i) and (ii) of Section 10(14) vide notification No.SO61....
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..... Rule, 1962 : In a case falling in sub-clause (ii)above, the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital. (c) premium paid by the employer in respect of medical insurance taken for his employees (under any scheme approved by the Central Government) 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); (d) reimbursement, by the employer, of the amount spent by an employee in obtaining medical treatment for himself or any member of his family from any doctor, not exceeding in the aggregate Rs.15,000/- in an year. (e) As regards medical treatment abroad, the actual expenditure on stay and treatment abroad of the employee or any member of his family, or, on stay abroad of one attendant who accompanies the patient, in connection with such treatment, will be excluded from perquisites to the extent permitted by the Reserve Bank of India. It may be noted that the expenditure incurred on travel....
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....ed that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity; (3) Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary; (4) Any contribution made : (a) by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies; (b) to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children ; [The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E) dated 3.11.05.] (c) by an employee to a Recognized Provident Fund; (d) by an employee to an approved superannuation fund; It may be noted that "contribution" to any Fund shall not include any sums in repayment of loan; (5) Any subsc....
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....D) of section 10, or, by the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf; [The Central Government has since notified UTI-Retirement Benefit Pension Fund vide Notification S.O. No. 1564(E) dated 3.11.05.] (10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf; (11) 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 b....
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.... such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly. (13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee. It is clarified that any payment towards any development fees or donation or payment of similar nature does not qualify for deduction under these provisions. (14) subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company or by any public finance institution , which is approved by the Board. (15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board for this purpose. It may be clarifi....
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....lary in the previous year. Where any amount standing to the credit of the assessee in his account under such pension scheme, in respect of which a deduction has been allowed as per the provisions discussed above, together with the amount accrued thereon, if any, is received by the assessee or his nominee, in whole or in part, in any financial year, (a) on account of closure or his opting out of such pension scheme; or b) as pension received from the annuity plan purchased or taken on such closure or opting out, the whole of the amount referred to in clause (a) or clause (b) above shall be deemed to be the income of the assessee or his nominee, as the case may be, in the financial year in which such amount is received, and shall accordingly be charged to tax as income of that financial year. For the purposes of deduction under section 80CCD, salary includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites. The aggregate amount of deduction under sections 80C, 80CCC and 80CCD shall not exceed Rs.1,00,000/- (Section 80CCE) D. Under section 80D, in the case of the following categories of persons, a deduction ....
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.... allowed as deduction subject to the specified conditions. The deduction under this section shall be allowed only if the following conditions are fulfilled:- A. (i) the scheme referred to in clause (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 assessee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability. However, if the dependant, being a person with disability, predeceases the assessee, an amount equal to the amount paid or deposited under sub-para (3)(b) above shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and shall accordingly be chargeable to tax as the income of that previous year. B. The assessee, claiming a deduction under this section, shall furnish a copy of the certificate issued by the medical authority in the prescribed form and manner, along with the re....
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....iple Disabilities Act, 1999 (44 of 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 (1 of 1996) 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 (44 of 1999); (g) person with severe disability means (i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or (ii) a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999); (h) specified company means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002).] F. Under Section 80E of the Act a ded....
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....jiv Gandhi Foundation. and to the following bodies to the extent of 100% of the contribution: i. National Defence Fund or The Prime Minister's National Relief Fund. ii. The Prime Minister's Armenia Earthquake Relief Fund. iii. The Africa (Public Contributions - India) Fund. iv. The National Foundation for Communal Harmony. v. Chief Minister's Earthquake Relief Fund - Maharashtra. vi. National Blood Transfusion Council. vii. State Blood Transfusion Council. viii. Army Central Welfare Fund. ix. Indian Naval Benevolent Fund. x. Air Force Central Welfare Fund. xi. The Andhra Pradesh Chief Minister's Cyclone Relief Fund - 1996. xii. The National Illness Assistance Fund. xiii. The Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund in respect of any State or Union Territory as the case may be, subject to certain conditions. xiv. The University or Educational Institution of national eminence approved by the Prescribed Authority. xv. The National Sports Fund to be set up by Central Government. xvi. The National Cultural Fund Set up by the Central Government. xvii. The Fun....
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....ibed form and manner along with the return of income, in respect of the assessment year for which the deduction is claimed. In cases where the condition of disability requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority in the prescribed form and manner and a copy thereof is furnished along with the return of income. For the purposes of this section, the expressions disability, medical authority, person with disability and person with severe disability shall have the same meaning as given in section 80DD (sub-para E of para 5.4 of this Circular). DDOs to satisfy themselves of the genuineness of claim: (21) The Drawing and Disbursing Officers should satisfy themselves about the actual deposits/ subscriptions / payments made by the employees, by calling for such particulars/ information as they deem necessary before allowing the aforesaid deductions. In case the DDO is not satisfied about the genuineness of the employee's claim regarding any deposit/subscription/payment made by the employee, he sh....
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.... 6th Floor, Mayur Bhavan, Indira Chowk, New Delhi-110 001 and at the following websites: www.finmin.nic.in www.incometaxindia.gov.in (R.K. SAGAR) Under Secretary(Budget) Central Board of Direct Taxes 1. All State Governments(including Administration of Union Territories) 2. All Ministries/Departments of Government of India etc. 3. President's Secretariat 4. Vice-President's Secretariat 5. Prime Minister's Office 6. Lok Sabha Secretariat 7. Rajya Sabha Secretariat 8. Cabinet Secretariat 9. Secretary, U.P.S.C., Dholpur House, New Delhi 10.Secretary, Staff Selection Commission, Lodhi Complex, New Delhi 11.Supreme Court of India, New Delhi 12.Election Commission, New Delhi 13.Planning Commission, New Delhi 14.Secretariat of Governors/Lt.Governors of all States/Union Territories 15.All Integrated Financial Advisors to Ministries/Departments of Government of India 16.All Heads of Departments & Offices subordinate to the Department of Revenue CBDT, CBEC etc. 17.Army Headquarters, New Delhi 18.Air Headquarters, New Delhi 19.Naval Headquarters, New Delhi 20.Director-General of Posts & Telegraphs, New Delh....
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....ices, New Delhi 62.World Health Organisation, New Delhi 63.International Labour Office, India Branch, New Delhi 64.Secretary, Indian Red Cross Society, India, New Delhi 65.Atomic Energy Department, Mumbai 66.Secretary, Development Board, Ministry of Commerce & Industry, New Delhi 67.National Savings Organisation, Nagpur 68.Deputy Accountant General, Post & Telegraph, Kolkatta 69.The Legal Adviser, Export - Import Bank of India, Post Box No.19969, Nariman Point, Mumbai-400021 70.The Deputy Finance Manager(Headquarters), Indian Airlines(H) - Airlines House, 11, Gurudwara Rakabganj Road, New Delhi-110001 71.Manager, State Bank of India, Local Head Office:- i) Jeevan Deep Building, 1,Middleton Street, Kolkatta ii)Circle Top House, Rajaji Salai, Chennai-600001 iii)Lucknow, Uttar Pradesh iv) Bank Street, Hyderabad-500001 v) Hamida Road, Bhopal-462001 vi)Shop Nos.101 to 105, Sector 17-B, Chandigarh vii)New Amn.Building, Madam Cama Road, Mumbai-400021 viii) 9, Parliament Street, New Delhi-110001 ix) Bhedru, Ahmedabad-380001 x) Judges Court Road, Post Box No.103, Patna-800001 xi) 59, Forest Park, Bhubneshwar and Gauhati, Assam ....
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.... 5,00,000 10,00,000 (Including allowances) Contribution to G.P.F. 20,000 50,000 1,00,000 Computation of Total Income and tax payable thereon Gross Salary 2,00,000 5,00,000 10,00,000 Less : Deduction u/s 80C 20,000 50,000 1,00,000 Taxable Income 1,80,000 4,50,000 9,00,000 Tax thereon 11,000 85,000 2,20,000 Add : Surcharge Nil Nil Nil Add : Education Cess @2% 220 1,700 4,400 Total tax payable 11,220 86,700 2,24,400 Note : Surcharge at the rate of 10% of the tax payable is to be charged only if taxable income exceeds Rs.10,00,000 Example 2 Calculation of Income-tax in the case of a male employee having a handicapped dependant. Particulars : 1. Gross Salary Rs. 3,20,000 2. Amount spent on treatment of a dependant, being person with disability (but not severe disability) Rs. 7,000 3. Amount paid to LIC with regard to annuity for the maintenance of a dependant, being person....
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....of residential accommodation situated in Delhi in case of a female employee: Particulars : 1. Salary Rs. 2,00,000 2. Dearness Allowance Rs. 1,00,000 3. House Rent Allowance Rs. 1,20,000 4. C.C.A. Rs. 6,000 5. House rent paid Rs. 1,44,000 6. General Provident Fund Rs. 36,000 7. Life Insurance Premium Rs. 4,000 8. Subscription to Infrastructure Bonds Rs. 20,000 Computation of total income and tax payable thereon 1. Salary + D.A. + C.C.A. Rs. 3,06,000 House Rent Allowance Rs. 1,20,000 2. Total Salary income Rs. 4,26,000 3. Less: House Rent allowance exempt u/s 10(13A): Least of: a. Actual amount of HRA received = Rs. 1,20,000 b. Expenditure of rent in excess of 10% of salary (including D.A. presuming that D.A. is taken for retirement benefit) (1,44,000-30,000) = 1,14,000 c. 50% of Salary(Basic+ DA)= Rs.1,50,000 Rs. 1,14,000 Gross Total Income : ....
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....p; (c) Perquisite for furniture @ 10% of cost : Rs. 10,000 Rs. 1,29,040 Less : Rent recovered from employee : Rs. 10,000 Rs. 1,19,400 (d) Add : Perq. for free gas, electricity and water : Rs. 24,000 Total perquisites: : Rs. 1,43,040 Gross Total Income Rs. 7,19,040 (Rs. 5,76,000+1,43,040) Less : Deduction u/s 80C : Provident Fund : 36,000 Subscription to NSC VIII Issue : 20,000 LIC : 5,000 Infrastructure Bonds : 30,000 Total: 91,000 Rs. 91,000 Total Income Rs. 6,28,040 Tax Payable Rs. 1,38,412 Surcharge : Nil ....
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....sp; (Restricted to two children) : 20,000 Total : 1,80,000 Restricted to 1,00,000 Total Income : 4,12,000 Tax Payable 70,100 Surcharge : Nil Education Cess @ 2% 1,402 Total Tax Payable Rs. 71,502 Note : Part of the dearness allowance merged with the basic pay and shown as 'Dearness Pay' is also included in the definition of 'salary' for working out the amount of exemption under section 10(13A). Example 7 Income-tax calculation in the case of a male employee who claims loss under the head 'income from self-occupied house property'. Particulars : 1. Gross salary : 4,00,000 2. Housing Loan repaid (Principal) : 50,000 3. Interest payable on housing loan (Loan taken after 1-4-1999) : 1,60,000 4. Donation paid to National Children Fund : 5,000 5. NSC Purchased : 10,000 6. GPF : 30,000 Computation of taxable income and tax thereon 1....
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....00 Housing Loan repaid 30,000 Total: 60,000 Total Deductions under Chapter VI-A Rs. 63,000 Total Income Rs.3,07,000 Tax payable Rs. 42,100 Add : Surcharge Nil Add : Education Cess @ 2% Rs. 842 Total Tax payable Rs. 42,942 Example 9 Income-tax calculation in the case of a male pensioner who is more than 65 years of age. (Rs.) Particulars Service Pension 1,80,000 Infrastructure bonds 30,000 N.S.C. purchased 20,000 Computation of Taxable Income and Tax thereon Income from Salary (Pension) 1,80,000 Less : Deduction u/s 80C G.P.F. 30,000 N.S.C. 20,000 Total 50,000 Total Income 1,30,000 Tax payable Nil Note: Taxpayers of sixty five years of age or above do not have to pay tax up to a total income of Rs.1,85,000 Annexure II Form for sending particulars of income under s....
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..... Annexure VA Notification [F.No. 5/7/2003-ECB & PR], dated 22-12-2003 The Government approved on 23rd August, 2003 the proposal to implement the budget announcement of 2003-04 relating to introducing a new restructured defined contribution pension system for new entrants to Central Government service, except to Armed Forces, in the first stage, replacing the existing system of defined benefit pension system : (i) The system would be mandatory for all new recruits to the Central Government service from 1st of January, 2004 (except the armed forces in the first stage). The monthly contribution would be 10 per cent of the salary and DA to be paid by the employee and matched by the Central Government. However, there will be no contribution from the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a non-withdrawable pension tier-I account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service. (ii) In addition to the above pension account, each individual may also ....