TaxTMI 
TaxTMI 
Deduction of tax at source-Income-tax deductions from salaries during 1977-78
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....from salaries during 1977-78. I am directed to invite a reference to this Ministry's Circular No.214* of even number dated the 30th March, 1977, on the subject of deduction of income-tax from salaries paid during the year 1977-78. The Finance (No.2) Bill, 1977, introduced in Parliament on the 17th June, 1977, inter alia, prescribes the rates at which income-tax has to be deducted during the financial year 1977-78 from income chargeable under the head "Salaries". An extract of Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Finance (No.2) Bill, 1977, is enclosed as Annexure I. It will be observed that while the basic rates of income-tax laid down in the said Sub-Paragraph are the same as the rates in force for dedu....
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....purposes of deduction of tax at source during the financial year 1977-78. (iii) For the purpose of computing the total income of an employee the amount credited to his ledger account in the Additional Dearness Allowance Deposit Account under the provisions of the Additional Emoluments (Compulsory Deposit) Act, 1974, shall not be included in his total income of the previous year in which it is so credited but so much of the amount as is repaid to him shall be liable to be included in his total income of the previous year in which it is repaid as already explained in this Ministry's Circular No.182+ (F.No.275/12/75-ITJ) dated October 28, 1975. The amount repaid will include an element of interest also. While the repayment of principal sum ....
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....urred by the employee or not. This deduction will, however, not be admissible in the case of retired pensioners who have not been in employment at any time during the financial year 1977-78. In the case of persons who retire from service in the course of the financial year 1977-78, the standard deduction will be calculated only with reference to the salary derived from employment during the financial year without taking into account the pension received by the employee. Further, the standard deduction will be limited to Rs.1,000 only in cases, (a) where the employee is in receipt of a conveyance allowance, or (b) where he is provided with any motor car, motor cycle, scooter or other moped by his employer (for use otherwise than wholly or ex....
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.... to 30% of the estimated "salary" [after the deduction in respect of expenditure incidental to the employment of the assessee referred to in item (v)] or Rs.20,000, whichever is less. (vii) Section 80FF of the Income-tax Act, 1961, provides for deduction in respect of the expenditure incurred by a person on higher education of his dependent children, brother or sister. The deduction is admissible only in the case of Indian citizens whose "gross total income" does not exceed Rs.12,000. Where the said dependent of the taxpayer is studying for a degree or post-graduate course in medicine (including surgery and obstetrics), architecture, engineering, technology or business management, a deduction of Rs.1,000 and where the dependent is studyi....
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....prescribed the limits in respect of the amount which is not to be included in the total income of the assessee for the purpose of section 10(13A) of the Income-tax Act. It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee, subject to the limits laid down in rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the house rent allowance from the taxable income of the employee. (ix....