TaxTMI 
TaxTMI 
Deduction of tax at source--Income-tax deduction from salaries during the financial year 1980-81 u/s. 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
....inue to be made during the financial year 1980-81, from the payments of income chargeable under the head "Salaries" under section 192 of the Income-tax Act, 1961. 2. In the Finance (No. 2) Act, 1980, some modifications in the exemption limit, etc., have been made. An extract of Sub-Paragraph I of Paragraph A of Part III of the First Schedule to the Finance (No. 2) Act, 1980, is at Annex.I. 3. The substance of the main provisions in the law so far as they relate to income chargeable under the head "Salaries", on which tax is to be deducted at source during the financial year 1980-81, is given hereunder: (i) No tax will be deductible at source in any case unless the estimated salary income for the financial year exceeds Rs. 12,000. Where such income exceeds Rs.12,000 by a small margin, the person will be entitled to marginal relief as provided in the Sub-Paragraph reproduced at Annex. I. A few typical examples of calculations are given in Annex. II. (Example II illustrates the calculation of the marginal relief). (ii) The value of perquisites by way of free or concessional residential accommodation, or motor cars provided by employers to their employees shall be determine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....espective of whether any expenditure incidental to employment is actually incurred by the employee or not. This deduction will be available also to persons drawing pension during the current financial year at the same rates and subject to the same ceiling as the employees in actual service. 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 at any time during the financial year, or (b) where he is provided with any motor car, motor cycle, scooter or other moped by his employer (for use otherwise than wholly and exclusively in the performance of his duties), or where he is allowed the use of any one or more motor cars (otherwise than wholly and exclusively in the performance of his duties) out of a pool of motor cars owned or hired by the employer at any time during the financial year. In this connection it may be noted that the use of a motor car by the employee for the purposes of going from his residence to the place where the duties of the employment are to be performed, or from such place back to his residence will not be regarded as use of the motor car in the performance of his duties. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and C. Any provident fund set up by the Central Government and notified by it in the official Gazette-Public Provident Fund set up under the Public Provident Fund Act, 1968, is an example of such a fund. (vii) Section 80FF of the Income-tax Act, 1961, has been omitted, vide section 14 of the Finance (No. 2) Act, 1980, as it has become redundant with the increase in the exemption limit to Rs. 12,000. No deduction is, therefore, to be given under this section. (viii) Under section 80U, in the case of every resident individual who is blind or suffers from permanent physical disability, which substantially reduces his capacity to engage in gainful employment, a deduction of Rs.5,000 from the total income is allowable by the employer, vide this Ministry's Circular No. 272 dated May 27, 1980**. The Finance (No. 2) Act, 1980, has raised this limit to Rs. 10,000. Subject to fulfilment of the conditions prescribed in the above referred circular, deduction up to the increased limit of Rs. 10,000 may be allowed from salary for the purposes of deducting tax at source. (ix) Under section 10(13A) of the Income-tax Act, 1961, any special allowance specifically granted to an assessee b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e exemption of HRA allowed in view of judgment in Justice S.C. Mittal's case. (x) No deduction should be made from the salary income in respect of any donations for charitable purpose. The tax relief on such donations, as admissible under section 80G of the Act, will have to be claimed by the taxpayer separately at the time of the finalisation of the assessment. However, in cases where contributions to the National Defence Fund, Jawaharlal Nehru Memorial Fund, the Prime Minister's Drought Relief Fund, or the Prime Minister's National Relief Fund are made, 50% of such contributions may be deducted in computing the taxable income of the employee. Deduction will not be admissible where the aggregate of all contributions for the year is less than Rs. 250. (xi) Under section 80GG of the Act, an assessee is entitled to a deduction in respect of house rent paid by him for his own residence at the places specified under rule 11B of the Income-tax Rules, 1962. Such deduction is permissible subject to the following conditions:- (a) the assessee has not been in receipt of any house rent allowance specifically granted to him which qualifies for exemption under section 10(13A) of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer during regular assessment proceedings before him. The disbursing authority is also required to endorse a certificate in terms of section 10(14) on the tax deduction certificate issued under section 203 of the Act. In this connection, attention is invited to the Explanation to clause (14) of section 10 which clarifies that any allowance granted to the assessee to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, shall not be regarded for the purposes of that clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties. This may be kept in view while deciding whether any expenditure from the special allowance has been actually incurred and, if so, the extent to which it has been incurred, to meet the expenses wholly, necessarily and exclusively in the performance of duties of an office or employment of profit. (xiii) Section 80RRA provides that where the gross total income of an individual, who is a citizen of India, includes any remuneration received by him in foreign currency f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he provisions of the Act should be rounded off to the nearest multiple of ten rupees by ignoring the fraction which is less than five rupees and increasing the fraction which amounts to five rupees or more, to ten rupees. The net amount of tax deductible should be similarly rounded off to the nearest rupee. (xv) Attention is also invited to section 276B, where it is provided that if a person without reasonable cause or excuse fails to deduct or after deducting fails to pay the tax as required under the provisions of Chapter XVIIB of the Income-tax Act, 1961, he shall be punishable: (i) in a case where the amount of tax which he has failed to deduct or pay exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; and (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. 3. While making the payment of tax deducted at source to the credit of the Central Government, it may kindly be ensured that the correct amount of income-tax and surcharge is recorded in the relevant....