TaxTMI 
TaxTMI 
Tax Deduction at Source – Income Tax deduction from Salaries under section 192 during the Financial Year 2008-2009
X X X X Extracts X X X X
X X X X Extracts X X X X
....92(2B) 56 III. Boards's Notification dated 4.10.2002 {Form No. 12BA (as amended)} 57-58 IV. Boards's Notification dated 12.1.2004 (Form No. 16AA) 59-63 V. Boards's Notification dated 26.8.2003 64-66 VA. Deptt. Of Eco. Affairs Notification dated 22.12.2003 67 VIA. Boards's Notification dated 24.11.2000 68 VIB. Boards's Notification dated 29.1.2001 69 VII. Form No. 10BA 70 CIRCULAR NO. 9/2008, DATED 29-9-2008 [F.No. 275/192/2008-IT(B)] SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2008-2009 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961. .................. Reference is invited to Circular No. 08/2007, dated 5-12-2007 whereby the rates of deduction of income-tax from the payment of income under the head "Salaries" under section 192 of the Income-tax Act, 1961, during the financial year 2007-08, were intimated. The present Circular contains the rates of deduction of income-tax from the payment of income chargeable under the head "Salaries" during the financial year 2008-09 and explains certain related provisions of the Income-tax Act. The relevant Acts, Rules, Forms and Notifications are available at the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll be increased by a surcharge at the rate of ten per cent of such income-tax where the total income exceeds ten lakh rupees. However, the total amount payable as income-tax and surcharge shall not exceed the total amount payable as income-tax on a total income of Rs. 10,00,000 by more than the amount of income that exceeds Rs. 10,00,000. Additional surcharge on Income-tax (Education Cess on Income-tax): The amount of income-tax as increased by surcharge, if any, mentioned above shall be further increased by an additional surcharge (Education Cess on Income-tax) at the rate of two per cent of the income-tax and surcharge. Additional surcharge on Income-tax (Secondary and Higher Education Cess on Income-tax): From Financial year 2007-08 onwards, an additional surcharge is chargeable at the rate of one per cent of income-tax and surcharge (not including the Education Cess on income-tax). Surcharge, Education Cess, and Secondary and Higher Education Cess are payable by both resident and non-resident assessees. 3. Section 192 of the Income-tax Act, 1961: Broad Scheme of Tax Deduction at Source from "Salaries". Method of Tax Calculation: 3.1 Every person who i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re than one employer: 3.4 Sub-section (2) of section 192 deals with situations 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 taxpayer 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). Relief when salary paid in arrear or advance: 3.5 Under sub-section (2A) of section 192 where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body is entitled to the relief under sub-section (1) of section 89, he may furnish to the person responsible for making....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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 in Form No. 12BA. (Annexure-III). Form No. 12BA along with Form No. 16, as issued by the employer, are required to be produced on demand before the Assessing Officer in terms of section 139C of the Income-tax Act. Conditions for claim of deduction of interest on borrowed capital for computation of income from house property 3.7 (i) For the purpose of computing income/loss under the head 'income from house property' in respect of a self-occupied residential house, a normal deduction of Rs. 30,000 is allowable in respect of interest on borrowed capital. However, a deduction on account of interest up to a maximum limit of Rs. 1,50,000 is available if such loan has been taken on or after 1-4-1999 for constructing or acquiring the residential house and the construction or acquisition of the residential unit out of such loan has been completed within three years from the end of the financial year in which cap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. 3.10 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 Fourth Schedule to the Act. Salary paid in foreign currency: 3.11 For the purposes of deduction of tax on salary payable in foreign currency, the value in rupees of such salary shall be calculated at the prescribed rate of exchange. 4. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES: 4.1 Under clause (i) of section 204 of the Act the "persons responsible for paying" for the purpose of section 192 means the employer himself or if the employer is a Company, the Company itself including the Principal Officer thereof. 4.2 The tax determined as per para 6 should be deducted from the salary under section 192 of the Act. Deduction of tax at lower rate: 4.3 Section 197 enables the taxpayer to make ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which shall be between 3 months and 7 years, along with fine. Furnishing of certificate for tax deducted: 4.6 According to the provisions of section 203, every person responsible for deducting tax at source is required to furnish a certificate to the payee to the effect that tax has been deducted and to specify therein the amount deducted and certain other particulars. This certificate, usually called the "TDS certificate", has to be furnished within a period of one month from the end of the relevant financial year. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. In the case of employees receiving salary income (including pension), the certificate has to be issued in Form No. 16. However, in the case of an employee who is resident in India and whose income from salaries does not exceed Rs. 1,50,000, the certificate of deduction of tax shall be issued in Form No. 16AA (Specimen Form 16AA enclosed as Annexure-IV). It is, however, clarified that there is no obligation to issue the TDS certificate (Form 16 or Form 16AA) in case tax at source is not deductible/deducted by virtue of claims of exemptions and deductions. As per....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Officer in terms of section 139C, inserted by the Finance Act, 2007. The TDS claim made in the return of income is also required to be matched with the e-TDS returns furnished by the deductors. Assessing Officers may, if considered necessary, also write to the deductors for verification of the correctness of the taxes deducted or other particulars mentioned in the certificate. It has been decided for the proper administration of this Income-tax Act to allow the deductors, at their option, in respect of the tax to be deducted at source from income chargeable under the head 'Salaries' to use their digital signatures to authenticate the certificates of deduction of tax at source in Form No. 16. The deductors will have to ensure that TDS certificates in Form No. 16 bearing digital signatures have a control No. with log to be maintained by the employer (deductor). The deductor will ensure that its TAN and the PAN of the employee are correctly mentioned in such Form No. 16 issued with digital signatures. The deductors will also ensure that once the certificates are digitally signed, the contents of the certificates are not amenable to change by anyone. The income-tax authorities shall t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tatements are required to be filed on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year and on or before the 15th June following the last quarter of the financial year. The requirement of filing an annual return of TDS has been done away with with effect from 1-4-2006. The quarterly statement for the last quarter filed in Form 24Q (as amended by Notification No. S.O. 704(E), dated 12-5-2006) shall be treated as the annual return of TDS. It is now mandatory for all offices of the Government and all companies to file quarterly statements of TDS on computer media only in accordance with the "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003" as notified vide Notification No. S.O. 974(E), dated 26-8-2003. (Annexure-V). The quarterly statements are to be filed by such deductors in electronic format with the e-TDS Intermediary 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 quarterly statements in due time, he shall be liable to pay by way of penalty under section 272A(2)(k), a sum ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on Income from Pension: 4.13 In the case of pensioners who receive their pension from a nationalized bank, the instructions contained in this circular shall apply in the same manner as they apply to salary-income. The deductions from the amount of pension under section 80C on account of contribution to Life Insurance, Provident Fund, NSC etc., if the pensioners furnish the relevant details to the banks, may be allowed. Necessary instructions in this regard were issued by the Reserve Bank of India to the State Bank of India and other nationalized Banks vide RBI's Pension Circular (Central Series) No. 7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS) No. 60/GA.64(11CVL)-/92), dated the 27th April, 1992, and, these instructions should be followed by all the branches of the Banks, which have been entrusted with the task of payment of pensions. Further all branches of the banks are bound under section 203 to issue certificate of tax deducted in Form 16 to the pensioners also vide CBDT Circular No. 761, dated 13-1-1998. Important Circulars: 4.14 Where Non-Residents are deputed to work in India and taxes are borne by the employer, if any refund becomes due to the employee after he has alre....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e firm shall not be regarded as "Salary". Definition of Salary : (3) "Salary" includes wages, fees, commissions, perquisites, profits in lieu of, or, in addition to salary, advance of salary, annuity or pension, gratuity, payments in respect of encashment of leave etc. It also includes the annual accretion to the employee's account in a recognized provident fund to the extent it is chargeable to tax under rule 6 of Part A of the Fourth Schedule of the Income- tax Act. Contributions made by the employer to the account of the employee in a recognized provident fund in excess of 12 per cent of the salary of the employee, along with interest applicable, shall be included in the income of the assessee for the previous year. Any contribution made, in excess of 10 per cent, by the Central Government or any other employer 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 (enclosed as Annexure-VA) and referred to in section 80CCD [para 5.4(C) 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 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oyer, the rate is 15 per cent of 'salary' in cities having population exceeding 25 lakh as per the 2001 Census. The rate is 10 per cent of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 Census. For other places, the perquisite value would be 7½ per cent of the salary. (b) Where the accommodation so provided is taken on lease/rent by the employer, the prescribed rate is 15 per cent of the salary or the actual amount of lease rental payable by the employer, whichever is lower, as reduced by any amount of rent paid by the employee. For furnished accommodation, the value of perquisite as determined by the above method shall be increased by- (i) 10 per cent 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. "Accommodation" includes 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 employe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ersonal attendants etc.: 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ite. VII. Transfer of assets: Often an employee or member of 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 per cent 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 per cent 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 per cent of its actual c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....heme of any other employer, exemption will be governed by the provisions of sub-clause (ii) of clause (10A) of section 10. Also, any payment in commutation of pension received from a Regimental Fund or Non-Public Fund established by the Armed Forces of the Union referred to in section 10(23AAB) is exempt under sub-clause (iii) 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, whether on superannuation or otherwise, is exempt under sub-clause (i) of clause (10AA) of section 10. In the case of other employees, this exemption will be determined with reference to the leave to their credit at the time of retirement on superannuation, or otherwise, subject to a maximum of ten months' leave. This exemption will be further limited to the maximum amount specified by the Government of India Notification No. S.O. 588(E), dated 31-5-2002 at Rs. 3,00,000 in relation to such employees who retire, whether on superannuation or otherwise, after 1-4-1998. (5) Under section 10(10B), the retrenchment com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onus 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 per cent 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 by it in this behalf in the Official Gazette. (9) Under section 10(13A) of the Income-tax Act, 1961, any special allowance specifically granted to an assessee by his employer to meet expenditure incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from income-tax to the extent as may be prescribed, having regard to the area or place in which such accommodation is situated and other relevant considerations. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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. S.O. 617(E), dated 7th July, 1995 (F.No. 142/9/95-TPL) which has been amended vide Notification S.O. No. 403(E), dated 24-4-2000 (F. No. 142/34/99-TPL). The transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of duty is exempt to the extent of Rs. 800 per month vide Notification S.O. No. 395(E), dated 13-5-1998. (11) Under section 10(15)(iv)(i) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... who take medical insurance for themselves or for their family members (under any scheme approved by the Central Government or Insurance Regulatory and Development Authority); (d) 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 abroad by the patient/attendant, shall be excluded from perquisites only if the employee's gross total income, as computed before including the said expenditure, does not exceed Rs. 2 lakhs. For the purpose of availing exemption on expenditure incurred on medical treatment, 'hospital' includes a dispensary or clinic or nursing home, and 'family' in relation to an individual means the spouse and children o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 3-11-2005.] (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 subscription :- (a) to any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf; (b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....irement Benefit Pension Fund vide Notification S.O. No. 1564(E), dated 3-11-2005.] (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 both. [The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No. 37(E), dated 11-1-2007, for the purposes of section 80C(2)(xvi)(a)]. (12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me 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. Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes. It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature. (14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution. (15) Subsc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....deduction with reference to such amount shall not be allowed under section 88 up to assessment year 2005-06 and under section 80C from assessment year 2006-07 onwards. C. As per the provisions of section 80CCD, where an assessee, being an individual employed by the Central Government on or after the 1st day of January, 2004, has in the previous year paid or deposited any amount in his account under a pension scheme as notified vide Notification No. F. N. 5/7/2003-ECB&PR, dated 22-12-2003, he shall be allowed a deduction in the computation of his total income, of the whole of the amount so paid or deposited as does not exceed ten per cent of his salary in the previous year. Where, in the case of such an employee, the Central Government makes any contribution to his account under such pension scheme, the employee shall be allowed a deduction in the computation of his total income, of the whole of the amount contributed by the Central Government as does not exceed ten per cent of his salary 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 provisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion to the existing deduction available to the individual assess on medical insurance for himself, his spouse and dependent children. Further, it is proposed that if either of the individual assessees's parents, who have been medically insured, is a senior citizen, the deduction would be allowed up to twenty thousand rupees. For example, an individual assessee pays (through any mode other than cash) during the previous year medical insurance premia as under : (i) Rs. 12,000 to keep in force an insurance policy on his health and on the health of his wife and dependent children; (ii) Rs. 17,000 to keep in force an insurance policy on the health of his parents. Under the proposed new provisions he will be allowed a deduction of Rs. 27,000 (Rs. 12,000+Rs. 15,000) if neither of his parents is a senior citizen. However, if any of his parents is a senior citizen, he will be allowed a deduction of Rs. 29,000 (Rs. 12,000+Rs.17,000). Whether the parents are dependent or not, is not a consideration for deciding the deduction under the proposed new section. Further, in the above example, if cost of insurance on the health of the parents is Rs. 30,000, out of which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng with the return of income under section 139, 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 section 80DD,- (a) "Administrator" means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) ; (b) "dependant" means- (i) in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them; (ii) in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year r....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Act a deduction will be allowed in respect of repayment of interest on loan taken for higher education, subject to the following conditions: (i) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of interest on loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or children. (ii) The deduction specified above shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest referred to above is paid in full by the assessee, whichever is earlier. For this purpose- (a) "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority under clause (2C) of section 10, or, an institution referred to in clause (a) of sub-section (2) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stitution 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 Fund for Technology Development and Application set by the Central Government. (xviii) The National Trust for Welfare of persons with Autism, Cerebral Palsy, Mental Retardation and Multiple disabilities. (xix) Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat; or. (xx) Any Zila Saksharta Samiti in any district under the chairmanship of the Collector of that district for the purpose or purposes of improvement of primary education in villages and towns in such district and for literacy and post-literacy activities. (xxi) any fund setup by a State Government to provide medical relief to the poor; or. H. 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. Such deduction is permissible subject to the following conditions :- (a) The assessee has not been in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibed 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 should not allow the same, and the employee would be free to claim the deduction/rebate on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer. 6. Calculation of income-tax to be deducted 6.1 Salary income for the purpose of section 192 shall be computed as follow:- (a) First compute the gross salary as men....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nance vide its Office Order F. No. 1/1/2008-IC, dated 30th August, 2008 has stated at Para 2(v) "Bills may be drawn separately in respect of the arrears of pay and allowances for the period from January 1, 2006 to August 31, 2008. The aggregate arrears, computed after deduction of subscription at enhanced rates of GPF and NPS with reference to the revised pay, may be paid in two instalments, the first instalment being restricted to 40 per cent of the aggregate arrears. DDOs/PAOs will ensure that action is taken simultaneously in regard to Government's contribution towards enhanced subscription. Orders in regard to the payment of the second instalment of arrears will be issued separately." A number of representations have been received by CBDT seeking clarification as to whether TDS need to be deducted on 40 per cent of arrears to be paid during 2008-09 or on the entire arrears payable to the Government servant. The matter has been examined by the Board; the issue is clarified as given below. Salary is as defined under section 15 of Income-tax Act, 1961 :- (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 25. Accountant General-I, Bihar, Ranchi 26. Accountant General-II, Bihar, Patna 27. Accountant General-I, Gujrat, Ahmedabad 28. Accountant General-II, Gujrat, Rajkot 29. Accountant General, Kerala, Trivandrum 30. Accountant General, Madhya Pradesh, Gwalior 31. Accountant General, Tamil Nadu, Chennai 32. Accountant General-I, Maharashtra, Mumbai 33. Accountant General-II, Maharashtra, Nagpur 34. Accountant General, Karnataka, Bangalore 35. Accountant General, Orissa, Bhubaneshwar 36. Accountant General, Punjab, Chandigarh 37. Accountant General, Himachal Pradesh, Shimla 38. Accountant General, Rajasthan, Jaipur 39. Accountant General-I, II, III, Uttar Pradesh, Allahabad 40. Accountant General, West Bengal, Calcutta 41. Accountant General, Haryana, Chandigarh 42. Accountant General, Jammu & Kashmir, Srinagar 43. Accountant General, Manipur, Imhal 44. Accountant General, Tripura, Agartala 45. Accountant General, Nagaland, Kohima 46. Director of Audit (Central) Kolkata 47. Director of Audit....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (xi) 59, Forest Park, Bhubneshwar and Gauhati, Assam (xii) Gauhati, Assam 72. Chief Controller of Accounts, CBDT, Lok Nayak Bhawan, Khan Market, New Delhi 73. State Bank of Patiala, (Head Office), The Mall, Patiala 74. State Bank of Bikaner and Jaipur, Head Office, Tilak Marg, 'C' Scheme Jaipur 75. State Bank of Hyderabad, Head Office, Gun Factory, Hyderabad 76. State Bank of Indore, 5 Yashwant Nivas Road, Indore. 77. State Bank of Mysore (Head Office), K.G. Road, Bangalore 78. State Bank of Saurashtra, Behind Satyanarayan Road, Bhavnagar, Gujrat 79. State Bank of Travancore, Post Box No. 34, Trivandrum 80. N.S. Branch, Department of Economic Affairs, New Delhi 81. The Editor, 'The Income-Tax Reporter' Company Law Institute of India (P) Ltd., 88, Thyagaraja Road, Thyagaraja Nagar, Chennai-600017 82. The Editor, Chartered Secretary, The Institute of Company Secretaries of India, 'ICSI House, 22, Institutional Area, Lodhi Road, New Delhi-110003 83. The Editor, "Taxation" 174, Jorbagh, New Delhi. 84, The Editor, "The Tax Law Review" Post Box No. 152, Jalla....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cent of the Income-tax and surcharge, if any (not including the Education Cess on Income-tax). Note 4 : Surcharge, Education Cess, and Secondary and Higher Education Cess are payable by both resident and non-resident assessees. EXAMPLE 2 For Assessment Year 2009-10 Calculation of Income-tax in the case of a male employee having a handicapped dependent. 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 with disability (but not severe disability) Rs. 50,000 4. GPF Contribution Rs. 25,000 Computation of Tax 5. LIP Paid Rs. 10,000 Gross Salary Rs. 3,20,000 Less : Deduction U/s 80DD (Restricted to Rs. 50,000 only) Rs. 50,000 Taxable Income Rs. 2,70,000 Less : Deduction u/s 80C : GPF Rs. 25,000 LIP Rs. 10,000 Total 35,000 Rs. 35,000 Total Income Rs. 2,35,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....C.C.A. Rs. 3,50,000 House Rent Allowance Rs. 1,40,000 2. Total Salary income Rs. 4,90,000 3. 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 - 35,000) = 1,09,000 c. 50% of Salary (Basic + DA) = Rs. 1,75,000 Rs. 1,09,000 Gross Total Income: Rs. 3,81,000 Less: Deduction under section 80C: GPF 36,000 LIC 4,000 Subscription to Unit Linked Insurance Plan 50,000 Total: 90,000 Rs. 90,000 Total Income Rs. 2,91,000 Tax payable on total income Rs. 11,100 Add: Surcharge Education Cess @ 2% 222 Secondary and Higher Education Cess @ 1% 111 Total Income-tax payable Rs. 11,433 Rounded off to Rs. 11,430 EXAMPL....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 1,73,640 EXAMPLE 6 For assessment year 2009-10 Illustrating Valuation of perquisite and calculation of tax in the case of a female employee of a Private Company posted at Delhi and repaying House Building Loan. Particulars: 1. Salary Rs. 3,00,000 2. Dearness Allowance Rs. 1,00,000 3. House Rent Allowance Rs. 1,80,000 4. Special Duties Allowance Rs. 12,000 5. Provident Fund Rs. 60,000 6. LIP Rs. 10,000 7. Deposit in NSC VIII issue Rs. 30,000 8. Rent Paid by the employee for house hired by her Rs. 1,20,000 9. Repayment of House Building Loan (Principal) Rs. 60,000 10. Tuition Fees for three children (Rs.10,000 per child) Rs. 30,000 Computation of total income and tax payable thereon 1. Gross salary (Basic+DA+HRA+SDA) 5,92,000 Less: House rent allowance exempt u/s 10(13A) Least of: a. Actual amount of HRA received 1,80,000 b. Expenditure on rent in excess of 10% of salary (Including D.A.) assuming D.A. is including for retirement benefits (1,20....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 90,000 Total Deductions under Chapter VI-A Rs. 92,500 Total Income Rs. 1,57,500 Tax Payable Rs. 750 Add: Surcharge Nil Education Cess @ 2% 15 Secondary and Higher Education Cess @ 1% 8 Total Income-tax payable Rs. 773 Rounded off to Rs. 770 EXAMPLE - 8 For assessment year 2009-10 Income-tax calculation in the case of a male employee who claims loss under the head 'Income' from self-occupied house property, and has taken house building loan before 1-4-1999. 1. Gross Salary 4,00,000 2. Housing Loan repaid (Principal) 30,000 3. Interest payable on housing loan (Loan taken before 1-4-1999) 1,00,000 4. Donation paid to National Children's Fund 6,000 5. N.S.C. purchased 10,000 6. G.P.F. 20,000 Computation of Taxable Income and tax thereon 1. Salary Income Rs. 4,00,000 2. Income from House Property Annual va....
X X X X Extracts X X X X
X X X X Extracts X X X X
.......... (iii) Capital gains ............................ (iv) Income from other sources .......................... (a) Dividends (b) Interest (c) Other incomes (specify) Total ............................ 5. Aggregate of sub-items (i) to (iv) of item 4 6. Tax deducted at source (enclose certificates) issued under section 203 Place ............................ Date ............................ ............................................................ Signature of the employee Verification I, .............................................................................., do hereby declare that what is stated above is true to the best of my knowledge and belief. Verified today, the ............................day of........................................ 2002. Place ............................ Date ............................ ............................................................ Signature of the employee F.No. 142/47/98-TPL NOTIFICATION NO. 10722 Sd/- (SUNITI SRIVASTAVA) Under Secretary to the Govt. of India The principal rules were published vide notification No. S.O. 969(E)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (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 17 and rules framed thereunder and that such information is true and correct. Signature of the person responsible for deduction of tax Place... Date... Full Name ........................ Designation.............................. ANNEXURE IV ANNEXURE V [TO BE PUBLISHED IN THE GAZETTE OF INDIA EXTRAORDINARY PART-II SECTION 3, SUB-SECTION (ii)] GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) (CENTRAL BOARD OF DIRECT TAXES) ****** New Delhi, the 26th August, 2003 NOTIFICATION INCOME-TAX S.O. 974 (E)- In exercise of the powers conferred by sub-section (2) of section 206 of the Income-tax Act, 1961....
X X X X Extracts X X X X
X X X X Extracts X X X X
....respect of whom tax has been deducted by him except in respect of cases to which the first proviso to sub-section (5A) or the second proviso to sub-section (5B) of section 139A of the Act applies. (4) The e-deductor shall ensure that all columns of the Forms of the return for tax deduction at source, prescribed under the Rules, are duly and correctly filled in. (5) Each computer media used for preparation of the e-TDS Return shall be affixed with a label indicating name, permanent account number, tax deduction account number and address of the e-deductor, the period to which the return pertains, the Form Number of the return and the volume number of the said media in case more than one volume of such media is used. (6) Separate computer media shall be used for each Form of e- TDS Return by the e-deductor. 4. Furnishing of e-TDS Return.- (1) The e-deductor shall furnish e-TDS Return on computer media to the e-TDS Intermediary duly supported by a declaration in Form No.27A, as prescribed in the Rules, in paper format: Provided that in case any compression software has been used by the e-deductor for preparing the e-TDS Return, he shall ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ipt, the provisional receipt issued shall be deemed to be the acknowledgement of the e-TDS Return and the date of issue of provisional receipt shall be deemed to be the date of filing of e-TDS Return. (8) Where the deficiencies indicated in the deficiency memo are not removed by the e-deductor within seven days, the e-TDS Intermediary shall communicate the same to the e-filing Administrator and transmit the data to the e-filing Administrator whereupon Assessing Officer may take action for declaring the return as an invalid return after giving due opportunity to the deductor as required under sub-section (4) of section 206 of the Act. (9) In case the defects intimated by the Assessing Officer are rectified within the period of fifteen days or such further period as may be allowed by the Assessing Officer, the date of issue of provisional receipt shall be deemed to be the date of filing of e-TDS Return. 6. General responsibilities of e-TDS Intermediary. - (1) The e-TDS Intermediary shall ensure accurate transmission of the e-TDS Return to the e-filing Administrator: Provided that the e-TDS Intermediary shall not be responsible for any errors or omissions....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 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 have a voluntary tier-II withdrawable account at his option. This option is given as GPF will be withdrawn for new recruits in Central Government service. The Government will make no contribution into this account. These assets would be managed through exactly the above procedur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aving acts. 5. Uttam Jeevan Raksha Medal -do- 6. Jeevan Raksha Padak -do- 7. President's police medal for gallantry When awarded for acts of exceptional courage displayed by Members of Police Forces, Central Police or Security Forces and certified to this effect by the head of the department concerned. 8. Police medal for gallantry -do- 9. Sena Medal When awarded for acts of courage or conspicuous gallantry and supported by certificate issued to his effect by relevant service headquarters. 10. Nao Sena Medal -do- 11. Vayu Sena 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 last head of department. 13. President's Police and 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 Guards and Civil Defence Medal for gallantry -do- [Notification No. 11561/F. No. 142/29/99-TPL] T.K. SHAH Director ANNEXURE -VI B MINISTRY OF....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Return of income his total income includes income chargeable to income-tax under the head 'Salaries'; the income from salaries before allowing deductions under section 16 of the Income-tax Act, 1961 does not exceed rupees one lakh fifty thousand; his total income does not include income chargeable to income-tax under the head ‘Profits and gains of business or profession' or 'Capital gains' or agricultural income; and he is not in receipt of any other income from which tax has been deducted at source by any person other than the employer Name and address of the Employer Name and designation of the Employee PAN/GIR NO. TDS Circle where annual Return /statement under section 206 is to be filed ΤΑΠFROM Period PAN/GIR NO. Assessment year ΤΟ DETAILS OF SALARY PAID AND ANY OTHER INCOME AND TAX DEDUCTED 1. Gross salary Rs. (a) Salary as per provisions contained in section 17(1) (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. Rs. ....