Presentation by:

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WELCOME
Presentation by M. CHANDRA GOUD INCOMETAX OFFICER
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Salary Taxation
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Department Website

• The relevant Acts, Rules, Forms and Notifications
  are available at the website of the Income-tax
  Department -www.incometaxindia.gov.in

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TDS rates for Financial Year 2011-12
Senior Citizen Woman Others Super Sr. Citizen Tax ()
 For Income Between 0 to 2,50,000  For Income Between 0 to 1,90,000  For Income Between 0 to 1,80,000 nil 0
 For Income Between 2,50,001 to 5,00,000  For Income Between 1,90,001 to 5,00,000  For Income Between 1,80,001 to 5,00,000 nil 10
 For Income Between 5,00,001 to 8,00,000  For Income Between 5,00,001 to 8,00,000  For Income Between 5,00,001 to 8,00,000  For Income Between 5,00,001 to 8,00,000 20
 For Income above 8,00,001  For Income above 8,00,001  For Income above 8,00,001 For Income above 8,00,001 30
Surcharge   Surcharge 0
Education Cess   Education Cess 3
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What is salary ?

• Salary includes
• Wages, Any annuity or Pension, any Gratuity, any
  Fees, Commission, Perquisites, Leave encashment,
  Arrears of salary and others.

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HOUSERENT ALLOWANCE u/s.10(13A)

• The least of the following exempted
• Actual HRA received
• Rent paid in excess of 10 of salary
• 50 of salary in metro cities
• 40 in other places.
• For this purpose Salary includes dearness
  allowance if terms of employment so provide

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House Rent Allowance

• The disbursing authorities should satisfy
  themselves in this regard by insisting on
  production of evidence of actual payment of rent.
  
• It has been decided as an administrative measure
  that salaried employees drawing house rent
  allowance up to Rs. 3,000 per month will be
  exempted from production of rent receipt.

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Allowances exempt, amount received or limit
specified, which ever is less

1. Children Education Allowance Exempt up to
   actual amount received per child or Rs.100 p.m.
   per child up to maximum of two children, which
   ever is less.
2. Hostel Expenditure Allowance Exempt up to
   actual amount received per child or Rs.300 p.m.
   per child up to maximum of two children, which
   ever is less.
3. Transport Allowance Exempt to the extent of
   Rs.800 p.m.

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PERQUISITES

• The value of any benefit or amenity granted or
  provided free of cost or at concessional rate.
• With effect from 1.4.2010 (assessment year
  2010-11), the value any specified security (stock
  option) or sweat equity shares allotted or
  transferred.

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Gratuity

• Death Cum Retirement Gratuity received by the
  Central Govt./State Govt. /Local Authorities.
• Covered by gratuity Act, 1972 Any other
  gratuity, least of the following is exempted.
• Actual amount received.
• 15 days salary for each year of completed service
• Rs.10,00,000/-.

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EL Encashment

• Central Govt / State Govt Employees Exempt
• Other Employees - 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 of Rs. 3,00,000.

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Deduction on income fromHouse property

• interest up to a maximum limit of Rs. 1,50,000
  is allowed
• Loan taken on or after 1-4-1999
• for constructing/acquiring the residential. house
  and
• completed within three years from the end of the
  financial year in which capital was borrowed.
• No limits for the let out property
• Only one property is eligible for deduction

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Deductions under chapter VI A u/s.80C,80CCC80CCD

• The following investments are eligible for
  deduction
• Life Insurance Premium, Statutory Provident
  Fund, RPF, PPF, NSC, ULIP, Notified Units of
  Mutual Fund, Re-payment of housing loan, Tuition
  Fee paid, fixed deposit for 5 years or more with
  a scheduled Bank, Senior Citizen Saving Scheme,
  five year time deposit scheme in Post Office etc.

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Deduction u/s.80CCC

• Deduction in respect of contribution made to
  pension fund any annuity plan of the LIC of
  India.
• The maximum amount deductible under this section
  is 10 per cent of salary.

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Deduction u/s.80CCD

• Deduction in respect of contribution made to
  pension scheme notified by Central Govt
• The maximum amount deductible under this section
  is 10 percent of salary.

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Deductions u/s.80CCE (u/s.80C,80CCC80CCD)

• Amount of deduction allowable gross qualifying
  amount is actual amount invested or Rs.1,00,000
  which ever is lower.

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Deductions u/s.80CCE (u/s.80C,80CCC80CCD)

• Sec.80CCE amended w.e.f. the F.Y.2011-12 The
  contribution made by employer to NPS u/s.80CCD(2)
  shall be excluded from the limit of Rs.1,00,000

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Deduction u/s.80CCF

• Deduction in respect of subscription to long term
  infrastructure bonds.
• This deduction applicable from the assessment
  year 2012-13
• Maximum deduction allowable is Rs.20,000.

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Deduction u/s.80D

• Medical insurance premium (Med claim Policy)
  paid On the health of taxpayer, spouse, parents
  and dependent children
• The premium can be paid by any mode other than
  cash.
• It is paid out of income chargeable to tax.

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Deduction u/s.80D

• Amount of deduction Rs.15,000
• additional deduction Rs.5,000 is allowed if the
  policy is taken on the health of senior citizen.

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Deduction u/s.80DD

• Deduction in respect of maintenance including
  medical treatment of a handicapped dependent
• Furnish a certificate issued by the medical
  authority in form No.10-IA.
• Amount of deduction Rs.50,000 is allowed.
• In case severe disability (80 or more),
  Rs.1,00,000 is allowed.
• The person claiming deduction under this section,
  he should not claim any deduction under section
  80U.

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Deduction u/s.80DDB

• Medical treatment of dependent or self for
  specified disease/ailment.
• Amount of deduction Rs.40,000 if the person is
  a senior citizen Rs.60,000 is allowed.
• This deduction is not allowable by the DDO. The
  employees has to claim in his/her return of
  income.

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Deductions -u/s.80E

• Payment of interest on loan taken for higher
  education spouse or children
• The loan has to be taken from any financial
  institution or approved charitable institution.
• Such amount is paid out of his income chargeable
  to tax.
• The deduction is available for a maximum of 8
  years or till the interest is paid, whichever is
  earlier.

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Deductions -u/s.80G

• Deduction in respect of donations to certain
  funds, charitable institutions etc.
• Deduction can be allowed by the employer only
  in respect of donations made to Prime Minister
  Relief Fund, Chief Ministers Relief Fund,
  Earthquake Fund, etc.
• In respect of donations to charitable
  institutions, deductions cannot be allowed by the
  employer.

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Deductions under Chapter VI A-u/s.80U

• Deduction in case of a person with disability
  blindness, low vision, leprosy, hearing
  impairment, mental retardation and mental
  illness.
• Conditions Furnish a certificate issued by the
  medical authority in form No.10-IA.
• Amount of deduction (fixed)Rs.50,000 is allowed.
  In case severe disability (80 or more),
  Rs.1,00,000 is allowed.

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Relief u/s.89(1)

• Relief is available when salary is received in
  arrears or advance.
• Application in Form-10E has to be obtained from
  the employee.
• Form 10E is required to allow claim of relief
  u/s. 89(1)

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Relief u/s.89(1)

• from 1-4-2010 (assessment year 2010-11) that no
  such relief shall be granted in respect of any
  amount received or receivable by an assessee on
  his voluntary retirement or termination of his
  service.

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Estimation of Income for deducting tax

• Method of calculation Estimate the salary
  including perquisites for the financial year
  2010, apply the rates, calculate the tax and
  divide it by 12.

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Estimation of Income for deducting tax

• The amount of tax so arrived should be deducted
  every month in equal installments. However, Any
  excess or deficit arising out of any previous
  deduction can be adjusted by increasing or
  decreasing the amount of subsequent deductions
  during the same financial year.

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Duties of Persons responsible for deducting tax

• DDOs to satisfy themselves of the genuineness of
  claim
• The Drawing and Disbursing Officers should
  satisfy themselves about the actual
  deposits/subscriptions/payments made by the
  employees, by calling for such particulars/informa
  tion as they deem necessary before allowing the
  aforesaid deductions.

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FORM 16
The deductor has to issue a certificate in
Form No. 16 along with annexure A or B and 12BA
before 31st May from the end of financial year,
in which the deduction was made.
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TDS ON INTEREST

• SCOPE OF INTEREST
• Interest payable in respect of
• Monies borrowed
• Debt incurred (including a deposit, claim etc..)
• INTEREST ON BANK DEPOSITS
• TDS applicable to interest on
• term / fixed deposits
• cumulative deposits
• reinvestment deposits
• variable / flexi deposits

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Form No.15G 15H

• If the Depositor submits a declaration in form
  No.15G or 15H for non deduction of tax, the same
  should be forwarded to the DIT(CIB).
• Due date- on or before 7th of the following month

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TDS ON INTEREST

• INTEREST ON BANK DEPOSITS
• each branch of a bank is considered as a unit
  for reckoning the threshold limit for TDS
• interest payable on all the deposits in the
  branch standing in the name of a payee should be
  aggregated
• interest payable in the case of a deposit in
  joint names should be aggregated with the
  interest payable to joint account holder having
  higher interest income (circular No. 256)

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TDS ON INTEREST

• RATE OF TDS
• 10
• THRESHOLD LIMITS
• Rs. 10,000/- in the case of payments by banks,
  cooperative banks and post office (in respect of
  senior citizen savings scheme)
• Rs. 50,000/- in the case of interest on
  compensation awarded by motor accidents claims
  tribunal
• Rs. 5,000/- in all other cases
• GENERAL PRINCIPLES
• TDS to be made on gross interest payments

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TDS ON CONTRACT PAYMENTS

• SCOPE OF THE SECTION
• Contract payments for
• Carrying out any work in pursuance of a contract
• Supply of labour for carrying out any work
• Payments made by a contractor to a
  sub-contractor for
• carrying out whole or any part of the work
  undertaken by the contractor
• Supply of labour for carrying out whole or any
  part of the work undertaken by the contractor

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TDS ON CONTRACT PAYMENTS

• RATE OF TDS
• 1 where the contractor / subcontractor is an
  individual or HUF
• 2 where the contractor / sub-contractor is a
  person other than individual or HUF
• THRESHOLD LIMITS
• Rs. 30,000/- in respect of each contract (w.e.f
  01/07/2010)
• Rs. 75,000/- in the aggregate to the payee during
  the year in respect of all the contracts (w.e.f
  01/07/2010)
• GENERAL PRINCIPLES
• TDS to be made on gross payments and not on
  income comprised therein

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TDS ON RENT

• MEANING OF RENT
• Any payment under a lease / sub-lease / tenancy
  or any other agreement for use of
• Land
• Building (including factory building)
• Land appurtenant to a building
• Plant
• Machinery
• equipment
• Furniture
• Fittings
• either separately or together and whether they
  are owned by the payee or not

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TDS ON RENT

• RATE OF TDS
• 2 for the use of plant, machinery or equipment
  (w.e.f 01/10/2009)
• 10 for the use of other assets (w.e.f
  01/10/2009)
• THRESHOLD LIMITS
• Rs. 1,80,000/- per annum (w.e.f 01/07/2010)

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TDS ON RENT

• GENERAL PRINCIPLES
• In the case of jointly owned property, the
  threshold limit of Rs.1.80 Lakhs will apply in
  respect of each co-owner if the shares of the
  co-owners are definite and ascertainable
• No tax is deductible on the municipal taxes,
  ground rent etc. borne by the tenant (circular
  No.718)
• TDS is not required to be made on the service tax
  payable with the rent (circular No. 4 of 2008)
• TDS to be made even if the rent receipt is
  assessable as a business receipt in the hands of
  the receipient

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TDS ON COMMISSION OR BROKERAGE

• MEANING OF COMMISSION OR BROKERAGE
• Payment to a person acting on behalf of the payer
  for
• the services rendered (other than professional
  services)
• any services in the course of buying or selling
  of goods
• Services in relation to transactions in any
  asset, valuable articles or things other than
  securities
• Relationship of principle and agent is essential
  between the payer and payee to characterize it as
  commission / brokerage

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TDS ON COMMISSION OR BROKERAGE

• RATE OF TDS
• 10
• THRESHOLD LIMIT
• Rs. 5,000/- per annum (w.e.f 01/07/2010)

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TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES

• Scope of the section
• Fees for professional services
• Fees for technical services
• Royalty
• Payment towards non-compete agreement

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TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES

• MEANING OF PROFESSIONAL SERVICES
• Services rendered by a person in the course of
  carrying on
• Legal profession
• Medical profession
• Engineering or architectural profession
• Accountancy profession
• Technical consultancy
• Interior decoration
• Advertising
• Authorised representative

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TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES

• RATE OF TDS
• 10
• THRESHOLD LIMITS
• Rs. 30,000/- per annum (w.e.f 01/07/2010)
• GENERAL PRINCIPLES
• TDS to be made on gross payment including the
  reimbursement for expenses (circular no.715)

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TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES

• INSTANCES OF PAYMENTS LIABLE FOR TDS
• Payments to recruitment agencies (circular
  No.715)
• payment by banks for professional services for
  loan processing, credit verification
• Payments made to the Airport Authority of India
  towards Navigational facilities
• Payments made by banks to MICR centre for
  processing and clearing MICR cheques
• Payments made to a hospital for rendering medical
  services (circular no.715)
• Payments made by an advertising agency to the
  models, artists and other technicians (circular
  no. 714)
• Royalty paid by publishers to the authors
• Port/access/interconnect charges paid by telecom
  operators

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CONDITIONS FOR VALIDITY OF 15G / 15H DECLARATIONS

• Declaration in form No. 15G not valid if the
  amount paid / credited exceeds the tax exemption
  limit
• Declarations valid only for the assessment year
  mentioned therein
• Declarations valid only for the payment / credit
  made subsequent to the date of declaration

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• Thank you