and Personal Tax Management Responsibilities of Employers for Deduction and deposit of TDS

Persons Responsible for TDS & their Duties It is the duty of the employer to deduct tax in accordance with section 192 of the I.Tax act. D.D.O. Time Limit for Deposit of Tax (sec 200) : Tax deducted by Govt. should be paid to Central Govt. on the day of the Tax Deduction itself. For other than Govt. payment has to be made within one week of last date of the month. Method of Payment : Through Book adjustment. Penalty for late payment (Sec 201 (1A): 1% Per Month or part of the month. Penalty for T.D.S. not deducted or short deducted (Sec 271C): A sum equal to the amount of Tax not deducted. Penalty for non deposit of TDS recovered (Sec. 276B): Punishable with rigorous imprisonment from 3 months to 7 years.

Filing of Quarterly e-tds Statement. These statement require mandatory quoting of TAN – of employer & PAN- of employees (sec 203A). Min. 95% of employees Otherwise credit of Tax deducted can not be given. Penalty (sec 272BB) for wrong quoting of PAN- Rs 10000/- Failure to file e-tds return: penalty Rs 100 per Day. Quarter Time limit 30 th June 15 th July 30 th Sept. 15 th Oct. 31 st Dec. 15 th Jan. 31 st March. 15 th June Annual Return Not Required.

Furnishing of TDS Certificates. Form- 16AA To employees having salary income below- Rs 1,50,000/- Form- 16 Other Employees Form- 12BA For taxable perquisite or non monetary benefits. Time limit- within 30 days from the end of F.Y. Penalty (sec. 272A) for non furnishing of TDS cert. =Rs. 100/- for every day

Tax Rates Applicable to Male Resident for A.Y Nil 10% x ( TI – Rs. 1,10,000) % ( TI- Rs 1,50,000) 24,000+30%( TI- Rs.2,50,000) Up to Rs. 1,10,000. Rs 1,10,000 to 1,50,000 Rs.1,50,001 to 2,50,000 Rs. 2,50,001 and above A.Y A.Y Up to Rs.1,50,000. Rs 1,50,001 to 3,00,000 Rs.3,00,001 to 5,00,000 Rs. 5,00,001 and above Nil 10% x ( TI – Rs. 1,50,000) 15, % ( TI- Rs 3,00,000) 55, % ( TI- Rs.5,00,000)

Tax Rates Applicable to Women for A.Y For Resident woman Up to Rs.1,45,000. Rs 1,45,001 to 1,50,000 Rs.1,50,001 to 2,50,000 Rs. 2,50,001 and above Nil 10% x ( TI – Rs. 1,45,000) % ( TI- Rs 1,50,000) 20,500+30%(TI- Rs.2,50,000) For Resident woman Up to Rs.1,80,000. Rs 1,80,001 to 3,00,000 Rs.3,00,001 to 5,00,000 Rs. 5,00,001 and above Nil 10% x ( TI – Rs. 1,80,000) 12, % ( TI- Rs 3,00,000) 52,000+30%(TI- Rs.5,00,000) A.Y

Up to Rs.2,25,000. Rs 2,25,001 to 3,00,000 Rs. 3,00,001 to 5,00,000 Rs.5,00,001 and above Nil 10% x ( TI – Rs. 2,25,000) 75,00+ 20% ( TI- Rs 3,00,000) 47, %(TI- Rs.5,00,000) Education 2% + Higher Education 1% 10% is applicable to Total Income above Rs. 10 lacs Tax Rates Applicable to Senior Citizens A.Y A.Y Up to Rs.1,95,000. Rs 1,95,001 to 2,50,000 Rs. 2,50,001 and above Nil 20% x ( TI – Rs. 1,95,000) 11, % ( TI- Rs 2,50,000)

Comparative Chart of Tax Due between A.Y & A Male Resident A.Y A.Y Total Income Tax Due Total Income Tax Due

B Resident Women A.Y A.Y Total Income Tax Due Total Income Tax Due C Sr Citizens Total Income Tax Due Total Income Tax Due

Example For Assessment year : Male  Particulars(Rs.) (Rs.) (Rs.)  Gross Salary Income 2,00,000 5,00,000 10,00,000 (including Allowances) (including Allowances) Contribution to GPF 20,000 50,000 1,00,000 Contribution to GPF 20,000 50,000 1,00,000 Gross Salary 2,00,000 5,00,000 10,00,000 Gross Salary 2,00,000 5,00,000 10,00,000 Less: Deduction Less: Deduction U/s 80C 20,000 50,000 1,00,000 U/s 80C 20,000 50,000 1,00,000 Taxable Income 1,80,000 4,50,000 9,50,000 Taxable Income 1,80,000 4,50,000 9,50,000 Tax thereon 3,000 45,000 1,75,000 Tax thereon 3,000 45,000 1,75,000 Add: Surcharge NIL NIL NIL Add: Surcharge NIL NIL NIL Education ,500 Education ,500 Secondary & Higher Education ,750 Total Tax Payable 3,090 46,350 1,80,250

REVISED PAY COMMISSION AT GLANCE Before VI th P.C. After VI th P.C. 27 Pay Scales 6 Pay Scales 6 Pay Scales Basic = Pay+ D.P. Basic = Pay + Grade Pay ( There is no D P now.) Annual increment at fixed rates provided in the grade. Increment on 1 st 3%. HRA = 30%, 15%, 7.5% & 5% for A,B,C & Non categorised cities. HRA = 30%, 20% & 10% On Basic + NPA for X,Y,Z, cities CCA = Rs 25 – 300 P.M. depending on place of posting No C.C.A. Transport Allowance = Rs75 – 800 P.M. depending on place of posting Transport Allowance = Grade Pay Allowance Rs & above Rs D.A Rs 5400 & above Rs D.A Rs 4200,4600,4800 Rs D.A Below Rs 4200 Rs 600+ D.A

HOW TO COMPUTE TAX UNDER THE HEAD SALARY ( A.Y ) ParticularsAmount Total Salary Received xxxxx ( Basic +D.P. +D.A. +H.R.A. +Transport all +C.C.A. +N.P.A. ) Less: Exemption u/s 10 H.R.A.xxx Transport Allowance xxxx Add: Arrears of Salary Received xxxx Less: Loss under the head house Property or other head. xx Gross Total Income xxxxx Less: Rebate u/s 80C, 80D, 80DD, 80G, 80GG, 80E, 80U xxx Less: Rebate u/s 89 (1) for Arrears. xxx Total Taxable Income xxx Tax Due ( As per applicable rates) Xxx

1) Basic Pay = Fully Taxable 2) D.P. = Fully Taxable ( D.P. is not payable according to the Pay Commission) 3) D.A. = Fully Taxable 4) C.C.A. = Fully Taxable ( C.C.A. is not payable according to the Pay Commission) 5) N.P.A.( News Paper Allowance) = Fully Taxable 6) H.R.A. ( House Rent Allowance). Least of the following is exempt u/s 10(13A) of Income Tax Act. a) Actual HRA Received b) Rent Paid less 10% of Basic Salary + D.A. c) 50% of Salary for Delhi, Mumbai, Calcutta & Chennai or 40% in case of other cities. 7) Transport Allowance = Exemption of Rs 800/- P.M, balance is taxable Taxability of various allowances for A.Y NOTE (Section 10(14A): 70% of an allowance or Rs 6000 P.M. whichever is lower, is exempt for an employee working in any transport system, to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided such employee is not in receipt of daily allowance.

Medical Reimbursements to employees Employee/familymember Treatment in hospital maintained by employer Nottaxable Employee/ family familymember Reimbursement of expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family. Not a perquisite if treatment is carried on (a) in any hospital maintained by the Government, local authority, or which is approved by the Government for treatment of its employees or (b) in respect of prescribed diseases in any hospital approved by the Chief Commissioner in accordance with rule 3A. Employee (not any member of his family) Sum reimbursed by the employer in respect of medical treatment (other than that mentioned in items 1 and 2 above). Exempt from tax up to a maximum limit of Rs. 15,000 (Rs. 10,000 up to the assessment year ).

ARREARS OF SALARY RECEIVED As per the clarification issued by Ministry of Finance vide its office order F.No 1/1/200/-IC dated 30 th August, 2008 Tax is payable on Arrears on receipt basis i.e. 40% of the aggregate arrears is taxable in A.Y

Loss/ income under the head House Property If a person have taken any Loan for construction/ purchase of residential house, he can claim the rebate on the amount of repayment of loan, as under: a)For Principal Portion = Rebate u/s 80C up to maximum of Rs 1,00,000/- is available b) For Interest Portion = A normal deduction of Rs. 30,000/- is allowed in respect of interest on borrowed capital. Rs. 1,50,000/- is available if such loan has been taken on or after for construction or acquiring the residential house and the construction acquisition of the residential unit out of such loan has been completed with in three years from the end of the financial year in which capital was borrowed.

IMPORTANT POINTS TO REMEMBER Normally, an employee can take the benefit of either H.R.A. (u/s 10 (13A) Least of the following is exempt: a) Actual HRA Received b) Rent Paid less 10% of Basic Salary + D.A. c) 50% of Salary for Delhi, Mumbai, Calcutta & Chennai or 40% in case of other cities.) or Relief of interest on housing loan on self occupied house. An employee can take the benefit of both exemptions if the self occupied house is far from his work place. If the house purchased by the assessee is given on Rent, then (Rent received- 30% of Rent Received) is chargeable as tax under the head, Income from House Property and interest paid on borrowed capital is fully claimed as expenses irrespective of amount.

REBATE U/S 80 C An employee is entitled to deduction for the whole of the amount paid or deposited in the current Financial Year in the following schemes, Subject to a limit of Rs 1,00,000/-. A)Insurance Premium B)Provident Fund, GIS, PPF, VPF. C)Purchase of NSC and Interest accrued on previous NSC purchased. D)Units of any Mutual Fund. E)Principle portion of repayment of Housing Loan. F)Tuition Fee. G)Term Deposit for a fixed period of not less than five years.

Rebate u/s 80CCC Annuity Plan pension plan An employee paid or deposited any amount for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension. Maximum amount is Rs 1,00,000/- Rebate u/s 80CCD Where an assessee employed by the Central Govt. on or after 01/01/2004, has in the previous year paid any amount in his account under schemes as notified by the Govt., he shall be allowed a deduction of the whole of the amount so paid subject to a ceiling of 10% of his Salary in the Previous Year. Same applies to Govt contribution. Total becomes 20%. NOTE : The aggregate amount of deduction u/s 80C, 80CCC and 80CCD shall not exceed Rs 1,00,000/-.

Deduction u/s 80D Mediclaim Policy (over Rs. 1 lakh) The deduction is allowed for making the payment to effect or keep in force an insurance on :- The health of the assessee or on the health of wife or husband, dependant parents or dependent children of the assessee. Maximum amount of Deduction is Rs15,000/- or Rs 20,000/- if the payment is made for insurance of Senior Citizen.

Deduction u/s 80DD Relief to Handicapped Dependent Where an assessee, has, during the previous year: a)Incurred any expenditure for the medical treatment ( including Nursing) training and rehabilitation of a dependant, being a person with disability or b)Paid or deposit any amount under a scheme framed in this behalf by the life insurance corporation or any other insurer or Administrator or the specified Company for the maintenance of a dependant, being a person with disability. The assessee shall be allowed a deduction of a sum of Rs 50,000/- from his gross total income. The amount of deduction is a fixed deduction of RS 50,000/-, irrespective of the amount incurred or deposited under the scheme. However, where such dependent is a person with severe disability (80% or more), an amount of Rs shall be allowed as deduction subject to the fulfilled.

Deduction u/s 80GG Those in Occupation of GOVT. QTRS The assessee is entitled to deduction in respect of House Rent Paid by him for his own residence subject to following conditions: a)The assessee has not been in receipt of any HRA. b)The assessee does not own any residential accomodation himself, his spouse or minor child or where assessee is member if HUF, by such family at the place where he ordinarily resides or perform duties of his office. c)The assessee files the declaration in Form-10BA. Amount of deduction u/s 80GG is least of the following: 1) Rent paid less 10% of his total Income. 2) 25 % of Total Income. 3) Rs 2,000/- Per Month.

Deduction under section 80U For handicapped employee In computation the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, three shall be allowed a deduction of a sum of fifty thousand rupees. However, where such individual is a person with severe disability (80% or more), a higher deduction of seventy-five thousand rupees shall be allowed.

Relief under section 89 (1) Tax on arrears If an individual receives any portion of his salary in arrears or in advance, he can claim relief in terms of section 89 read with rule 21A. The idea for this relief is to compensate the individual to pay tax at higher rates.

Manner of computation of relief StepComputationResult 1. Include additional salary/family pension in the total income of the year of receipt and compute tax thereon. Tax (1) 2. Exclude additional salary/family pension in the total income of the year of receipt and compute tax thereon. Tax (2) 3. Compute Tax (1) – Tax (2) A 4. Include additional salary/family pension in the total income of the year to which it relates and compute tax thereon. Tax (3) 5. Exclude additional salary/family pension in total income of the year to which it relates and compute tax thereon. Tax (4) 6. Tax (3) - Tax (4) B 7. Compute A-B (A should not be less than B) Relief u/s 89 (1) Note : If additional salary / family pension relates to more than one previous year, salary should be spread over the previous years to which it pertains in the manner explained above.

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