1. WELCOME Presentation by: Sri MD.ZAKIR ALI UTFVSP

2. Salary Taxation

3. topicstopics SALARY SALARY COMPONENTS OF SALARY COMPONENTS OF SALARY WHAT IS PERK & WHICH ARE NOT WHAT IS PERK & WHICH ARE NOT INCLUDED IN PERK ? INCLUDED IN PERK ? INCOMES WHICH DO NOT FORM PART INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME. OF TOTAL INCOME. VARIOUS DEDUCTIONS. VARIOUS DEDUCTIONS. TDS ON SALARIES TDS ON SALARIES

4. What is salary ? Any Payment made by an employer /person responsible for payment to an employee who is appointed under specific employment rules either express or implied terms Relationship necessary Right to supervise & control the work

5. 1. Accommodation 2. Personal attendants 3. Gas, electricity & water 4. Free or concessional education 5. Interest free or concessional loans 6. Use of movable assets other than computers or laptops 7.Transfer of movable assets PERQUISITES

6. For purpose of valuation of the perquisite of unfurnished accommodation, all employees are divided into two categories : (i) Central Government & State Government employees; and (ii) Others. For employees of the Central and State Governments the value of perquisite shall be equal to the license fee charged for such accommodation as reduced by the rent actually paid by the employee. PERQUISITES

7. For all others, Owned by the employer (a)Owned by the employer 15% of ‘ salary ’ – Population > 25 lakhs 10% of Salary - Population = 10-25 lakhs 7½ % of Salary -other places Accommodation Lease/rent by the employer (b) Accommodation 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 amount of rent paid by the employee. PERQUISITES

8. Furnished accommodation,: (i)10 per cent of the cost of furniture (ii)Hire - amount of actual hire charges as reduced by any charges paid by the employee himself. PERQUISITES

9. What is not a perk Medical benefits provided by employer in hospital maintained by him. Expenditure by employer on treatment in a hospital maintained by govt. or local authority or in a hospital approved by CCIT. reimbursementIn other cases, reimbursement of medical treatment-expenses by employer up to maximum Rs. 15000

10. Perks : No TAX Conveyance to and from residence to place of work upto Rs.800 p.m.(1600 in case of blind or PH) periodicals and journals required for discharge of work expenses on telephones including a mobile phone Any allowance which is paid in the form of travelling, conveyance, uniform, if incurred wholly for official purposes

11. S.10 – Incomes which do not form part of total income. These payments will not be part of salary subject to limits prescribed oLTC (Sec. 10(5)) oGratuity (Sec. 10(10)) oCommuted value of pension (Sec. 10(10A)) oLeave encashment at the time of retirement (Sec. 10(10AA)) oProvident fund receipts and RPF receipts (Sec. 10(11) & 10(12))

12. L T C On Leave to any place in India Conditions Conditions: Economy fare of the National carrier. A/C first class fare (When connected with train). First Class or deluxe fare where recognized transport system exists, otherwise A/C First Class rail fare. Two Journeys in a block of four calendar years. Concession available to individual / family but shall not be available to more than two surviving children.

13. Voluntary Retirement Not exceeding 5 lakhs Applicable to companies / local authorities/ Co-opperative society/ university/IIT/notified institutions/ notified IIMs Conditions in Rule 2BA No 89(1) relief.

14. Gratuity Covered by gratuity Act Death Cum Retirement Gratuity received by the Central Govt./State Govt. /Local Authorities. Any other gratuity not exceeding half month salary for each year of completed service, subject to limit of Rs. 10,00,000/-.

15. Commuted value of pension Commuted pension covered by any pension fund covered by s.10(23AAB) In any other case i) Commuted value of 1/3 rd of pension if the employee received gratuity also ii) other wise, commuted value of half of pension. Central /State /Local Auth./Corporations – Any Payment.

16. 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 specified by the Government of India Notification No. S.O. 588(E), dated 31-5-2002 at Rs. 3,00,000. EL Encashment

17. Actual HRA. Rent paid in excess of 1/10 th of salary 50% of salary in metro cities 40% in other salary. H R A Sec 10(13)

18. Deduction on income from House property A normal deduction of Rs. 30,000 is allowed in respect of interest on capital borrowed prior to 1-4-99 in the case of self occupied property whose annual value is nil. 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 resid. 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

19. Other deductions 80D – Medical insurance premium paid 80DD Payment for treatment of dependent person with disability. 80DDB Medical treatment of dependent or self for specified disease/ailment 80E Interest on loan taken for self higher education 80G Donations to certain funds etc. 80U assessee is person with disability

20. Chapter VI A deductions 80C for various investments mentioned there in Annuity plans u/s 80CCC by any insurer Contributions to contributory pension scheme of the central Govt u/s 80CCD Sum of deductions of the above shall not exceed Rs.1 lakh(80CCE) Deductions u/s 80D,80DD and 80DDB w.r.t. medical related expenses on premia, treatment of self or dependents are available in addition to the Rs.1lakh u/s 80CCE upto the amounts of Rs.15000(20000 for sr.citizens), 50000(75000 for disables) respectively.

21. Deductions u/s. 80DDB and 80G shall not be allowed by the employer Deductions u/s. 80D, 80DD, 80E, 80U shall be allowed only on the basis of certificate issued by the prescribed authority Form 10BA shall be obtained from the employee to allow deduction u/s. 80GG w.r.t. rent paid by the employees who are not covered u/s. 10(13) Form 10E shall be obtained to allow claim of relief u/s. 89(1) Chapter VI A deductions

22. Education loan –Section 80E - a deduction, of interest available for eight assessment years which was taken for the purpose pursuing higher education of the assessee and any of his relative. The relief was not allowed to the parents, but to the student himself when he starts repaying the amount. –Higher education means full time studies for any graduate or post graduate course in engineering, medicine, management or for post graduate course in applied sciences or pure science including mathematics and statistics. –Also allow the deduction of interest on loan taken by an individual for higher education of his relative also. –Relative means for the purposes of section 80E so as to mean spouse and children of the individual. –This amendment will take effect from 1st April, 2008

23. The contribution made by the central govt. not exceeding 10% of the salary of the individual employee is also allowed as a deduction U/s. 80CCD(2). Pension Scheme

24. Attn: Govt. DDOs’ (a)submit a statement in Form No. 24G within ten days from the end of the month to the agency authorised by the Director General of Income-tax (Systems) in respect of tax deducted by the deductors and reported to him for that month; and (b) intimate the number (hereinafter referred to as the Book Identification Number) generated by the agency to each of the deductors in respect of whom the sum deducted has been credited.

25. CERTIFICATE OF TDS TO BE FURNISHED UNDER SECTION 203. Form No. 16, - for SALARIES (2) The certificate referred to in sub-rule (1) shall specify: (a) valid permanent account number (PAN) (b) valid TAN (c) (i) book identification number; (ii) Challan identification number (d) (i) receipt number of the relevant quarterly statement (ii) receipt numbers of all the relevant quarterly statements for “Salaries”.

26. Form No. PeriodicityDue date 16AnnualBy 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted PERIODICITY OF FORMS

27. The deductor may issue a duplicate certificate in Form No. 16, if the deductee has lost the original certificate so issued and makes a request for issuance of a duplicate certificate and such duplicate certificate is certified as duplicate by the deductor. FORM 16

28. Revised Form -16

29. Annexure –A of Revised Form -16 Government deductors to enclose Annexure-A if tax is paid without production of an income-tax challan

30. Annexure –B of Revised Form -16 Non-Government deductors and if tax is paid accompanied by an income-tax challan

31. Form -24G

32. Research funds – amounts paid to Employee Doctors by Autonomous Institutions. Salary u/s 192

33. Not calculating the perquisites, like accommodation, interest free loans, facilities like sweeper, gardener etc. Free supply of electricity Salary u/s 192

34. Payments made to Govt. Doctors under Rajiv Arogyasree Scheme. Salary u/s 192

35.  You may not be able to cover the tax liability.  Employee may not submit the details to arrive at the correct liability. I will submit the details in February NOT DEDUCTING TAX STARTING FROM FINANCIAL YEAR

36.  Withholding of salary leading to grievance of employees.  Employee paying tax on his own indicating failure of the DDO. Don’t deduct, I will pay NOT DEDUCTING TAX STARTING FROM FINANCIAL YEAR

37. NON DEDUCTION Payments made to local authorities which are taxable. Please deduct tax

38. If the House Property is transferred before expiry of five years no deduction in the year of transfer and earlier deductions allowed will become income in the year of transfer. No deductions u/s. 80C for the repayment of principal amount if the loan is taken from the private persons and also not for commercial properties. Points to Ponder ?

39. If the House Property is transferred before expiry of five years no deduction in the year of transfer and earlier deductions allowed will become income in the year of transfer. No deductions u/s. 80C for the repayment of principal amount if the loan is taken from the private persons and also not for commercial properties. Points to Ponder ?

40. Research funds – amounts paid to Employee Doctors by Autonomous Institutions. Points to Ponder

41. Not calculating the perquisites, like accommodation, interest free loans, facilities like sweeper, gardener etc. Free supply of electricity Points to Ponder

42. Payments made to Govt. Doctors under Rajiv Arogyasree Scheme. Points to Ponder

43.  You may not be able to cover the tax liability.  Employee may not submit the details to arrive at the correct liability. I will submit the details in February NOT DEDUCTING TAX STARTING FROM FINANCIAL YEAR

44.  Withholding of salary leading to grievance of employees.  Employee paying tax on his own indicating failure of the DDO. Don’t deduct, I will pay NOT DEDUCTING TAX STARTING FROM FINANCIAL YEAR

45. Timely action Penalty Notices for non filing of Quarterly statements particulary to Govt. DDO’s. Form 16 Verification Payments made to employees in various other heads Suggestions to check compliance

46. Insisting on filing of 24G Statements by Treasury officers Limited inspection on regular basis before December in the cases of Govt/PSU and autonomous organisations. Suggestions to check compliance

47. Thank you