3 Department WebsiteThe relevant Acts, Rules, Forms and Notifications are available at the website of the Income-tax Department -www.incometaxindia.gov.in
4 TDS rates for Financial Year 2011-12 Senior CitizenWomanOthersSuper Sr. CitizenTax (%) For Income Between 0 to 2,50,000 For Income Between 0 to 1,90,000 For Income Between 0 to 1,80,000nil 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 5,00,00010 For Income Between 5,00,001 to 8,00,00020 For Income above 8,00,001For Income above 8,00,00130SurchargeEducation Cess3
5 What is salary ? Salary includes Wages, Any annuity or Pension, any Gratuity, any Fees, Commission, Perquisites, Leave encashment, Arrears of salary and others.
6 HOUSERENT ALLOWANCE u/s.10(13A) The least of the following exemptedActual HRA receivedRent paid in excess of 10% of salary50% of salary in metro cities40% in other places.For this purpose “Salary” includes dearness allowance if terms of employment so provide
7 House Rent AllowanceThe 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.
8 Allowances exempt, amount received or limit specified, which ever is less 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.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.Transport Allowance :Exempt to the extent of Rs.800 p.m.
9 PERQUISITESThe value of any benefit or amenity granted or provided free of cost or at concessional rate.With effect from (assessment year ), the value any specified security (stock option) or sweat equity shares allotted or transferred.9
10 GratuityDeath Cum Retirement Gratuity received by the Central Govt./State Govt. /Local Authorities.Covered by gratuity Act, & Any other gratuity, least of the following is exempted.Actual amount received.15 days salary for each year of completed serviceRs.10,00,000/-.
11 EL EncashmentCentral Govt / State Govt Employees – ExemptOther 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.
12 Deduction on income from House property interest up to a maximum limit of Rs. 1,50,000 is allowedLoan taken on or afterfor constructing/acquiring the residential. house andcompleted within three years from the end of the financial year in which capital was borrowed.No limits for the let out propertyOnly one property is eligible for deduction
13 Deductions under chapter VI A –u/s.80C,80CCC&80CCD 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.
14 Deduction u/s.80CCCDeduction 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.
15 Deduction u/s.80CCDDeduction in respect of contribution made to pension scheme notified by Central GovtThe maximum amount deductible under this section is 10 percent of salary.
16 Deductions u/s.80CCE (u/s.80C,80CCC&80CCD) Amount of deduction allowable; gross qualifying amount is actual amount invested or Rs.1,00,000 which ever is lower.
17 Deductions u/s.80CCE (u/s.80C,80CCC&80CCD) Sec.80CCE amended w.e.f. the F.Y – The contribution made by employer to NPS u/s.80CCD(2) shall be excluded from the limit of Rs.1,00,000
18 Deduction u/s.80CCFDeduction in respect of subscription to long term infrastructure bonds.· This deduction applicable from the assessment yearMaximum deduction allowable is Rs.20,000.
19 Deduction u/s.80D The premium can be paid by any mode other than cash. Medical insurance premium (Med claim Policy) paid: On the health of taxpayer, spouse, parents and dependent childrenThe premium can be paid by any mode other than cash.It is paid out of income chargeable to tax.
20 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.
21 Deduction u/s.80DDDeduction 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.
22 Deduction u/s.80DDBMedical 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.
23 Deductions -u/s.80EPayment of interest on loan taken for higher education: spouse or childrenThe 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.
24 Deductions -u/s.80GDeduction 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.
25 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.
26 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)
27 Relief u/s.89(1)from (assessment year ) 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.
28 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.
29 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.
30 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/information as they deem necessary before allowing the aforesaid deductions.
31 FORM 16The 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.
32 TDS ON INTEREST SCOPE OF INTEREST : Interest payable in respect of Monies borrowedDebt incurred (including a deposit, claim etc..)INTEREST ON BANK DEPOSITS –TDS applicable to interest onterm / fixed depositscumulative depositsreinvestment depositsvariable / flexi deposits
33 Form No.15G & 15HIf 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
34 TDS ON INTERESTINTEREST ON BANK DEPOSITS –each branch of a bank is considered as a unit for reckoning the threshold limit for TDSinterest payable on all the deposits in the branch standing in the name of a payee should be aggregatedinterest 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)
35 TDS ON INTEREST RATE OF TDS THRESHOLD LIMITS GENERAL PRINCIPLES 10% 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 tribunalRs. 5,000/- in all other casesGENERAL PRINCIPLESTDS to be made on gross interest payments
36 TDS ON CONTRACT PAYMENTS SCOPE OF THE SECTION :Contract payments forCarrying out any work in pursuance of a contractSupply of labour for carrying out any workPayments made by a contractor to a sub-contractor forcarrying out whole or any part of the work undertaken by the contractorSupply of labour for carrying out whole or any part of the work undertaken by the contractor
37 TDS ON CONTRACT PAYMENTS RATE OF TDS1% where the contractor / subcontractor is an individual or HUF2% where the contractor / sub-contractor is a person other than individual or HUFTHRESHOLD LIMITSRs. 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 PRINCIPLESTDS to be made on gross payments and not on income comprised therein
38 TDS ON RENT MEANING OF RENT Any payment under a lease / sub-lease / tenancy or any other agreement for use ofLandBuilding (including factory building)Land appurtenant to a buildingPlantMachineryequipmentFurnitureFittingseither separately or together and whether they are owned by the payee or not
39 TDS ON RENT RATE OF TDS THRESHOLD LIMITS 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 LIMITSRs. 1,80,000/- per annum (w.e.f 01/07/2010)
40 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 ascertainableNo 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
41 TDS ON COMMISSION OR BROKERAGE MEANING OF COMMISSION OR BROKERAGEPayment to a person acting on behalf of the payer forthe services rendered (other than professional services)any services in the course of buying or selling of goodsServices in relation to transactions in any asset, valuable articles or things other than securitiesRelationship of principle and agent is essential between the payer and payee to characterize it as commission / brokerage
42 TDS ON COMMISSION OR BROKERAGE RATE OF TDS10%THRESHOLD LIMITRs. 5,000/- per annum (w.e.f 01/07/2010)
43 TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES Scope of the sectionFees for professional servicesFees for technical servicesRoyaltyPayment towards non-compete agreement
44 TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES MEANING OF PROFESSIONAL SERVICESServices rendered by a person in the course of carrying onLegal professionMedical professionEngineering or architectural professionAccountancy professionTechnical consultancyInterior decorationAdvertisingAuthorised representative
45 TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES RATE OF TDS10%THRESHOLD LIMITSRs. 30,000/- per annum (w.e.f 01/07/2010)GENERAL PRINCIPLESTDS to be made on gross payment including the reimbursement for expenses (circular no.715)
46 TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES INSTANCES OF PAYMENTS LIABLE FOR TDSPayments to recruitment agencies (circular No.715)payment by banks for professional services for loan processing, credit verificationPayments made to the Airport Authority of India towards Navigational facilitiesPayments made by banks to MICR centre for processing and clearing MICR chequesPayments 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 authorsPort/access/interconnect charges paid by telecom operators
47 CONDITIONS FOR VALIDITY OF 15G / 15H DECLARATIONS Declaration in form No. 15G not valid if the amount paid / credited exceeds the tax exemption limitDeclarations valid only for the assessment year mentioned thereinDeclarations valid only for the payment / credit made subsequent to the date of declaration