Transcript Slide 1

WELCOME
Presentation by:
M. CHANDRA GOUD
INCOMETAX OFFICER
Salary Taxation
Department Website
• The relevant Acts, Rules,
Forms and Notifications are
available at the website of the
Income-tax Department www.incometaxindia.gov.in
TDS rates for Financial Year 2011-12
Super Sr.
Citizen
Senior Citizen
Woman
Others
For Income
Between 0 to
2,50,000
For Income
Between 0 to
1,90,000
For Income
Between 0 to
1,80,000
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
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
Between 5,00,001
to 8,00,000
For
Income above
8,00,001
For
Income above
8,00,001
For
Income above
8,00,001
For
Income above
8,00,001
Surcharge
Surcharge
Education Cess
Education Cess
Tax (%)
nil
nil
For Income
0
10
20
30
0
3
What is salary ?
• Salary includes
• Wages, Any annuity or Pension, any Gratuity,
any Fees, Commission, Perquisites, Leave
encashment, Arrears of salary and others.
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
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.
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.
PERQUISITES
1. The value of any benefit or amenity
granted or provided free of cost or at
concessional rate.
2. With effect from 1.4.2010 (assessment
year 2010-11), the value any specified
security (stock option) or sweat equity
shares allotted or transferred.
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.
1.
Actual amount received.
2. 15 days salary for each year of completed
service
3. Rs.10,00,000/-.
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.
Deduction on income from
House 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
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.
•
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.
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.
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.
Deductions u/s.80CCE
(u/s.80C,80CCC&80CCD)
• 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
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.
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.
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.
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.
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.
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.
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.
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.10IA.
• Amount of deduction (fixed)Rs.50,000 is
allowed. In case severe disability (80%
or more), Rs.1,00,000 is allowed.
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)
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.
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.
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.
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.
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.
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
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
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)
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
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 subcontractor 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
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
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
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.
1,80,000/01/07/2010)
per
annum
(w.e.f
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
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
TDS ON COMMISSION
OR BROKERAGE
RATE OF TDS
 10%
THRESHOLD LIMIT
 Rs. 5,000/- per annum (w.e.f 01/07/2010)
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
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
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)
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
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
Thank you