WELCOME

Presentation by:
Ram Prakash Gautam B.Com.(H) C.A. P.E.II MOBILE NO. 08010422094

TAXATION FOR SALARY PERSON

SALARY INCOME

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

For Income Between 0 to 1,80,000 For Income Between 1,80,001 to 5,00,000 For Income Between 5,00,001 to 8,00,000

TDS RATE FOR THE F/Y 2011-12

For Income Between 1,90,001 to 5,00,000 For Income Between 5,00,001 to 8,00,000 For Income above 8,00,001 For Income Between 2,50,001 to 5,00,000 For Income Between 5,00,001 to 8,00,000 For Income above 8,00,001 For Income Between 5,00,001 to 8,00,000 For Income above 8,00,001

For Income Between 0 to 1,90,000

For Income Between 0 to 2,50,000

For Income Between 0 to 5,00,000

0%

10 % 20 % 30 % 0 3%

For Income above 8,00,001 Surcharge

Education Cess

Topics
WHAT IS SALARY PERQUISITES

ALLOWANCES
INCOMES WHICH DO NOT FORM PART OF TOTAL INCOME. DEDUCTION UNDER SECTION 16 DEDUCTION OF INTEREST PAID/ACCRUED ON SOP DEDUCTIONS UNDER CHAPTER vi A. DUTIES TAX OF PERSONS RESPONSIBLE FOR

DEDUCTION

 Motto for Life: If you chase it, it will run! Confidence comes naturally with Success But, Success comes only, who are Confident So, Begin your day with great confidence.

What is salary ? (Sec.15)

Employer and Employee relationship Full time or Part time Employment. Foregoing or Sacrificing of Salary. Surrender of Salary. Salary paid tax-free. Voluntary Payments.

What is salary ? {Sec. 17(1)}

Salary includes
Wages, Any Annuity or Pension, any Gratuity, any Fees, Commission, Perquisites, Leave encashment, Arrears of salary , Interest earned in excess of 9.5% on RPF, Amount transferred in excess of 12% of salary to RPF.

What is salary ?
Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as Salary.

What is salary ? {Sec. 17(3)}

Compensation due or received from present / former employer in connection with (a) termination of employment or (b) modification of terms & conditions of employment. Any amount received from an Unrecognized Provident Fund , to the extant of Employers contribution along with interest on such contribution. Sum received under Key man Insurance Policy , Including Bonus on it. Any sum received , either prior to employment or after cessation of employment.

HOUSERENT ALLOWANCE u/s.10(13A)

The least of the following whichever is less 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 ` 3,000 per month will be exempted from production of rent receipt. (CBDT Circular No. 01/2010 dated January 11,2010)

Declaration of Circular No. 01/2010 dtd. 11.01.10

Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), 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. It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent.

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

1. Children Education Allowance : Exempt up to actual amount received per child or `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 `.300 p.m. per child up to maximum of two children, which ever is less. 1. Transport Allowance :Exempt to the extent of `.800 p.m.(In case of Handicapped ` 1600)

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.

S.10 Incomes which do not form part of total income.

These payments will not be part of salary subject to limits prescribed o LTC (Sec. 10(5)) o The exemption is allowed only in respect of fare only. o Gratuity (Sec. 10(10)) o Commuted value of pension (Sec. 10(10A)) o Leave encashment at the time of retirement (Sec. 10(10AA)) o Provident fund receipts and RPF receipts (Sec. 10(11) & 10(12))

Gratuity
Death Cum Retirement Gratuity received by the Central Govt./State Govt. /Local Authorities will be fully Exempt from tax u/s 10(10)(i). Covered by gratuity Act, 1972 & Any other gratuity, least of the following is exempted u/s 10(10)(ii). 1. Actual amount received. 2. 15/26 X Last drawn Salary X No. of years of completed service or part there of in excess of 6 months. 3. ` 10,00,000/-.

"Eleven Hints for Life"

1. It hurts to love someone and not be loved in return. But what is more painful is to love someone and never find the courage to let that person know how you feel. 2. A sad thing in life is when you meet someone who means a lot to you, only to find out in the end that it was never meant to be and you just have to let go. 3. The best kind of friend is the kind you can sit on a porch swing with, never say a word, and then walk away feeling like it was the best conversation you've ever had. 4. It's true that we don't know what we've got until we lose it, but it's also true that we don't know what we've been missing until it arrives. 5. It takes only a minute to get a crush on someone, an hour to like someone, and a day to love someone-but it takes a lifetime to forget someone. BALANCE ON SLIDE :- 24

Gratuity
Covered by not gratuity Act, 1972 u/s 10(10)(iii) 1. Actual amount received. 2. X Average Salary X No. of fully completed years of service. 3. ` 10,00,000/-.

Pension 10(10A)
I. Uncommuted Pension :-It is taxable for all employees as salary. II. Commuted Pension:- It is taxable as under (i) received by govt. employee wholly exempt. (ii) received by non govt. employees following is exempt: (a) If received gratuity Commuted value of Onethird of the pension which he is normally entitled to receive. (b) In any other case :- Commuted value of Onehalf of such pension.

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.

BALANCE OF SLIDE 20
6. Don't go for looks, they can deceive. Don't go for wealth, even that fades away. Go for someone who makes you smile because it takes only a smile to make a dark day seem bright. 7. Dream what you want to dream, go where you want to go, be what you want to be. Because you have only one life and one chance to do all the things you want to do. 8. Always put yourself in the other's shoes. If you feel that it hurts you, it probably hurts the person too.

9. A careless word may kindle strife. A cruel word may wreck a life. A timely word may level stress. But a loving word may heal and bless.
10. The happiest of people don't necessarily have the best of everything they just make the most of everything that comes along their way. 11. Love begins with a smile, grows with a kiss, ends with a tear. When you were born, you were crying and everyone around you was smiling. Live your life so that when you die, you're the one smiling and everyone around you is crying.

Deduction under section 16

Tax on employment (professional tax) paid is allowable as deduction from salary. Entertainment Allowance : This deduction is allowed only to a Government employee to the least of following. Actual amount received. 20% of salary exclusive of any allowance. `5000.

Deduction on income from House property

interest up to a maximum limit of ` 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,80CCD&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.

Deductions u/s.80C,80CCD&80CCD

Amount of deduction allowable; gross qualifying amount or `1,00,000 which ever is lower.

Deduction u/s.80CCF
Deduction in respect of subscription to long term infrastructure bonds. This deduction applicable from the assessment year 2011-12 Maximum deduction allowable is ` 20,000.

Deduction u/s.80D
Medical insurance premium (Medi

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 `15,000 additional deduction `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 ` 50,000 is allowed. In case severe disability (80% or more), ` 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 ` 40,000: if the person is a senior citizen ` 60,000 is allowed.

This deduction is not allowable by the employer.

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 -u/s.80GG
Deduction in respect of rent paid : The assessee should not be receipt of HRA and he should not own any house The least of the following amount is exempted 1. Rent paid in excess of 10% of total income before allowing deduction under this section. 2. ` 2000 per month. 3. 25% of total income before allowing deduction under this section

Deduction-u/s.80GGC
Any amount of contribution made by a person to a political party or an electoral trust is deductible.

This deduction is not allowable 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) ` 50,000 is allowed. In case severe disability (80% or more), `1,00,000 is allowed.

Particulars of income other than salary

Employee has to furnish particulars of income under any head other than Salaries in a simple statement, which is properly verified by him. Such income should not be a loss under any such head other than the loss under the head Income from House Property.

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.

DDOs to satisfy themselves of the genuineness of claim:

In case the DDO is not satisfied about the genuineness of the employees claim regarding any deposit/subscription/payment made by the employee, he should not allow the same, and the employee would be free to claim the deduction/rebate on such amount by filing his return of income and furnishing the necessary proof etc., therewith, to the satisfaction of the Assessing Officer.

Duties of Persons responsible for deducting tax

File Quarterly statements in form No.24Q within time i.e. 15th July, 15 th October, 15th January of the relevant financial year and for the last quarter is 15th May following financial year. Challans for deposit of TDS - for salaries challan No.ITNS-281.

Attn: Govt. DDOs

(a)Who are paying taxes by Book Adjustment - submit a statement in Form No. 24G within ten days from the end of the month to the agency authorized 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.

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.

FORM 16

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.

Revised Form -16

Points to Ponder
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
Any contributions made towards the ULIP, deposit under Senior Citizen Saving Scheme, Time deposit in Post Office during the financial year and the same terminates within 5 years and LIP terminates within 2 years. The above contributions not qualified for deduction u/s.80C.

Points to Ponder
The quantum of deduction already taken in the preceding years would be deemed as income of the taxpayer in the year in which contribution to the above plan/scheme/deposit is terminated.

NOT DEDUCTING TAX STARTING FROM FINANCIAL YEAR

You may not be able to cover the tax liability.

I will submit the details in February

Employee may not submit the details to arrive at the correct liability.

NOT DEDUCTING TAX STARTING FROM FINANCIAL YEAR

Withholding of salary leading to grievance of employees. Employee paying tax on his own indicating failure of the DDO.
Dont deduct, I will pay

Thank you