For Taxation Students - World Public...
Transcript of For Taxation Students - World Public...
Salary Summary For Taxation Students
AY 2015-16
Summary prepared for quick revision
Author – Pratik Kikani Facebook Page [email protected]
This Book is dedicated to:
All Gods, Gurus, Parents, Family Members and Friends.
© With the Author
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission, in writing, from the author.
Price: ₹0.00
Edition: First
April, 2015 Edition
Author – Pratik Kikani Facebook Page [email protected]
Preface
Dear Friends,
Here I am presenting a book with Summary of Salary
head under the Income Tax for Taxation Students of India.
While preparing the summary, I kept in mind last
minute revision and thus this book will serve as revision
purpose. This book is prepared with five effective pages of
Summary which only you need to read to recapture the
concept covered in Salary Head. Do only print such five
pages and If you are reading it on digital media then its
best.
Go Green because it also Saves Money.
Thanks and warm Regards,
Dated: 18/04/2015 Pratik Kikani
Place: Ahmedabad
Author – Pratik Kikani Facebook Page [email protected]
About the Author:
Pratik Kikani
Degree holder of Bachelor of Commerce.
Student of CA Final.
Has contributed Articles for “AADTIYAVAT” magazine
for CA Students of Ahmedabad.
Has been active member of Team WICASA Ahmedabad
for more than four years.
Has been awarded for “On the spot - Poetry Writing”
by HA College of Commerce, Ahmedabad.
Has been awarded for on the spot photography
competition on subject of "Heritage with Human" by
Ahmedabad Branch of WICASA.
Has been associated as Volunteer with many social
organizations like PETA, Red Cross, etc.
Has been regular Blood Donor.
For May & November 2015 Exam Summary of Salary Head Author = Pratik Kikani
[email protected] Page | 1 www.facebook.com/authorpratikkikani
Sec 14 1) Salary 2) HP 3) PGBP 4) CG 5) IFOS
Sec 14A If any income is exempt from Tax then related Exps are not allowed at all.
Sec 15 Charging Section
Due basis or Receipt basis w.e. Earlier
Except Only on Receipt basis
Bonus, Advance Salary, Arrears of Salary Sub to relief Sec89(1) (Retrospectively increased), Salary in lieu of Notice period
Sec 16 Deductions
16(i) Std Deduction
16(ii) Entertainment Allowance = Govt. Employee only (Actual amt / 20% of Salary / Rs.5000 w.e. lower)
16(iii) Professional / Employment Tax = Whatever amt paid on this account by employee is deductible at all, whether received from employer or not.
Sec 17 Definition
17(1) Salary
It includes
- Basic Salary, Wages
- Annuity, Pension
- Gratuity, Provident Fund, Leave Encashment, Commuted Pension
- Allowances, Perquisites
- Bonus, Commission
- Advance Salary, Profit in Lieu of Salary, Sec 80CCD
17(2) Perquisites
- Rent Free Accommodation provided by Employer to Employee
- Concessional Rent Accommodation provided by Employer to Employee
- Value of any Benefit or amenity Only in case of Specified Employee# (Either free of cost or at Concessional rate)
- Obligation of the employee is met by employer
- Any sum paid to get assurance of Life of the Employee
- Any other Fringe Benefits provided by the Employer as may be prescribed under this act
- Employer’s Contribution in approved superannuation Fund in excess of Rs.100,000
- ESOP or Sweat Eq. Share , Employer gives shares for free or at concessional rate Taxable = FMV on exercise date (less) Recovered amount
# Specified Employee 1) Director of Comp. 2) Having Substantial Interest in concern in which he is employed (20% or more voting
power) 3) Employee getting monetary benefits over Rs.50,000pa*
*50,000pa includes all monetary benefits but excludes (a) Non Taxable / Exempted Monetary benefits (b) Perquisites, and after giving deduction us Sec16(ii) & Sec 16(iii)
17(3) Profit in lieu of Salary
- Any compensation due to or received by any present employer or former employer on account of Termination or Modification of Terms of the employment
- Any compensation due to or received by any person from any other person before the joining or after session of the employment
- Keyman Policy
For May & November 2015 Exam Summary of Salary Head Author = Pratik Kikani
[email protected] Page | 2 www.facebook.com/authorpratikkikani
Retirement Benefits
Sec 10(10) Gratuity
Govt. Employee 100% Exempt
Non Govt. Employee
Covered under Gratuity Act 1972 Not- Covered under Gratuity Act 1972
1) Actual Amt. Least
Is Exempt
1) Actual Amt.
2) Max Rs.10,00,000 2) Max Rs.10,00,000
3) Half Month Salary (15/26 Days) on based on Last drawn Salary for Each completed yrs. of service or Part there of (Note- Round Off nearest)
3) Half Month Salary (15/30 days) on basis of Last 10 months Avg. Salary for each completed years of service. (Note-Backward Round-off)
Salary means = Basic + DA Salary means = Basic + DA (*if) + **%
*If covered under terms of Employment and forming part of Retirement benefits **% of commission on the basis of Turnover achieved by employee
1) Received during employment = 100% Taxable 2) Max limit of Rs.10,00,000 is for Lifetime Limit in together for all employment
Sec 10(10A) Commuted Pension
Govt. Employee 100% Exempt
Non Govt. Employee
Gratuity Received No Gratuity Received
1/3 of 100% Commuted Pension 1/2 of 100% Commuted Pension
Sec 10(10AA) Leave Encashment
Govt. Employee 100% Exempt
Non Govt. Employee 1) Actual Amt. received 2) Max Rs.3,00,000 3) Earned Leave Salary* 4) Max. 10 Month Salary*
Least is exempt
*On basis of immediately preceding 10 months Avg. Salary *Salary = Basic + DA(if) + %
Maximum 30days leave allowed in a year
Sec 10(10B) Retrenchment Compensation
1) Act. Amt. 2) Max. Rs.5,00,000 3) Amt. Calculated as per Industry Dispute Act,1947
Least is Exempt
If approved by Govt. then Fully Exempt
Once in Lifetime available
Sec 10(10C) Voluntary Retirement Compensation
1) Act. Amt. 2) Max. Rs.5,00,000 3) Higher of (a) & (b)
(a) Remaining months of Service X Last Drawn Salary* (b) Completed Yrs. Of Service x 3 x Last Drawn Salary
Least is Exempt
Once in Lifetime available
*Salary = Basic + DA(if) + %
Sec 10(10CC) Tax on Perquisites Born by Employer not taxable in hands of Employee
Provident Fund SPF PPF URPF RPF
1 Employer’s Contribution
Not Taxable
- Not Taxable Excess of 12% Taxable When Withdrawn taxable as Salary
2 Employee Contribution 80C No 80C Hence Not tax when withdrawn 80C
3 Interest credited to PF Not Taxable Not Taxable Excess of 9.5% Taxable When
Withdrawn On Employer Contri. Taxable as Salary
On Employee Contri. Taxable as IFOS
4 Withdrawal Exempt 10(11) Taxable Exempt 10(12)
For May & November 2015 Exam Summary of Salary Head Author = Pratik Kikani
[email protected] Page | 3 www.facebook.com/authorpratikkikani
Allowances
Allowances 100% Tax Free Any allowances in hands of Salary Allowance Perquisites
SC / HC Judges Taxable Exempt Taxable
UNO employee Exempt Exempt Exempt
Employee working for Indian Embassy Taxable Exempt Exempt
Allowances 100% Taxable Dearness , City Compensatory, Tiffin / Lunch, Non- Practicing, Warden/ Proctor, Deputation, Over-time, Fixed Medical, Servant, Family, Project, Marriage, Holiday, Telephone, etc.
Partly Tax free Allowance Children Education Allowances = 100Rs. Per Month Per Child ( subject to Max 2 Children)
Hostel Allowances = 300Rs. Per Month Per Child ( subject to Max 2 Children)
Sec 10(13A) House Rent Allowances Conditions
1) Do not have house in that city 2) Living on Rent and Actually paying Rent
Least is allowed 1) Actual Rent 2) Rent Paid - 10% of Salary* 3) 50% of Salary for Metro City
40% of Salary for Non-Metro *Salary = Basic + DA(if) + % (for the relevant period)
Depending upon actual Exp. Uniform Allowances
Travelling Allowances for Official Tour and Transfer - Including payment of transfer, packing
Daily Allowances
Helper Allowances - Used for performing official duties
Academic Allowances - Used for Academic Research & Training purpose
Conveyance Allowances
Special Compensatory Allowances
Hill Area Allowance = (300pm to 7000pm)
Border Area Allowances = (200pm to 1300pm)
Tribal / Schedule Area Allowances = Rs.200pm
Transport Allowances to Employee working in Transport System (Similar to DA) 70% of such allowance or Rs10,000pm w.e. least
Transport Allowance = Rs.800pm For Blind / Handicap = Rs.1600pm
Sec 10(7) Allowances / Perquisites paid outside India by the Govt. to a citizen of India for rendering service outside India.
Here Salary Taxable but only allowances / Perquisites not taxable
Sec 10(5) Amount received as Leave Travel Concession from Employer
Upto actual Spent is exempt
1) Via Air = Economy Class + short rout
2) Via Rail = 1st Class AC + short rout
3) Via other = 1st class deluxe fare of public transport (if not available then 1st class AC rail fare)
- Two journeys in block of four calendar years
- Family includes = Spouse, Child (max 2) + Wholly dependent parents & siblings
For May & November 2015 Exam Summary of Salary Head Author = Pratik Kikani
[email protected] Page | 4 www.facebook.com/authorpratikkikani
Valuation of Perquisites (Normally in kind but can be in cash)
Note- Amt. charged from Employee to be deducted from Taxable value of Perquisites
Medical Facility
In India Outside India
In Govt. / Approved / Owned Hospital> = 100% Not Taxable Treatment + Lodging = upto limit permit by RBI
Any Other Hospital = upto Rs.15000 Not Taxable Travelling = If GTI is upto Rs200,000 = Not Taxable
*Family covers= Spouse, children, and Dependent Parents, Dependent siblings.
Rent Free Unfurnished Accommodation
Govt. License Fees ( Taxable)
Non Govt.
Owned by Employer Not Owned by Employer
City Having Population Least of the following Taxable Rent
or 15% of Salary Upto 10 Lacs 10 to 25 Lacs Above 25 Lacs
7.5% of Salary 10% of Salary 15% Salary
Rent Free Furnished Accommodation
Owned by Employer = 10% of Actual Cost Not Owned = Hire Charges
Concessional Rent Accommodation = Value of Furnished
Note-1 In case of Transfer from 1place to another = aggregate 15days of Transports for Transfer = Free Accommodation
Note-2 For 1st 90days of Transfer when accommodation has been provided to both new and old place of employment , taxable only lower value of the home accommodation
Note-3 Salary = All monetary Taxable Value not Include PF & DA(if not in terms of employment)
Domestic Servant (gardener, Sweeper, Cook, Watchman, Guard, etc.)
Appoint Employee Employer
Obligation Employer Employer
Use Employee Employee
Pay Employer Employer
Taxable in all cases Taxable in case of Specified Employee
Value of Perquisites = Amt. Actually paid by Employer
Gas , Water , Heater, Electricity
Appoint Employee Employer
Obligation Employer Employer
Use Employee Employee
Pay Employer Employer
Taxable in all cases Taxable in case of Specified Employee
Value of Perquisites
Owned Resources Outside Agency
Cost of Production Amt. Actually Paid by Employer
Free Education
Refresher Course = Tax Free to Employee To employees Family members
Owned College Outside / Other College
Fee Charged by Same type of College in nearby area
Actual amt. paid by Employer
Limit of Rs.1000 pm per child and No number of Child limits apply.
Free / Concessional Journey / Transports
Owned Normal Value of Ticket Railway / Airline 100% Exempted
Life Insurance Premium Paid by Employer = Taxable under Salary on due basis & allowed us 80C on payment basis
Staff Group insurance = Fully Exempted
For May & November 2015 Exam Summary of Salary Head Author = Pratik Kikani
[email protected] Page | 5 www.facebook.com/authorpratikkikani
Fringe Benefits
1 Free Lunch During Working Hours
Not covered Breakfast, Tea, Snacks, and Supper (Means not taxable at all)
Dinner covered if working at night Shift
Upto Rs.50 per meal. i.e. Rs.60 lunch means Rs.10 Taxable
2 Gift In Kind = Taxable in Excess of Rs.5000 as Salary In Cash = Fully Taxable as Salary
3 Club Membership Fees
Not Taxable = Corporate Membership , Common facility to all employees
4 Credit Card Exps.
Including add on cards Reimburse by Employer
Except used for official purposes
Telephone Facility = Personal or Official = Tax Free (Telephone Allowance = Taxable)
5 Interest Free or Concessional Loan
Loan can be = Personal Loan, Car Loan, House Loan, Educational Loan, Other Loan
On Maximum outstanding monthly balance
Charged on as on last date of each month
Rate as charged by SBI on relevant PY’s 1st April
Not covered Loan amounting in total upto Rs.20,000
Loan for Medical Treatment of Specified Disease
6 Use of Movable Assets (except cars) = 10% of Actual Cost or Hire Charges
Not Taxable = Computer & Laptop given to use
7 Transfer of Movable Assets
Asset Type Computer / Laptop / Electronic Gadgets Cars Others
Depreciation 50% pa (WDV) 20%pa (WDV) 10%pa (SLM)
*pa means completed year. i.e 2years 11 months and 29 days then take 2years.
8 Car Facility
Owned By Exps. Incurred By Wholly used for Personally Partly for Personal & Partly for Business
Employee Employee - -
Employee Employer Exp. incurred by Employer Spent by Employer (-) upto 1.6ltr (-) above 1.6ltr + Driver Facility
XXXX (1800pm) (2400pm)
900pm
Employer Employee 10% of Actual Cost as Wear & Tear (like Depreciation)
+ upto 1.6ltr + above 1.6ltr + Driver Facility
600pm 900pm 900pm
Employer Employer Exp. incurred by Employer +
10% of Actual Cost
+ upto 1.6ltr + above 1.6ltr + Driver Facility
1800pm 2400pm 900pm
Notes
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Author – Pratik Kikani Facebook Page [email protected]
Other Books by Author
Validate Digital
Signature in Adobe
Interest Payable
.AMR
DKC Style CA Final RTP
Nov 2014 Solution
PGBP Sums for CA
Final Nov14
PGBP SUMS For CA FINAL MAY2015
Recommended
Wealth Tax Summary May + Nov15
Recommended
“Salarious one is Hilarious one,
Until last week of month.” –Pratik Kikani
DISCLAIMER:
This book is presented solely
for educational purposes. The
author and publisher are not
offering it as legal,
accounting, or other
professional services advice.
While best efforts have been
used in preparing this book,
the author and publisher make
no representations or
warranties of any kind and
assume no liabi lit ies o f any
kind with respect to the
accuracy or completeness of
the contents and specifically
disclaim any implied
warranties of merchantabil ity
or f itness of use for a
particular purpose. Neither
the author nor the publisher
shall be held liable or
responsible to any person or
entity with respect to any loss
or incidental or consequential
damages caused, or alleged to
have been caused, directly or
indirectly, by the information
contained herein. No warranty
may be created or extended by
sales representatives or
written sales materials.
* * * * * * * * * * * * * * * * * * * * * * * * *
Feedback is awaited. Do mail or
connect on Facebook.
Critics are most welcomed.
Author = Pratik Kikani Slab Rates for AY 15-16
For Individual below 60 years of
age
&
HUF / AOP / BOI
For Resident Senior Citizens
(Age 60 years or more but less
than 80 years)
For Resident Senior Citizens
(Age 80 years or more)
Income Level Tax Rate Income Level Tax Rate Income Level Tax
Rate
Upto Rs. 2,50,000 Nil Upto Rs. 3,00,000 Nil -
Rs. 2,50,001 - Rs.
500,000 10%
Rs. 3,00,001 - Rs.
500,000 10% Upto Rs. 5,00,000 Nil
Rs. 500,001 - Rs.
10,00,000 20%
Rs. 500,001 - Rs.
10,00,000 20%
Rs. 5,00,001 - Rs.
10,00,000 20%
Above Rs. 10,00,000 30% Above Rs. 10,00,000 30% Above Rs. 10,00,000 30%
Flat Rate
Domestic Company / Firm 30% Foreign Company 30%
LTCG 20% STCG (STT) 15%
Lottery etc. 30% Education Cess 2% & Secondary & Higher
Education Cess 1% levied on all taxes after
considering Surcharge.
Surcharge
Total Income Exceeds Domestic
Company
Foreign
Company
Individual / HUF / AOP/ BOI / Local
Authority / Co-operative Society
1cr. 5% 2% 10%
10cr. 10% 5% Marginal Relief available to all Types
of Assessee.