TDS ON SALARY M. V. DAMANIA & CO 07/01/2012 SANJAY CHOKSHI.
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Transcript of TDS ON SALARY M. V. DAMANIA & CO 07/01/2012 SANJAY CHOKSHI.
TDS ON SALARY
M. V. DAMANIA & CO
07/01/2012
SANJAY CHOKSHI
TDS ON SALARY
SYNOPSIS1.Tax Deduction as required u/s1922.What salary is charged to Tax u/s153.Deductions in Salary as allowable u/s 164.Salary as Defined u/s 17(1)5.Perquisites as Defined u/s 17(2)6.Profit in lieu of Salary as defined u/s 17(3)7.Valuation of Perquisites under rule 3 SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (1)Person responsible for Payment of SalaryAt the time of PaymentAverage rate of Tax as per the Rates in ForceEstimated income under this head
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (1A) and (1B)In case of PerquisitesPayment of the whole or part of the tax without deduction of TaxTo be deducted on the basis of other salary at the time of such payment
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (2)If the Employee is employed with more than one employer•Simultaneously•SuccessivelyEmployee may provide the details of his salary and TDS thereonRule 26 Form 12BEmployer to account for that income for TDS
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (2B)Relief to be granted u/s 89(1) if applicable by:GovernmentCompanyCo-op. SocietyLocal AuthorityUniversityInstitutionAssociation or BodyRule 21 Form 10EEmployee to account for such relief and deduct tax accordingly
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (2B)If the Employee has income other than SalaryIncome should not be a lossLoss in case of House PropertyProvide information of such income and TDS thereon to the EmployerRule 26B Form No. 12CEmployer to account for such income for the Purpose of TDSResult should not reduce the TDS otherwise deductible
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (2C)Employer to furnish to the employee statement giving correct and complete details:Particulars of SalaryParticulars of PerquisitesProfit in lieu of SalaryRule 26, Form 16 and 12BA
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (3)Permits adjustments to be made during the F. Y. in relation to excess or shortage in deduction during the earlier deductions
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (4)Trustees of Recognised Provident Fund to deduct TDSOn payment of accumulated balances as per Rule 9(1) of Part A of Fourth ScheduleTDS as provided in Rule 10 of Part A of Fourth Schedule
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (5)Trustees of Recognised Superannuation Fund to deduct TDSOn payment of accumulated balances from such fund in relation to contribution made by the employer and interest thereonTDS as provided in Rule 6 of Part B of Fourth Schedule
SANJAY CHOKSHI
TDS ON SALARY U/S. 192
SS (6)In case the salary is paid in Foreign Exchange, the same is to be converted to rupees as per the rates prescribed under RR 26 and 115
SANJAY CHOKSHI
ISSUES ON TDS ON SALARY U/S. 192
Internal Private Agreement between Employer and Employee that The Employer need not deduct Tax and that the employee shall take care of his IT dues
TDS on Judgment DebtsPayment made for securing services of a person
Furlough PayTax on Tax Exclusive Income
SANJAY CHOKSHI
SECTION 15 – CHARGING SECTION IN CASE OF SALARIES
Salary due from an employer or former employer in the previous year
Advance SalaryArrears of Salary
Salary shall not be taxed on accrual if the same is taxed on the basis of advance payment.
Salary paid to partner is taxable as business income and not salary
SANJAY CHOKSHI
SECTION 16 – DEDUCTIONS FROM SALARIES
Entertainment allowance paid to government employees
1/5th of salary (inclusive of any allowance, benefit or other perquisites
Tax on Employment (Profession Tax)
Lower of the two above
SANJAY CHOKSHI
DISTINCTION BETWEEN EMPLOYEE AND AGENT
SANJAY CHOKSHI
Instructions with not only what he has to do but also how he has to do
More direct control No authority to
enter into contract on behalf of the employer
Payment in terms of wages and salaries
Instructions with only what he has to do and not how he has to do
More indirect control Normally enters into
contract on behalf of the principal
Payment by commission
EMPLOYEE AGENT
WHETHER EMPLOYEES OR OTHERWISE
Director of a CompanyManaging Director of a Company
Whole time Director of a company
Financial AdvisorOfficial LiquidatorFilm ArtistLawyer or professionalA doctor working in a hospitalA Chauffer driving a car
SANJAY CHOKSHI
WHETHER SALARY OR OTHERWISE
Director Sitting FeesProfessional Fees Paid to Director for services rendered
Salary paid to Managing Director
Salary paid to Whole time Director
Temporary Labour on daily wages
SANJAY CHOKSHI
WHETHER SALARY OR OTHERWISE
Payment on piece rate to employees
Payment to Professional on time basis
Salary to part time workers
SANJAY CHOKSHI
SECTION 17(1)– DEFINITION OF SALARIES INCLUDES
Wages Annuities and/or Pension Gratuity Fees, commission, perquisites or profit in lieu of or in addition to any salary or wages
Advance salary Leave encashment
SANJAY CHOKSHI
SECTION 17(1)– DEFINITION OF SALARIES INCLUDES
Annual accretion to the balance of the credit of the employee participating in a recognised provident fund to the extent to which it is chargeable to tax under Rule 6 of Part A of the Fourth Schedule
Contribution by Employer in excess of 12 %
Interest accrued in excess of that declared by the Government
SANJAY CHOKSHI
SECTION 17(1)– DEFINITION OF SALARIES INCLUDES
The aggregate of all sums that are comprised in the transferred balance as referred to in sub rule 2 of rule 11 of Part A of the For the Schedule of an employee participating in a recognised provident fund to the extent to which it is chargeable to tax under sub rule 4 thereof.
SANJAY CHOKSHI
SECTION 17(1)– DEFINITION OF SALARIES INCLUDES
Calculation of taxable transferred balance:
Recognisation is granted to an existing unrecognised Fund
Calculation of the taxable amount as per the earlier subsection as if the fund was a recognised fund since inception for each year till date
The sum of such taxable amount is taxable in the current year
SANJAY CHOKSHI
SECTION 17(1)– DEFINITION OF SALARIES INCLUDES
Contribution by an employer to a pension fund referred to in section 80CCD
SANJAY CHOKSHI
SECTION 17(2)– DEFINITION OF PERQUISITES INCLUDES
Value of Rent Free Accommodation provided to the assessee by his employer
Value of any concession in the matter of rent in relation to any accommodation provided to the assessee by his employer
SANJAY CHOKSHI
SECTION 17(2)– DEFINITION OF PERQUISITES INCLUDES
The value of any benefit or amenity granted or provided free of cost or at a concessional rate in any of the following cases:
To an employee director To an employee who is substantially interested in the company
Employee whose salary per annum exceeds Rs. 1 lac.
Vehicle provided for journey from residence to office and return is not included as perquisite
SANJAY CHOKSHI
SECTION 17(2)– DEFINITION OF PERQUISITES INCLUDES
• any sum paid by the employer in respect of any obligation which but for such payment, would have been payable by the assessee
• any sum payable by the employer, whether directly or through a fund, other than a recognised provident fund or an approved superannuation fund or a Deposit-linked Insurance Fund established under section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or, section 6C of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952)], to effect an assurance on the life of the assessee or to effect a contract for an annuity
SANJAY CHOKSHI
SECTION 17(2)– DEFINITION OF PERQUISITES INCLUDES
• the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee.
SANJAY CHOKSHI
SECTION 17(2)– DEFINITION OF PERQUISITES INCLUDES
Explanation : For the purposes of this sub-clause,—(a) "specified security" means the securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme;
(b) "sweat equity shares" means equity shares issued by a company to its employees or directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called;
SANJAY CHOKSHI
SECTION 17(2)– DEFINITION OF PERQUISITES INCLUDES
(c) the value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from the assessee in respect of such security or shares;
(d) "fair market value" means the value determined in accordance with the method as may be prescribed;
(e) "option" means a right but not an obligation granted to an employee to apply for the specified security or sweat equity shares at a predetermined price;
SANJAY CHOKSHI
SECTION 17(2)– DEFINITION OF PERQUISITES INCLUDES
• the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee, to the extent it exceeds one lakh rupees; and
• the value of any other fringe benefit or amenity as may be prescribed
SANJAY CHOKSHI
EXCLUSION FROM FRINGE BENEFIT OR AMENITY
• the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer ;
SANJAY CHOKSHI
EXCLUSION FROM FRINGE BENEFIT OR AMENITY
• any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family—
a. in any hospital maintained by the Government or any local authority or any other hospital approved by the Government for the purposes of medical treatment of its employees;
b. in respect of the prescribed diseases or ailments in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines :
Provided that, in a case falling in sub-clause (b), the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital.
SANJAY CHOKSHI
EXCLUSION FROM FRINGE BENEFIT OR AMENITY
• any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), for the purposes of clause (ib) of sub-section (1) of section 36 ;
• any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his health or the health of any member of his family under any scheme approved by the Central Government or the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999), for the purposes of section 80D ;
SANJAY CHOKSHI
EXCLUSION FROM FRINGE BENEFIT OR AMENITY
• any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family other than the treatment referred to in clauses (i) and (ii); so, however, that such sum does not exceed fifteen thousand rupees in the previous year.
SANJAY CHOKSHI
EXCLUSION FROM FRINGE BENEFIT OR AMENITY
• any expenditure incurred by the employer on—1. medical treatment of the employee, or any member
of the family of such employee, outside India;2. travel and stay abroad of the employee or any
member of the family of such employee for medical treatment ;
3. travel and stay abroad of one attendant who accompanies the patient in connection with such treatment, subject to the condition that—
(A)the expenditure on medical treatment and stay abroad shall be excluded from perquisite only to the extent permitted by the Reserve Bank of India;
and(B)the expenditure on travel shall be excluded from
perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees.
SANJAY CHOKSHI
EXCLUSION FROM FRINGE BENEFIT OR AMENITY
• any sum paid by the employer in respect of any expenditure actually incurred by the employee for any of the purposes specified in clause (vi) subject to the conditions specified in or under that clause.
SANJAY CHOKSHI
SECTION 17(3)– DEFINITION OF PROFIT IN LIEU OF SALARY
INCLUDES
• The amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions of his employment;
SANJAY CHOKSHI
SECTION 17(3)– DEFINITION OF PROFIT IN LIEU OF SALARY
INCLUDES• any payment [other than any
payment referred to in clause (10), (10A), (10B), (11), (12) (13)] or (13A)] of section (10)], due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.
SANJAY CHOKSHI
SECTION 17(3)– DEFINITION OF PROFIT IN LIEU OF SALARY
INCLUDES
• any amount due to or received, whether in lump sum or otherwise, by any assessee from any person
A.before his joining any employment with that person; or
B.after cessation of his employment with that person.
SANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation on the basis amount paid or cost of manufacture, or cost of providing such services:• Sweeper, Gardner, Watchmen
or Personal Attendant• Gas, Electric Energy or Water• Education to any member• Carriage of passengers• Travel, tour and
accommodation.
SANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation in case of Loans:• Interest on similar loans charged
by SBI as on 1/4 of that FY on the maximum outstanding monthly balance
• No interest on loan given for medical treatment of diseases specified in rule 3A. If Loans are reimbursement against Mediclaim, interest on such outstanding shall be considered as perquisites.
SANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation on the basis amount paid or cost of manufacture or of provision of services:• Food and non alcoholic
beverages provided by employer if the same is in excess of Rs. 50/- per meal or tea or snacks provided during working hours
• Value of gifts or vouchers on ceremonial occasions if the same exceeds Rs. 5000/- p.a.
SANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation on the basis amount paid or cost of manufacture or of provision of services:• Personal Expenses paid
through credit card including membership and annual fees.
• If exclusively for official purpose, the valuation shall be nil.
• Proper records to be maintained and a certificate to that effect to be given by employer
SANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation in case of club membership:• Actual expenditure incurred or
reimbursement• In case of corporate membership,
initial fees paid for acquiring such membership not to be included
• If exclusively for official purpose, the valuation shall be nil, provided proper records to be maintained and a certificate to that effect to be given by employer
• Not applicable to use of sports, health club or similar facility provided uniformly to all employees
SANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation of use of moveable asset other than furniture and computers:• In case owned by employee – 10% of cost• In case rented – actual rent paidSANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation in case of transfer of moveable asset:• Actual cost of asset reduced by depreciation @ 10% for each completed year on WDV method
• In case of Computers the rate of Depreciation shall be 50%
• In case of Cars the rate of Depreciation shall be 20%
SANJAY CHOKSHI
RULE 3– VALUATION OF PERQUISITES
• Valuation of any other benefit, amenity, right or privilege:• Cost to employer under an arm’s length price• Not applicable in relation to telephone and mobile phone.
SANJAY CHOKSHI
THANK YOU
SANJAY CHOKSHI