WELCOME Presentation by: Sri MD.ZAKIR ALI UTFVSP.

WELCOMEWELCOME

Presentation by:Presentation by:

Sri MD.ZAKIR ALISri MD.ZAKIR ALI

UTFVSPUTFVSP

Salary TaxationSalary TaxationSalary TaxationSalary Taxation

topicstopicstopicstopics

SALARYSALARY COMPONENTS OF SALARYCOMPONENTS OF SALARY WHAT IS PERK & WHICH ARE NOT WHAT IS PERK & WHICH ARE NOT

INCLUDED IN PERK ?INCLUDED IN PERK ? INCOMES WHICH DO NOT FORM PART INCOMES WHICH DO NOT FORM PART

OF TOTAL INCOMEOF TOTAL INCOME.. VARIOUS DEDUCTIONSVARIOUS DEDUCTIONS.. TDS ONTDS ON SALASALARIESRIES

What is salaryWhat is salary ? ?• Any Payment made by an employer /person

responsible for payment to an employee who is appointed under specific employment rules either express or implied terms

• Relationship necessary

• Right to supervise & control the work

1. Accommodation

2. Personal attendants

3. Gas, electricity & water

4. Free or concessional education

5. Interest free or concessional loans

6. Use of movable assets other than computers or

laptops

7. Transfer of movable assets

PERQUISITES

• For purpose of valuation of the perquisite of unfurnished accommodation, all employees are divided into two categories : (i) Central Government & State Government employees; and (ii) Others.

• For employees of the Central and State Governments the value of perquisite shall be equal to the license fee charged for such accommodation as reduced by the rent actually paid by the employee.

PERQUISITESPERQUISITES

• For all others, (a) Owned by the employerOwned by the employer

15% of ‘salary’ – Population > 25 lakhs 10% of Salary - Population = 10-25 lakhs 7½ % of Salary - other places

(b) Accommodation Lease/rent by the employerAccommodation Lease/rent by the employerThe prescribed rate is 15 per cent of the

salary or the actual amount of lease rental payable by the employer, whichever is lower, as

reduced by amount of rent paid by the employee.


• Furnished accommodation,:• (i) 10 per cent of the cost of

furniture (ii) Hire - amount of actual hire

charges

• as reduced by any charges paid by the employee himself.


What is not a perkWhat is not a perk

• Medical benefits provided by employer in hospital maintained by him.

• Expenditure by employer on treatment in a hospital maintained by govt. or local authority or in a hospital approved by CCIT.

• In other cases, reimbursementreimbursement of medical treatment-expenses by employer up to maximum Rs. 15000

Perks : No TAXPerks : No TAX• Conveyance to and from residence to place of work

upto Rs.800 p.m.(1600 in case of blind or PH)• periodicals and journals required for discharge of

work• expenses on telephones including a mobile phone • Any allowance which is paid in the form

of travelling, conveyance, uniform, if incurred wholly for official purposes

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

These payments will not be part of salary subject to limits prescribed

o LTC (Sec. 10(5))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))

L T CL T COn Leave to any place in India

ConditionsConditions:Economy fare of the National carrier.

A/C first class fare (When connected with train).

First Class or deluxe fare where recognized transport system exists, otherwise A/C First Class rail fare.

Two Journeys in a block of four calendar years.

Concession available to individual / family but shall not be available to more than two surviving children.

Voluntary RetirementVoluntary Retirement• Not exceeding 5 lakhs • Applicable to companies / local authorities/

Co-opperative society/ university/IIT/notified institutions/ notified IIMs

• Conditions in Rule 2BA • No 89(1) relief.

GratuityGratuity

• Covered by gratuity Act• Death Cum Retirement Gratuity received

by the Central Govt./State Govt. /Local Authorities.

• Any other gratuity not exceeding half month salary for each year of completed service, subject to limit of Rs. 10,00,000/-.

Commuted value of pensionCommuted value of pension

• Commuted pension covered by any pension fund covered by s.10(23AAB)

• In any other case i) Commuted value of 1/3rd of pension if the

employee received gratuity also ii) other wise, commuted value of half of

pension.• Central /State /Local Auth./Corporations –

Any Payment.

• 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 specified by the Government of India Notification No. S.O. 588(E), dated 31-5-2002 at Rs. 3,00,000.

EL EncashmentEL Encashment

• Actual HRA.

• Rent paid in excess of 1/10th of salary

• 50% of salary in metro cities

• 40% in other salary.

H R AH R A Sec 10(13)Sec 10(13)

Deduction on income fromDeduction on income fromHouse propertyHouse property

• A normal deduction of Rs. 30,000 is allowed in respect of interest on capital borrowed prior to 1-4-99 in the case of self occupied property whose annual value is nil.

• 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 resid. 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

Other deductions Other deductions

• 80D – Medical insurance premium paid• 80DD Payment for treatment of dependent

person with disability.• 80DDB Medical treatment of dependent or self

for specified disease/ailment• 80E Interest on loan taken for self higher

education• 80G Donations to certain funds etc.• 80U assessee is person with disability

Chapter VI A deductionsChapter VI A deductions

• 80C for various investments mentioned there in• Annuity plans u/s 80CCC by any insurer• Contributions to contributory pension scheme of the central

Govt u/s 80CCD• Sum of deductions of the above shall not exceed Rs.1

lakh(80CCE)• Deductions u/s 80D,80DD and 80DDB w.r.t. medical related

expenses on premia, treatment of self or dependents are available in addition to the Rs.1lakh

• u/s 80CCE upto the amounts of Rs.15000(20000 for sr.citizens), 50000(75000 for disables) respectively.

• Deductions u/s. 80DDB and 80G shall not be allowed by the employer

• Deductions u/s. 80D, 80DD, 80E, 80U shall be allowed only on the basis of certificate issued by the prescribed authority

• Form 10BA shall be obtained from the employee to allow deduction u/s. 80GG w.r.t. rent paid by the employees who are not covered u/s. 10(13)

• Form 10E shall be obtained to allow claim of relief u/s. 89(1)

Chapter VI A deductionsChapter VI A deductions

Education loanEducation loan– Section 80E - a deduction, of interest available for eight

assessment years which was taken for the purpose pursuing higher education of the assessee and any of his relative. The relief was not allowed to the parents, but to the student himself when he starts repaying the amount.

– Higher education means full time studies for any graduate or post graduate course in engineering, medicine, management or for post graduate course in applied sciences or pure science including mathematics and statistics.

– Also allow the deduction of interest on loan taken by an individual for higher education of his relative also.

– Relative means for the purposes of section 80E so as to mean spouse and children of the individual.

– This amendment will take effect from 1st April, 2008

• The contribution made by the central govt. not exceeding 10% of the salary of the individual employee is also allowed as a deduction U/s. 80CCD(2).

Pension SchemePension Scheme

Attn: Govt. DDOs’Attn: Govt. DDOs’

(a)submit a statement in Form No. 24G within ten days from the end of the month to the agency authorised 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.

CERTIFICATE OF TDS TO BE CERTIFICATE OF TDS TO BE

FURNISHED UNDER SECTION 203.FURNISHED UNDER SECTION 203.

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”.

Form No.

Periodicity Due date

16 Annual By 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted

PERIODICITY OF FORMSPERIODICITY OF FORMS

The deductor may issue a duplicate certificate in Form No. 16 , if the deductee has lost the original certificate so issued and makes a request for issuance of a duplicate certificate and such duplicate certificate is certified as duplicate by the deductor.

FORM 16FORM 16

Revised Form -16

Annexure –A of Revised Form -16

Government deductors to enclose Annexure-A if tax is paid without production of an income-tax challan

Annexure –B of Revised Form -16

Non-Government deductors and if tax is paid accompanied by an income-tax challan

Form -24G

• Research funds – amounts paid to Employee Doctors by Autonomous Institutions.

Salary u/s 192Salary u/s 192

• Not calculating the perquisites, like accommodation, interest free loans, facilities like sweeper, gardener etc.

• Free supply of electricity


• Payments made to Govt. Doctors under Rajiv Arogyasree Scheme.


You may not be able to cover the tax liability.

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

I will submit the details in February

NOT DEDUCTING TAX NOT DEDUCTING TAX STARTING FROM STARTING FROM FINANCIAL YEARFINANCIAL YEAR

Withholding of salary leading to grievance of employees.

Employee paying tax on his own indicating failure of the DDO.

Don’t deduct, I will pay


NON DEDUCTIONNON DEDUCTION• Payments

made to local authorities which are taxable.

Please deduct tax

• 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 PonderPoints to Ponder

??

• Research funds – amounts paid to Employee Doctors by Autonomous Institutions.


• Not calculating the perquisites, like accommodation, interest free loans, facilities like sweeper, gardener etc.

• Free supply of electricity


• Payments made to Govt. Doctors under Rajiv Arogyasree Scheme.


You may not be able to cover the tax liability.

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

I will submit the details in February


Withholding of salary leading to grievance of employees.

Employee paying tax on his own indicating failure of the DDO.

Don’t deduct, I will pay


• Timely action• Penalty Notices for non filing of

Quarterly statements particulary to Govt. DDO’s.

• Form 16 Verification• Payments made to employees in various

other heads

Suggestions to check Suggestions to check compliance compliance

• Insisting on filing of 24G Statements by Treasury officers

• Limited inspection on regular basis before December in the cases of Govt/PSU and autonomous organisations.

Suggestions to check Suggestions to check compliance compliance

Thank youThank you

WELCOME Presentation by: Sri MD.ZAKIR ALI UTFVSP.

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