SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE FINANCIAL YEAR 2013-14 UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961. RATES OF INCOME-TAX AS PER FINANCE ACT, 2013: As per the Finance Act, 2013, income-tax is required to be deducted under Section 192 of the Act from income chargeable under the head Salaries for the financial year 2013-14 (i.e. Assessment Year 2014-15) at the following rates: 2.1 Rates of tax A. Normal Rates of tax: No Total Income Rate of tax 1 Where the total income does not exceed Rs. 2,00,000/-. Nil 2 Where the total income exceeds Rs. 2,00,000 but does not exceed Rs. 5,00,000/- . 10 per cent of the amount by which the total income exceeds Rs. 2,00,000/- 3 Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. Rs. 30,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-. 4 Where the total income exceeds Rs. 10,00,000/-. Rs. 1,30,000/- plus 30 Per cent of the amount by which the total income exceeds Rs. 10,00,000/- B. Rates of tax for every individual, resident in India, who is of the age of sixty years or more but less than eighty years at any time during the financial year: Sl No Total Income Rate of tax 1 Where the total income does not exceed Rs. 2,50,000/- Nil 2 Where the total income exceeds Rs. 2,50,000 but does not exceed Rs. 5,00,000/- 10 per cent of the amount by which the total income exceeds Rs. 2,50,000/- 3 Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-. 4 Where the total income exceeds Rs. 10,00,000/- Rs. 1,25,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/- C. In case of every individual being a resident in India, who is of the age of eighty years or more at any time during the financial year: Sl No Total Income Rate of tax 1 Where the total income does not exceed Rs. 5,00,000/- Nil 2 Where the total income exceeds Rs. 5,00,000 but does not exceed Rs. 10,00,000/- 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/- 4 Where the total income exceeds Rs. 10,00,000/- Rs. 1,00,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/- 2.2 Surcharge on Income tax: The amount of income-tax shall be increased by a surcharge @10% of the Income-tax on payments to an individual taxpayer, if the total income of the individual exceeds Rs 1 crore during FY 2013-14 (AY 2014-15). However the amount of Surcharge shall not exceed the amount by which the individual’s total income exceeds Rs 1 crore and if surcharge so arrived at, exceeds such amount (assessee’s total income minus one crore) then it will be restricted to the amount of total income minus Rupees one crore. 2.3.1 Education Cess on Income tax: The amount of income-tax including the surcharge if any, shall be increased by Education Cess on Income Tax at the rate of two percent of the income-tax. 2.3.2 Secondary and Higher Education Cess on Income-tax: An additional cess is chargeable at the rate of one percent of income-tax including the surcharge if any, but not including the Education Cess on income tax as in 2.3.1. 4.4.1. Due dates for payment of TDS Prescribed time of payment/deposit of TDS to the credit of Central Government account is as under: a) In case of an Office of Government: Sl No. Description Time up to which to be deposited. 1 Tax deposited without Challan [Book Entry] SAME DAY 2 Tax deposited with Challan 7TH DAY NEXT MONTH 3 Tax on perquisites opt to be deposited by the employer. 7TH DAY NEXT MONTH b) In any case other than an Office of Government Sl No. Description Time up to which to be deposited. 1 Tax deducted in March 30th APRIL NEXT FINANCIAL YEAR 2 Tax deducted in any other month 7TH DAY NEXT MONTH 3 Tax on perquisites opted to be deposited by the employer 7TH DAY NEXT MONTH However, if a DDO applies before the jurisdictional Additional/Joint Commissioner of Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allows for payments on quarterly basis and as per time given in Table below: Sl. No. Quarter of the financial year ended on Date for quarterly payment 1 30th June 7th July 2 30th September 7th October 3 31st December 7th January 4 31st March 30th April next Financial Year Furnishing of Certificate for Tax Deducted (Section 203): 4.6.1 Section 203 requires the DDO to furnish to the employee a certificate in Form 16 detailing the amount of TDS and certain other particulars. The Act stipulates that Form 16 should be furnished to the employee by 31st May after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. Revised Form 16 annexed to Notification No 11 dated 19-02-2013 is enclosed. The certificate in Form 16 shall specify (a) Valid permanent account number (PAN) of the deductee; (b) Valid tax deduction and collection account number (TAN) of the deductor; (c) (i) Book identification number or numbers (BIN) where deposit of tax deducted is without production of challan in case of an office of the Government; (ii) Challan identification number or numbers (CIN*) in case of payment through bank. (*Challan identification number (CIN) means the number comprising the Basic Statistical Returns (BSR) Code of the Bank branch where the tax has been deposited, the date on which the tax has been deposited and challan serial number given by the bank.) (d) Receipt numbers of all the relevant quarterly statements in case the statement referred to in clause (i) is for tax deducted at source from income chargeable under the head “Salaries”. The receipt number of the quarterly statement is of 8 digit. Further as per Circular 04/2013 dated 17-04-2013 all deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall issue the Part A of Form No. 16, by generating and subsequently downloading it through TRACES Portal and after duly authenticating and verifying it, in respect of all sums deducted on or after the 1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of Form No 16 shall have a unique TDS certificate number. Part B (Annexure) of Form No. 16 shall be prepared by the deductor manually and issued to the deductee after due authentication and verification alongwith the Part A of the Form No. 16. It may be noted that under the new TDS procedure, the accuracy and availability of TAN, PAN and receipt number of TDS statement filed by the deductor will be unique identifier for 9 granting online credit for TDS. Hence due care should be taken in filling these particulars. Due care should also be taken in indicating correct CIN/ BIN in TDS certificate. If the DDO fails to issue these certificates to the person concerned, as required by section 203, he will be liable to pay, by way of penalty, under section 272A(2)(g), a sum which shall be Rs.100/- for every day during which the failure continues. It is, however, clarified that there is no obligation to issue the TDS certificate in case tax at source is not deductible/deducted by virtue of claims of exemptions and deductions. [Note: TRACES is a web-based application of the Income - tax Department that provides an interface to all stakeholders associated with TDS administration. It enables viewing of challan status, downloading of NSDL Conso File, Justification Report and Form 16 / 16A as well as viewing of annual tax credit statements (Form 26AS). Each deductor is required to Register in the Traces portal. Form 16/16A issued to deductees should mandatorily be generated and downloaded from the TRACES portal] 4.6.2. If an assessee is employed by more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers and Part B may be issued by each of the employers or the last employer at the option of the assessee. 4.9 Statement of deduction of tax under section 200(3) [Quarterly Statement of TDS]: 4.9.1 The person deducting the tax (employer in case of salary income), is required to file duly verified Quarterly Statements of TDS in Form 24Q for the periods [details in Table below] of each financial year, to the TIN/facilitation Centres authorized by DGIT (System’s) which is currently managed by M/s National Securities Depository Ltd (NSDL). Particulars of e-TDS Intermediary at any of the TIN Facilitation Centres are available at incometaxindia.gov.in and tin-nsdl portals. The requirement of filing an annual return of TDS has been done away with w.e.f. 1.4.2006. The quarterly statement for the last quarter filed in Form 24Q (as amended by Notification No. S.O.704(E) dated 12.5.2006) shall be treated as the annual return of TDS. Due dates of filing this statement quarterwise is as in the Table below. TABLE: Dates of filing Quarterly Statements E-TDS Return 24Q Sl No Return for Quarter ending Due date for GovernmentOffices Due date for OtherDeductors 1 30th June 31st July 15th July 2 30th September 31st October 15th October 3 31st December 31st January 15th January 4 31st March 15th May 15th May Fee for default in furnishing statements (Section 234E): If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) in respect of tax deducted at source on or after 1.07.2012 he shall be liable to pay, by way of fee a sum of Rs. 200 for every day during which the failure continues. However, the amount of such fee shall not exceed the amount of tax which was deductible at source. This fee is mandatory in nature and to be paid before furnishing of such statement. 4.9.5 Penalty for failure in furnishing statements or furnishing incorrect information (section 271H): If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) or furnishes an incorrect statement, in respect of tax deducted at source on or 12 after 1.07.2012, he shall be liable to pay, by way of penalty a sum which shall not be less than Rs. 10,000/- but which may extend to Rs 1,00,000/-. However, the penalty shall not be levied if the person proves that after paying TDS with the fee and interest, if any, to the credit of Central Government, he had delivered such statement before the expiry of one year from the time prescribed for delivering the statement. Medical Reimbursement by the employer exceeding Rs. 15,000/- p.a. u/s 17(2) is to be taken as perquisite. It is further clarified that the rule position regarding valuation of perquisites are given at section 17(2) of the Act and in rule 3 of the Rules. The deductors may look into the above provisions carefully before they determine the perquisite value for deduction purposes. It is pertinent to mention that benefits specifically exempt u/s 10(13A), 10(5), 10(14), 17 etc. of the Act would continue to be exempt. These include benefits like house rent allowance, leave travel concession, travel on tour and transfer, daily allowance to meet tour expenses as prescribed, medical facilities subject to conditions. The CBDT has prescribed guidelines for the purpose of Section 10(14) (i) & 10 (14) (ii) vide notification No.SO 617(E) dated 7th July, 1995 (F.No.142/9/95-TPL)which has been amended vide notification SO No.403(E) dt 24.4.2000 (F.No.142/34/99-TPL). The transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of duty is exempt to the extent of Rs.800 p. m. or Rs1600 p.m (for a blind person) vide notification S.O.No. 395(E) dated 13.5.98. Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.1,00,000/-: Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee. Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, prenursery and nursery classes. It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature. It is emphasized that as per the section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) shall not exceed Rs.1,00,000/-. However the contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD(2) shall be excluded from the limit of Rs.1,00,000/- provided under this Section. Deductions in respect of maintenance including medical treatment of a dependent who is a person with disability (section 80DD): Under section 80DD, where an employee, who is a resident in India, has, during the previous year- (a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or (b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the employee shall be allowed a deduction of a sum of fifty thousand rupees from his gross total income of that year. However, where such dependant is a person with severe disability, an amount of one hundred thousand rupees shall be allowed as deduction subject to the specified conditions. The deduction under (b) above shall be allowed only if the following conditions are fulfilled:- (i) the scheme referred to in (b) above provides for payment of annuity or lump sum amount for the benefit of a dependant, being a person with disability, in the event of the death of the individual in whose name subscription to the scheme has been made; (ii) the employee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability. However, if the dependant, being a person with disability, predeceases the employee, an amount equal to the amount paid or deposited under sub-para(b) above shall be deemed to be the income of the employee of the previous year in which such amount is received by the employee and shall accordingly be chargeable to tax as the income of that previous year. 5.5.7.2 Deductions in respect of a person with disability (section 80U): Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of fifty thousand rupees. However, where such individual is a person with severe disability, a higher deduction of one lakh rupees shall be allowable. DDOs should note that 80DD deduction is in case of the dependent of the employee whereas 80U deduction is in case of the employee himself. However under both the Sections the employee shall furnish to the DDO following: 1. A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein. 2. Further in cases where the condition of disability is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO. Deduction in respect of interest on loan taken for residential house property (Section 80EE): Vide Finance Act 2013, an individual is allowed a deduction upto a limit of Rs 1,00,000 being paid as interest on a loan taken from a Financial Institution, sanctioned during the period 01-04- 2013 to 31-03-2014 (loan not to exceed Rs 25 lakhs) for acquisition of a residential house whose value does not exceed Rs 40 lakhs. However the deduction is available if the assessee does not own any residential house property on the date of sanction of the loan. Deductions on respect of donations to certain funds, charitable institutions, etc. (Section 80G): Section 80G provides for deductions on account of donation made to various funds , charitable organizations etc. In cases where employees make donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate 37 to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf - Circular No. 2/2005, dated 12-1-2005. No deduction under this section is allowable in case of amount of donation if exceeds Rs 10000/- unless the amount is paid by any mode other than cash. 5.5.12 Deductions is respect of rents paid (Section 80GG): Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :- (a) the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act; (b) the employee files the declaration in Form No.10BA. (Annexure X) (c) The employee does not own: (i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or (ii) at any other place, any residential accommodation which is in the occupation of the employee, the value of which is to be determined under section 23(2)(a) or section 23(4)(a), as the case may be. (d) He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or Rs. 2,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG. The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent.] Section 80TTA has been introduced from the Financial Year 2012-13 and it allows to an employee from his gross total income if it includes any income by way of interest on deposits (not being time deposits) in a savings account, a deduction amounting to: (i) in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and (ii) in any other case, ten thousand rupees. REBATE OF RS 2000 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO RS 5 LAKH [SECTION 87A] Finance Act 2013 has provided relief in the form of rebate to individual taxpayers, resident in India, who are in lower income bracket, i. e. having total income not exceeding Rs 5,00,000/-. The amount of rebate is Rs 2000/- or the amount of tax payable, whichever is lower.
Posted on: Wed, 22 Jan 2014 06:59:20 +0000
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