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Income-tax deduction from salaries during the financial year 2017-18 under section 192 of the Income-tax Act, 1961
January, 08th 2018
           GOVERNMENT OF INDIA
           MINISTRY OF FINANCE
         (DEPARTMENT OF REVENUE)
      CENTRAL BOARD OF DIRECT TAXES




       DEDUCTION OF TAX AT SOURCE-
   INCOME-TAX DEDUCTION FROM SALARIES
UNDER SECTION 192 OF THE INCOME-TAX ACT, 1961

     DURING THE FINANCIAL YEAR 2017-18




             CIRCULAR NO 29 /2017




        NEW DELHI, the 5th December, 2017
                                          Index

Para No.                                                                             Page No.
1.         General                                                                   1
2.         RATES OF INCOME-TAX AS PER FINANCE ACT, 2017                              1
           2.1 Rates of tax                                                          1
           2.2 Surcharge of Income tax                                               2
           2.3.1 Education Cess on Income tax                                        2
           2.3.2 Secondary and Higher Education Cess on Income tax                   3
  3        BROAD SCHEME OF TAX DEDUCTION AT SOURCE FROM                              3
           SALARIES
           3.1 Method of Tax Calculation                                             3
           3.2 Payment of Tax on Non monetary Perquisites by Employer                3
           3.2.1 Computation of Average Income Tax                                   3
           3.3 Salary From More Than One Employer                                    4
           3.4 Relief When Salary Paid in Arrear or Advance                          4
           3.5 Information regarding Income under any Other head                     4
           3.6 Computation of Income under the head " Income from house              5
           property'
           3..7 Adjustment for Excess or Shortfall of Deduction                      6
           3.8 Salary Paid in Foreign Currency                                       6
      4    PERSONS RESPONSIBLE FOR DEDUCTION OF TAX AND                              6
           THEIR DUTIES
           4.1 Stipulation of section 204 of the Act                                 6
           4.2 Tax determined to be deducted from Salary u/s 192                     6
           4.3 Deduction of Tax at Lower Rate                                        6
           4.4 Deposit of Tax Deducted                                               6
           4.4.1 Due dates for payment of TDS                                        6
           4.4.2 Mode of payment of TDS                                              7
           4.5 Interest, Fee, Penalty& Prosecution for Failure to Deposit Tax        8
           Deducted
           4.6 Furnishing of Certificate for Tax Deducted (Section 203)              8
           4.7Mandatory Quoting of PAN and TAN                                       11
           4.8 Compulsory Requirement to furnish PAN by employee (Section            12
           206AA)
           4.9 Statement of Deduction of tax under of section 200 (3) [Quarterly     12
           Statement of TDS]
           4.10 TDS on Income from Pension                                           14
           4.11 Matters pertaining to the TDS made in case of Non Resident           14
      5    COMPUTATION OF INCOME UNDER THE HEAD "SALARIES"                           14
           5.1 Income chargeable under the head "Salaries":                          14
           5.2 Definition of "Salary", "perquisite" and "profit in lieu of salary"   15
           (Section 17)
           5.3 Income not included under the Head "Salaries" (Exemptions)            23
           5.4 Deduction u/s 16 of the Act form the Income from Salaries             28
           5.5 Deductions under Chapter VI-A of the Act                              28
      6    REBATE OF RS. 2500 FOR INDIVIDUAL HAVING TOTAL                            40
       INCOME UPTO RS. 3.5 LAKH (SECTON 87A)
 7     TDS ON PAYMENT OF ACCUMULATD BALANCE UNDER             41
       RECOGNISED PROVIDENT FUND AND CONTIBUTION FROM
       APPROVED SUPERANNUATION FUND.
 8     DDOS TO SATISFY THEMSELVES OF THE GENUINENESS OF       41
       CLAIM
 9     CALCULATION OF INCOME-TAX TO BE DEDUCTED               41
10     MISCELLENOUS                                           42

                            ANNEXURE

 1     SOME ISSUSTRATIONS                                     46-58
 II    FORM NO 12BA                                           59-60
IIa    FORM NO 12BB                                           61-62
III    REVISED PROCEDURE FOR FURNISHING QTLY E-TDS/TCS        63-64
       STATEMENT BY DEDUCTORS/COLLECTORS
IV     THE PROCEDURE OF FURNISHING FORM 24G                   65-71
 V     PERSON RESPONSIBLE FOR FILING FORM 24G IN CASE OF      72
       STATE GOVT DEPARTMENTS/CENTRAL GOVT
       DEPARTMENTS
VI     PROCEDURE OF PREPARATION OF QUARTERLY                  73-75
       STATEMENT OF DEDUCTION OF TAX u/s 200 (3)
VII    DEPTT. OF ECO. AFFAIRS NOTIFICATION DATED 22.12.2013   76
VIII   BOARD'S NOTIFICATION DATED 24.11.2000                  77-78
IX     BOARD'S NOTIFICATION DATED 29.01.2001                  79
 X     FORM NO. 10 BA                                         80
                                                              CIRCULAR NO : 29 /2017
                               F.No. 275/192/2017-IT(B)
                                  Government of India
                                   Ministry of Finance
                                Department of Revenue
                              Central Board of Direct Taxes
                                        ******

                                                                   North Block, New Delhi
                                                              Dated the 5th December, 2017


SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE
         FINANCIAL YEAR 2017-18 UNDER SECTION 192 OF THE
         INCOME-TAX ACT, 1961.
                             *****

       Reference is invited to Circular No. 01/2017 dated 02.01.2017 whereby the rates
of deduction of income-tax from the payment of income under the head "Salaries" under
Section 192 of the Income-tax Act, 1961 (hereinafter `the Act'), during the financial year
2016-17, were intimated. The present Circular contains the rates of deduction of income-tax
from the payment of income chargeable under the head "Salaries" during the financial
year 2017-18 and explains certain related provisions of the Act and Income-tax Rules, 1962
(hereinafter the Rules). The relevant Acts, Rules, Forms and Notifications are available at
the website of the Income Tax Department- www.incometaxindia.gov.in.

2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2017:

As per the Finance Act, 2017, income-tax is required to be deducted under Section 192 of
the Act from income chargeable under the head "Salaries" for the financial year 2017-18
(i.e. Assessment Year 2018-19) at the following rates:

2.1 Rates of tax

A.     Normal Rates of tax:

 Sl          Total Income                                   Rate of tax
 N
 o
 1 Where the total income does not                              Nil
    exceed Rs. 2,50,000/-.
 2 Where the total income exceeds     5 per cent of the amount by which the total income
    Rs. 2,50,000/- but does not       exceeds Rs. 2,50,000/-
    exceed Rs. 5,00,000/-.
 3 Where the total income exceeds     Rs. 12,500/- plus 20 per cent of the amount by which the
    Rs. 5,00,000/- but does not       total income exceeds Rs. 5,00,000/-.
    exceed Rs. 10,00,000/-.
 4 Where the total income exceeds     Rs. 1,12,500/- plus 30 per cent of the amount by which
    Rs. 10,00,000/-.                  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               Total Income                                  Rate of tax
 No
  1      Where the total income does not    Nil
         exceed Rs. 3,00,000/-
  2      Where the total income exceeds     5 per cent of the amount by which the total
         Rs. 3,00,000 but does not exceed   income exceeds Rs. 3,00,000/-
         Rs. 5,00,000/-
  3      Where the total income exceeds     Rs. 10,000/- plus 20 per cent of the amount by
         Rs. 5,00,000/- but does not        which the total income exceeds Rs. 5,00,000/-.
         exceed Rs. 10,00,000/-
  4      Where the total income exceeds     Rs. 1,10,000/- plus 30 per cent of the amount by
         Rs. 10,00,000/-                    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                Total Income                                  Rate of tax
 No
  1      Where the total income does not      Nil
         exceed Rs. 5,00,000/-
  2      Where the total income exceeds       20 per cent of the amount by which the total
         Rs. 5,00,000 but does not exceed     income exceeds Rs. 5,00,000/-
         Rs. 10,00,000/-
  4      Where the total income exceeds       Rs. 1,00,000/- plus 30 per cent of the amount by
         Rs. 10,00,000/-                      which the total income exceeds Rs. 10,00,000/-

2.2      Surcharge on Income tax:

The amount of income-tax computed in accordance with the preceding provisions of this
Paragraph, or the provisions of section 111A or section 112 of the Act, shall, in the case of
every individual or Hindu undivided family or association of persons or body of individuals,
whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii)
of clause (31) of section 2 of the Act, will be as under:

      (a) having a total income exceeding fifty lakh rupees but not exceeding one crore rupees,
          at the rate of ten percent of such income-tax and
      (b) having a total income exceeding one crore rupees, at the rate of fifteen percent of
          such income-tax:

Provided that in the case of persons mentioned above having total income exceeding;-

      (a) Fifty lakh rupees but not exceeding one crore rupees, the total amount payable as
          income-tax and surcharge on such income shall not exceed the total amount payable
          as income-tax on a total income of fifty lakh rupees by more than the amount of
          income that exceeds fifty lakh rupees;
      (b) one crore rupees, the total amount payable as income-tax and surcharge on such
          income shall not exceed the total amount payable as income-tax on a total income of
          one crore rupees by more than the amount of income that exceeds one crore rupees.
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 education 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.

3. SECTION 192 OF THE INCOME-TAX ACT, 1961: BROAD SCHEME OF TAX
DEDUCTION AT SOURCE FROM "SALARIES":

3.1 Method of Tax Calculation:

Every person who is responsible for paying any income chargeable under the head
"Salaries" shall deduct income-tax on the estimated income of the assessee under the head
"Salaries" for the financial year 2017-18. The income-tax is required to be calculated on the
basis of the rates given above, subject to the provisions related to requirement to furnish
PAN as per sec 206AA of the Act, and shall be deducted at the time of each payment. No
tax, however, will be required to be deducted at source in any case unless the estimated
salary income including the value of perquisites, for the financial year exceeds Rs.
2,50,000/- or Rs.3,00,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of
the employee.(Some typical illustrations of computation of tax are given at Annexure-I).

3.2 Payment of Tax on Perquisites by Employer:

An option has been given to the employer to pay the tax on non-monetary perquisites given
to an employee. The employer may, at its option, make payment of the tax on such
perquisites himself without making any TDS from the salary of the employee. However,
the employer will have to pay the tax at the time when such tax was otherwise deductible
i.e. at the time of payment of income chargeable under the head "salaries" to the employee.

3.2.1 Computation of Average Income Tax:

For the purpose of making the payment of tax mentioned in para 3.2 above, tax is to be
determined at the average of income tax computed on the basis of rate in force for the
financial year, on the income chargeable under the head "salaries", including the value
of perquisites for which tax has been paid by the employer himself.

3.2.2 Illustration:

The income chargeable under the head "salaries" of an employee below sixty years of age
for the year inclusive of all perquisites is Rs. 4,50,000/-, out of which, Rs. 50,000/- is on
account of non-monetary perquisites and the employer opts to pay the tax on such
perquisites as per the provisions discussed in para 3.2 above.

STEPS:

    Income Chargeable under the head "Salaries"       Rs. 4,50,000/-
    inclusive of all perquisites
    Tax on Total Salary (including Cess)              Rs. 10,300/-
    Average Rate of Tax [(10,300/4,50,000) X 100]     2.29%
    Tax payable on Rs.50,000/= (2.29% of 50,000)      Rs. 1145/-
    Amount required to be deposited each month        Rs. 95 ((Rs. 95.42) =1145/12)

The tax so paid by the employer shall be deemed to be TDS made from the salary of the
employee.

3.3 Salary From More Than One Employer:

 Section 192(2) deals with situations where an individual is working under more than one
employer or has changed from one employer to another. It provides for deduction of tax at
source by such employer (as the tax payer may choose) from the aggregate salary of the
employee, who is or has been in receipt of salary from more than one employer. The
employee is now required to furnish to the present/chosen employer details of the income
under the head "Salaries" due or received from the former/other employer and also tax
deducted at source therefrom, in writing and duly verified by him and by the
former/other employer. The present/chosen employer will be required to deduct tax at
source on the aggregate amount of salary (including salary received from the former or other
employer).

3.4 Relief When Salary Paid in Arrear or Advance:

3.4.1 Under section 192(2A) where the assessee, being a Government servant or an
employee in a company, co-operative society, local authority, university, institution,
association or body is entitled to the relief under Section 89(1) he may furnish to the
person responsible for making the payment referred to in Para (3.1), such particulars in
Form No. 10E duly verified by him, and thereupon the person responsible, as aforesaid,
shall compute the relief on the basis of such particulars and take the same into account in
making the deduction under Para(3.1) above.

Here "university" means a university established or incorporated by or under a Central, State
or Provincial Act, and includes an institution declared under Section 3 of the University
Grants Commission Act, 1956 to be a university for the purpose of that Act.

3.4.2 With effect from 1/04/2010 (AY 2010-11), 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, in accordance with any scheme or schemes of voluntary
retirement or in the case of a public sector company referred to in section 10(10C)(i) (read
with Rule 2BA), a scheme of voluntary separation, if an exemption in respect of any amount
received or receivable on such voluntary retirement or termination of his service or
voluntary separation has been claimed by the assessee under section 10(10C) in respect of
such, or any other, assessment year.

3.5 Information regarding Income under any other head:

(i) Section 192(2B) enables a taxpayer to furnish particulars of income under any head
other than "Salaries" ( not being a loss under any such head other than the loss under the
head " Income from house property") received by the taxpayer for the same financial year
and of any tax deducted at source thereon. The particulars may now be furnished in a simple
statement, which is properly signed and verified by the taxpayer in the manner as
prescribed under Rule 26B(2) of the Rules and shall be annexed to the simple statement. The
form of verification is reproduced as under:
          I, ...................... (name of the assessee), do declare that what is stated
          above is true to the best of my information and belief.

It is reiterated that the DDO can take into account any loss only under the head "Income
from house property". Loss under any other head cannot be considered by the DDO for
calculating the amount of tax to be deducted.

It may be noted that loss under the head "Income from house property" can be set off
only up to Rs. 2.00 lakh with the income under any other head of income in view of the
amendment to section 71 of the Act vide Finance Act, 2017. Hence, loss under the head
"Income from house property" in excess of Rs. 2.00 lakh is to be ignored for calculating
the amount of tax deduction.

3.6       Computation of income under the head " Income from house property":

While taking into account the loss from House Property, the DDO shall ensure that the
employee files the declaration referred to above and encloses therewith a computation of
such loss from house property. Following details shall be obtained and kept by the employer
in respect of loss claimed under the head " Income from house property" separately for each
house property:

                  a)      Gross annual rent/value
                  b)      Municipal Taxes paid, if any
                  c)      Deduction claimed for interest paid, if any
                  d)      Other deductions claimed
                  e)      Address of the property

The DDO shall also ensure furnishing of the evidence or particulars in Form No. 12BB
in respect of deduction of interest as specified in Rule 26C read with section 192 (2D).

3.6.1 Conditions for Claim of Deduction of Interest on Borrowed Capital for
Computation of Income From House Property [Section 24(b)]:

Section 24(b) of the Act allows deduction from income from houses property on interest on
borrowed capital as under:-

(i)        the deduction is allowed only in case of house property which is owned and is in
           the occupation of the employee for his own residence. However, if it is actually not
           occupied by the employee in view of his place of the employment being at other
           place, his residence in that other place should not be in a building belonging to him.
      (ii) the quantum of deduction allowed as per table below:

  Sl              Purpose of borrowing capital           Date of borrowing       Maximum Deduction
  No                                                          capital                allowable
   1       Repair or renewal or reconstruction of the        Any time               Rs. 30,000/-
           house
      2    Acquisition or construction of the house      Before 01.04.1999            Rs. 30,000/-
      3    Acquisition or construction of the house         On or after              Rs. 1,50,000/-
                                                            01.04.1999            (upto AY 2014-15)
                                                                                     Rs. 2,00,000/-
                                                                                 (w. e. f. AY 2015-16)

In case of Serial No. 3 above
       (a) The acquisition or construction of the house should be completed within 5 years
           from the end of the FY in which the capital was borrowed. Hence, it is necessary
           for the DDO to have the completion certificate of the house property against
           which deduction is claimed either from the builder or through self-declaration
           from the employee.
       (b) Further any prior period interest for the FYs upto the FY in which the property
           was acquired or constructed (as reduced by any part of interest allowed as
           deduction under any other section of the Act) shall be deducted in equal
           installments for the FY in question and subsequent four FYs.
       (c) The employee has to furnish before the DDO a certificate from the person to
           whom any interest is payable on the borrowed capital specifying the amount of
           interest payable. In case a new loan is taken to repay the earlier loan, then the
           certificate should also show the details of Principal and Interest of the loan so
           repaid.
3.7    Adjustment for Excess or Shortfall of Deduction:

The provisions of Section 192(3) allow the deductor to make adjustments for any excess or
shortfall in the deduction of tax already made during the financial year, in subsequent
deductions for that employee within that financial year itself.

3.8    Salary Paid in Foreign Currency:

For the purposes of deduction of tax on salary payable in foreign currency, the value in
rupees of such salary shall be calculated at the "Telegraphic transfer buying rate" of
such currency as on the date on which tax is required to be deducted at source ( see Rule 26).

4.     PERSONS RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES:

4.1. As per section 204(i) of the Act, in the context of payments other than payments by the
Central Government or the State Government the "person responsible for paying" for the
purpose of Section 192 means the employer himself or if the employer is a Company, the
Company itself including the Principal Officer thereof. Further, as per Section 204(iv), in
case the credit, or as the case may be, the payment is made by or on behalf of Central
Government or State Government, the DDO or any other person by whatever name called,
responsible for crediting, or as the case may be, paying such sum is the "person responsible
for paying" for the purpose of Section 192.

4.2. The tax determined as per para 9 should be deducted from the salary u/s 192 of the Act.

4.3. Deduction of Tax at Lower Rate:

If the jurisdictional TDS officer of the Taxpayer issues a certificate of No Deduction or
Lower Deduction of Tax under section 197 of the Act, in response to the application filed
before him in Form No 13 by the Taxpayer; then the DDO should take into account such
certificate and deduct tax on the salary payable at the rates mentioned therein.(see Rule
28AA). The Unique Identification Number of the certificate is required to be reported in
Quarterly Statement of TDS (Form 24Q).


4.4.   Deposit of Tax Deducted:

Rule 30 prescribes time and mode of payment of tax deducted at source to the account of
Central Government.
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                       30 September
                                       th
                                                                             7 October
                                                                              th

             3                       31st December                           7th January
             4                         31st March                   30 April next Financial Year
                                                                      th



4.4.2 Mode of Payment of TDS

4.4.2.1 Compulsory filing of Statement by PAO, Treasury Officer, etc in case of
payment of TDS by Book Entry u/ s 200 (2A):

In the case of an office of the Government, where tax has been paid to the credit of the
Central Government without the production of a challan [Book Entry], the Pay and
Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or
any other person by whatever name called to whom the deductor reports about the tax
deducted and who is responsible for crediting such sum to the credit of the Central
Government, shall

       (a) submit a statement in Form No. 24G under section 200 (2A) on or before the
       30th day of April where statement relates to the month of March; and in any other
       case, on or before 15 days from the end of relevant month to the agency authorized
       by the Director General of Incometax (Systems) [TIN Facilitation Centres currently
       managed by M/s National Securities Depository Ltd] 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 or
       BIN) generated by the agency to each of the deductors in respect of whom the sum
       deducted has been credited. BIN consist of receipt number of Form 24G, DDO
       sequence number in Form No. 24G and date on which tax is deposited.

If the PAO/CDDO/TO etc, as stated above, fails to deliver the statement as required u/s
200(2A), he will be liable to pay, by way of penalty, under section 272A(2)(m), a sum
which shall be Rs.100/- for every day during which the failure continues. However, the
amount of such penalty shall not exceed the amount of tax which is deductable at
source.

The procedure of furnishing Form 24G is detailed in Annexure III. PAOs/DDOs should go
through the FAQs in Annexure IV to understand the correct process to be followed. The
ZAO / PAO of Central Government Ministries is responsible for filing of Form No. 24G on
monthly basis. The person responsible for filing Form No. 24G in case of State Govt.
Departments is shown at Annexure V.

The procedure of furnishing Form 24G is detailed in Annexure IV. PAOs/DDOs should go
through the FAQs therein to understand the correct process to be followed.

4.4.2.2 Payment by an Income Tax Challan:

(i) In case the payment is made by an income-tax challan, the amount of tax so deducted
shall be deposited to the credit of the Central Government by remitting it, within the time
specified in Table in para 4.4.1 above, into any office of the Reserve Bank of India or
branches of the State Bank of India or of any authorized bank;
(ii) In case of a company and a person (other than a company), to whom provisions of
section 44AB are applicable, the amount deducted shall be electronically remitted into the
Reserve Bank of India or the State Bank of India or any authorised bank accompanied by an
electronic income-tax challan (Rule125).

The amount shall be construed as electronically remitted to the Reserve Bank of India or to
the State Bank of India or to any authorized bank, if the amount is remitted by way of:

               (a)    internet banking facility of the Reserve Bank of India or of the State
                      Bank of India or of any authorized bank; or
               (b)    debit card. {Notification No.41/2010 dated 31st May 2010}

4.5 Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted:

4.5.1 If a person fails to deduct the whole or any part of the tax at source, or, after
deducting, fails to pay the whole or any part of the tax to the credit of the Central
Government within the prescribed time, he shall be liable to action in accordance with the
provisions of section 201 and shall be deemed to be an assessee-in-default in respect of
such tax and liable for penal action u/s 221 of the Act. Further Section 201(1A) provides
that such person shall be liable to pay simple interest
        (i) at the rate of 1% for every month or part of the month on the amount of such tax
        from the date on which such tax was deductible to the date on which such tax is
        deducted; and
        (ii) at the rate of one and one-half percent for every month or part of a month on the
        amount of such tax from the date on which such tax was deducted to the date on
        which such tax is actually paid.
Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of
quarterly statement of TDS for respective quarter.

4.5.2 Section 271C inter alia lays down that if any person fails to deduct whole or any
part of tax at source or fails to pay the whole or part of tax under the second proviso to
section 194B, he shall be liable to pay, by way of penalty, a sum equal to the amount of
tax not deducted or paid by him.

4.5.3 Further, section 276B lays down that if a person fails to pay to the credit of the
Central Government within the prescribed time, as above, the tax deducted at source
by him or tax payable by him under the second proviso to Section 194B, he shall be
punishable with rigorous imprisonment for a term which shall be between 3 months and 7
years, along with fine.


4.6    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. Rule 31 prescribes that Form 16
should be furnished to the employee by 15th June (w.e.f. 02.06.2017) 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 of TDS (24Q). 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 along with the Part A of the Form No. 16.

It may be noted that under the new TDS procedure, TAN of deductee/ PAN of the deductee
and receipt number of TDS statement filed by the deductor act as unique identifier for
granting online credit of TDS to the decutee. Hence due care should be taken in filling these
particulars. Due care should also be taken in indicating correct CIN/ BIN in TDS statement.

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].

Certain essential points regarding the filing of the Statement and obtaining TDS
certificates are mentioned below:

(a)      TDS certificate (Form16) would be generated for the deductee only if Valid PAN is
correctly mentioned in the Annexure II of Form 24Q in Quarter 4 filed by the deductor.
Moreover, employers are advised to ensure in Form 16 that the status of "matching" with
respect to "Form 24G/OLTAS" is `F'. If the status of matching other than `F', kindly take
necessary action promptly to rectify the same. It is pertinent to mention here that certain
facilities have been provided to the deductors at website www.tdscpc.gov.in/ including
online correction of statements (Form 24Q).

(b)     The employer should quote the gross amount of salary (including any amount
exempt under section 10 and the deductions under chapter VI A) in column 321 (Amount
paid/credited) of Annexure I of Form 24Q as per NSDL RPU (hereafter Return Preparation
Utility).

(c)    The employer should quote the amount of salary excluding any amount exempt
under section 10 in column 333 (Total amount of salary) of Annexure II of Form 24Q as per
NSDL RPU.

(d)    TDS on Income (including loss from House Property) under any Head other than the
head `Salaries' offered for TDS (shown in column 339) can be shown in column 350
(Reported amount of TDS by previous employer, as per NSDL RPU.

(e)    Employer is advised to quote Total Taxable Income (Column 346) in Annexure II
without rounding-off and TDS should be deducted and reported accordingly i.e. without
rounding-off of TDS also.

         Example:

    Total        Total Taxable          TDS to be           TDS Deducted/                Short
  Taxable           Income              Deducted            Reported after             Deduction
  Income         (Rounded Off)                           rounding-off of income
 Rs.1350094       Rs. 1350090         Rs. 235028.20            Rs 235028                 Rs.1.20

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.

4.6.3.   Authentication by Digital Signatures:

         (i) Where a certificate is to be furnished in Form No. 16, the deductor may, at his
         option, use digital signatures to authenticate such certificates.
         (ii) In case of certificates issued under clause (i), the deductor shall ensure that
                  (a) the conditions prescribed in para 4.6.1 above are complied with;
                  (b) once the certificate is digitally signed, the contents of the certificates are
                  not amenable to change; and
                  (c) the certificates have a control number and a log of such certificates is
                  maintained by the deductor.
    The digital signature is being used to authenticate most of the e-transactions on the
    internet as transmission of information using digital signature is failsafe. It saves
    time specially in organisations having large number of employees where issuance of
    certificate of deduction of tax with manual signature is time consuming (Circular no
    2 of 2007 dated 21.05.2007)

4.6.4. Furnishing of particulars pertaining to perquisites, etc (Section 192(2C):

4.6.4.1 As per section 192(2C), the responsibility of providing correct and complete
particulars of perquisites or profits in lieu of salary given to an employee is placed on the
person responsible for paying such income i.e., the person responsible for deducting tax at
source. The form and manner of such particulars are prescribed in Rule 26A, Form 12BA
(Annexure II) and Form 16 of the Rules. Information relating to the nature and value of
perquisites is to be provided by the employer in Form 12BA in case salary paid or payable is
above Rs.1,50,000/-. In other cases, the information would have to be provided by the
employer in Form 16 itself.






4.6.4.2 An employer, who has paid the tax on perquisites on behalf of the employee as per
the provisions discussed in para 3.2 of this circular, shall furnish to the employee
concerned, a certificate to the effect that tax has been paid to the Central Government and
specify the amount so paid, the rate at which tax has been paid and certain other particulars
in the amended Form 16.

4.6.4.3 The obligation cast on the employer under Section 192(2C) for furnishing a
statement showing the value of perquisites provided to the employee is a crucial
responsibility of the employer, which is expected to be discharged in accordance with law
and rules of valuation framed there under. Any false information, fabricated
documentation or suppression of requisite information will entail consequences thereof
provided under the law. The certificates in Forms 16 and/or Form 12BA specified above,
shall be furnished to the employee by 31st May of the financial year immediately following
the financial year in which the income was paid and tax deducted. If he fails to issue these
certificates to the person concerned, as required by section 192(2C), he will be liable to pay,
by way of penalty, under section 272A(2)(i), a sum which shall be Rs.100/- for every day
during which the failure continues.

As per Section 139C of the Act, the Assessing Officer can require the taxpayer to produce
Form 12BA along with Form 16, as issued by the employer.

4.6.5 DDOs empowered to obtain evidence of proof or particulars of the prescribed
claim (including claim for set-off of loss) under the section 192(2D):

DDOs have been authorized u/s 192 to allow certain deductions, exemptions or allowances
or set-off of certain loss as per the provisions of the Act for the purpose of estimating the
income of the assessee or computing the amount of tax deductible under the said section.
The evidence /proof /particulars for some of the deductions/exemptions/allowances/set-off
of loss claimed by the employee such as rent receipt for claiming deduction in HRA,
evidence of interest payments for claiming loss from self-occupied house property, etc is not
available to the DDO. To bring certainity and uniformity in this matter, section 192(2D)
provides that person responsible for paying (DDOs) shall obtain from the assessee evidence
or proof or particular of claims such as House rent Allowance (where aggregate annual rent
exceeds one lakh rupees); Leave Travel Concession or Assistance; Deduction of interest
under the head "Income from house property" and deduction under Chapter VI-A as per the
prescribed form 12BB laid down by Rule 26C of the Rules. Form 12BB is enclosed as
Annexure IIa.
4.7    Mandatory Quoting of PAN and TAN:

4.7.1 Section 203A of the Act makes it obligatory for all persons responsible for
deducting tax at source to obtain and quote the Tax deduction and collection Account No
(TAN) in the challans, TDS-certificates, statements and other documents. Detailed
instructions   in    this regard are available in this Department's Circular No.497
[F.No.275/118/ 87-IT(B) dated 9.10.1987]. If a person fails to comply with the provisions
of section 203A, he will be liable to pay, by way of penalty, under section 272BB, a sum
of ten thousand rupees. Similarly, as per Section 139A(5B), it is obligatory for persons
deducting tax at source to quote PAN of the persons from whose income tax has been
deducted in the statement furnished u/s 192(2C), certificates furnished u/s 203 and all
statements prepared and delivered as per the provisions of section 200(3) of the Act.

4.7.2 All tax deductors are required to file the TDS statements in Form No.24Q (for tax
deducted from salaries). As the requirement of filing TDS certificates alongwith the return
of income has been done away with, the lack of PAN of deductees is creating difficulties in
giving credit for the tax deducted. Tax deductors are, therefore, advised to procure and quote
correct PAN details of all deductees in the TDS statements for salaries in Form 24Q.
Taxpayers are also liable to furnish their correct PAN to their deductors. Non-furnishing of
PAN by the deductee (employee) to the deductor (employer) will result in deduction of TDS
at higher rates u/s 206AA of the Act mentioned in para 4.8 below.

4.8    Compulsory Requirement to furnish PAN by employee (Section 206AA):
4.8.1 Section 206AA in the Act makes furnishing of PAN by the employee compulsory in
case of receipt of any sum or income or amount, on which tax is deductible. If employee
(deductee) fails to furnish his/her PAN to the deductor , the deductor has been made
responsible to make TDS at higher of the following rates:
               i)     at the rate specified in the relevant provision of this Act; or
               ii)    at the rate or rates in force; or
               iii)   at the rate of twenty per cent.

The deductor has to determine the tax amount in all the three conditions and apply the higher
rate of TDS. However, where the income of the employee computed for TDS u/s 192 is below
taxable limit, no tax will be deducted. But where the income of the employee computed for
TDS u/s 192 is above taxable limit, the deductor will calculate the average rate of income-
tax based on rates in force as provided in sec 192. If the tax so calculated is below 20%,
deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%,
tax is to be deducted at the average rate. Education cess @ 2% and Secondary and Higher
Education Cess @ 1% is not to be deducted, in case the tax is deducted at 20% u/s 206AA of
the Act.

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)
or at www.incometaxindiaefiling.gov.in after registering as Deductor. Particulars of e-TDS
Intermediary at any of the TIN Facilitation Centres are available at
http://www.incometaxindia.gov.in and http://tin-nsdl.com 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: Due dates of filing Quarterly Statements in Form 24Q

      Sl. No.       Date of ending of                           Due date
                   quarter of financial
                           year
                    th
         1        30 June                   31st July of the financial year
         2        30th September            31st October of the financial year
         3        31st December             31st January of the financial year
         4        31st March                31st May of the financial year immediately
                                            following the financial year in which the
                                            deduction is made



4.9.2 The statements referred above may be furnished in paper form or electronically
under digital signature or along with verification of the statement in Form 27A of verified
through an electronic process in accordance with the procedures, formats and standards
specified by the Director General of Incometax (Systems). The procedure for furnishing the
e-TDS/TCS statement is detailed at Annexure VI.

4.9.3 All Returns in Form 24Q are required to be furnished in electronically except in case
where the number of deductee records is less than 20 and deductor is not an office of
Government, or a company or a person who is required to get his accounts audited under
section 44AB of the Act. [Notification No. 11 dated 19.02.2013].

4.9.4 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 Rectification of mistake in filing TDS Statement:

A DDO can also file a correction statement for rectification of any mistake or to add, delete
or update the information furnished in the statement delivered earlier.

4.9.6 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
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.

4.9.7 At the time of preparing statements of tax deducted, the deductor is required to:
            (i) mandatory quote his tax deduction and collection account number (TAN) in
                 the statement;
            (ii) mandatory quote his permanent account number (PAN) in the statement
                 except in the case where the deductor is an office of the Government(
                 including State Government). In case of Government deductors
                 "PANNOTREQD" to be quoted in the e-TDS statement;
            (iii) mandatory quote of permanent account number PAN of all deductees;
            (iv) furnish particulars of the tax paid to the Central Government including book
                 identification number or challan identification number, as the case may be.
            (v) furnish particular of amounts paid or credited on which tax was not deducted
                 in view of the issue of certificate of no deduction of tax u/s 197 by the
                 assessing officer of the payee.


4.10     TDS on Income from Pension:

In the case of pensioners who receive their pension (not being family pension paid to a
spouse) from a nationalized bank, the instructions contained in this circular shall apply in
the same manner as they apply to salary-income. The deductions from the amount of
pension under section 80C on account of contribution to Life Insurance, Provident Fund,
NSC etc., if the pensioner furnishes the relevant details to the banks, may be allowed.
Necessary instructions in this regard were issued by the Reserve Bank of India to the
State Bank of India and other nationalized Banks vide RBI's Pension
Circular(Central Series) No.7/C.D.R./1992 (Ref. CO: DGBA: GA (NBS) No.60/GA.64
(11CVL)-/92) dated the 27th April 1992, and, these instructions should be followed
by all the branches of the Banks, which have been entrusted with the task of
payment of pensions. Further all branches of the banks are bound u/s 203 to issue
certificate of tax deducted in Form 16 to the pensioners also vide CBDT circular no. 761
dated 13.1.98.

4.11. Matters pertaining to the TDS made in case of Non Resident:

4.11.1 Where Non-Residents are deputed to work in India and taxes are borne by the
employer, if any refund becomes due to the employee after he has already left India and has
no bank account in India by the time the assessment orders are passed, the refund can be
issued to the employer as the tax has been borne by it [Circular No. 707 dated
11.07.1995].

4.11.2 In respect of non-residents, the salary paid for services rendered in India shall be
regarded as income earned in India. It has been specifically provided in the Act that any
salary payable for rest period or leave period which is both preceded or succeeded by
service in India and forms part of the service contract of employment will also be
regarded as income earned in India.

5. COMPUTATION OF INCOME UNDER THE HEAD "SALARIES"

5.1 INCOME CHARGEABLE UNDER THE HEAD "SALARIES":

(1) The following income shall be chargeable to income-tax under the head "Salaries" :

   (a)      any salary due from an employer or a former employer to an assessee in the
            previous year, whether paid or not;
       (b)      any salary paid or allowed to him in the previous year by or on behalf of an
                employer or a former employer though not due or before it became due to him.

       (c)      any arrears of salary paid or allowed to him in the previous year by or on behalf
                of an employer or a former employer, if not charged to income-tax for any
                earlier previous year.

(2) For the removal of doubts, it is clarified that where any salary paid in advance is
included in the total income of any person for any previous year it shall not be included
again in the total income of the person when the salary becomes due.

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".

5.2 DEFINITION OF "SALARY", "PERQUISITE" AND "PROFIT IN LIEU OF
SALARY" (SECTION 17):

5.2.1 "Salary" includes:-

      i.     wages, fees, commissions, perquisites, profits in lieu of, or, in addition to salary,
             advance of salary, annuity or pension, gratuity, payments in respect of encashment
             of leave etc.
  ii.        the portion of the annual accretion to the balance at the credit of the employee
             participating in a recognized provident fund as consists of {Rule 6 of Part A of the
             Fourth Schedule of the Act}:
                     a) contributions made by the employer to the account of the employee in a
                     recognized provident fund in           excess of 12% of the salary of the
                     employee, and
                     b) interest credited on the balance to the credit of the employee in so far as it
                     is allowed at a rate exceeding such rate as may be fixed by Central
                     Government. [w.e.f. 01-09-2010 rate is fixed at 9.5% - Notification No SO
                     1046(E) dated 13-05-2011]
 iii.        the contribution made by the Central Government or any other employer to the
             account of the employee under the New Pension Scheme as notified vide
             Notification F.N. 5/7/2003- ECB&PR dated 22.12.2003 (enclosed as Annexure VII)
             referred to in section 80CCD (para 5.5.3 of this Circular).

       It may be noted that, since salary includes pension, tax at source would have to
be deducted from pension also, unless otherwise so required. However, no tax is required to
be deducted from the commuted portion of pension to the extent exempt under section 10
(10A).

       Family Pension is chargeable to tax under head "Income from other sources" and
not under the head "Salaries". Therefore, provisions of section 192 of the Act are not
applicable. Hence, DDOs are not required to deduct TDS on family pension paid to person.

5.2.2 Perquisite includes:

I.           The value of rent free accommodation provided to the employee by his employer;
II.          The value of any concession in the matter of rent in respect of any accommodation
             provided to the employee by his employer;
III.         The value of any benefit or amenity granted or provided free of cost or at
             concessional rate in any of the following cases:
               i)   By a company to an employee who is a director of such company;
               ii)  By a company to an employee who has a substantial interest in the
               company;
               iii) By an employer (including a company)to an employee, who is not
                    covered by (i) or (ii) above and whose income under the head
                    "Salaries" (whether due from or paid or allowed by one or more
                    employers), exclusive of the value of all benefits and amenities not
                    provided by way of monetary payment, exceeds Rs.50,000/-.

[What constitutes concession in the matter of rent have been prescribed in Explanations 1 to
4 below section 17(2)(ii) of the Act]

IV.    Any sum paid by the employer in respect of any obligation which would otherwise
       have been payable by the assessee.
V.     Any sum payable by the employer, whether directly or through a fund, other than a
       recognized provident fund or an approved superannuation fund or other specified
       funds u/s 17, to effect an assurance on the life of an assessee or to effect a contract
       for an annuity.
VI.    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 employee and for this purpose, .

              (a)     "specified security" means the securities as defined in section 2(h) of
              the Securities Contracts (Regulation) Act, 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;
               (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, as the case
               may be, 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 (refer Rule 3(9) of the IT Rules);
               (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;
VII.    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 and fifty
        thousand rupees (w.e.f. 01.04.2017); and
VIII    The value of any other fringe benefit or amenity as prescribed in Rule 3.


5.2.2A Rules for valuation of such benefit or amenity as given in Rule 3 are as under : -


I. Residential Accommodation provided by the employer [Rule 3(1)]:-
"Accommodation" includes a house, flat, farm house or part thereof , hotel accommodation,
motel, service apartment, guest house, a caravan, mobile home, ship or other floating
structure.

A. For valuation of the perquisite of rent free unfurnished           accommodation, all
employees are divided into two categories:

(i) For employees of the Central and State governments the value of perquisite shall be
equal to the licence fee charged for such accommodation as reduced by the rent
actually paid by the employee. Employees of autonomous, semi-autonomous
institutions, PSUs/PSEs & subsidiaries, Universities, etc. are not covered under this
method of valuation.

(ii) For all others, i.e., those salaried taxpayers not in employment of the Central
government and the State government, the valuation of perquisite in respect of
accommodation would be at prescribed rates, as discussed below:

 a) Where the accommodation provided to the employee is owned by the employer:

       Sl No      Cities having population as per the 2001 census            Perquisite
         1                         Exceeds 25 lakh                         15% of salary
         2          Exceeds 10 lakhs but does not exceed 25 lakhs           10% of salary
         3                        For other places                         7.5 % of salary

b) Where the accommodation so provided is taken on lease/ rent by the employer:

The prescribed rate is 15% of the salary or the actual amount of lease rental payable by the
employer, whichever is lower, as reduced by any amount of rent paid by the employee.
Meaning of `Salary `for the purpose of calculation of perquisite in respect of Residential
Accommodation :
       a. Basic Salary ;
       b. Dearness Allowance, or Dearness Pay if it enters into the computation of
       superannuation or retirement benefit of the employees;
       c. Bonus ;
       d. Commission ;
       e. All other taxable allowances (excluding the portion not taxable ); and
       f. Any monetary payment which is chargeable to tax (by whatever name called).

Salary from all employers shall be taken into consideration in respect of the period during
which an accommodation is provided. Where on account of the transfer of an employee from
one place to another, he is provided with accommodation at the new place of posting while
retaining the accommodation at the other place, the value of perquisite shall be determined
with reference to only one such accommodation which has the lower value for a period not
exceeding 90 days and thereafter the value of perquisite shall be charged for both such
accommodation.

B Valuation of the perquisite of furnished accommodation- the value of perquisite as
determined by the above method (in A) shall be increased by-

       i) 10% of the cost of furniture, appliances and equipments, or
       ii) where the furniture, appliances and equipments have been taken on hire, by the
           amount of actual hire charges payable
       and the value so arrived at shall be reduced by any charges paid by the employee
       himself.

It is added that where the accommodation is provided by the Central Government or any
State Government to an employee who is serving on deputation with any body or
undertaking under the control of such Government,-

       (i).    the employer of such an employee shall be deemed to be that body or
               undertaking where the employee is serving on deputation; and
       (ii).   the value of perquisite of such an accommodation shall be the amount
               calculated in accordance with Table in A(ii)(a) above, as if the
               accommodation is owned by the employer.

C.      Furnished Accommodation in a Hotel: The value of perquisite shall be determined
on the basis of lower of the following two:
                 1. 24% of salary paid or payable in respect of period during which the
                accommodation is provided; or
                 2. Actual charges paid or payable by the employer to such hotel,

for the period during which such accommodation is provided as reduced by any rent actually
paid or payable by the employee.

However, nothing in (C) shall be taxable if following two conditions are satisfied :
              1. The hotel accommodation is provided for a total period not exceeding in
             aggregate 15 days in a previous year, and
              2. Such accommodation is provided on an employee's transfer from one
             place to another place.

It may be clarified that while services provided as an integral part of the accommodation,
need not be valued separately as perquisite, any other services over and above that for
which the employer makes payment or reimburses the employee shall be valued as a
perquisite as per the residual clause. In other words, composite tariff for accommodation
will be valued as per the Rules and any other charges for other facilities provided by the
hotel will be separately valued under the residual clause.

D.     However, the value of any accommodation provided to an employee working at a
mining site or an on-shore oil exploration site or a project execution site or a dam site
or a power generation site or an off-shore site will not be treated as a perquisite if:

   i) such accommodation is located in a "remote area" or
   ii) where it is not located in a "remote area", the accommodation is of a temporary
       nature having plinth area of not more than 800 square feet and should not be located
       within 8 kilometers of the local limits of any municipality or cantonment board.

A project execution site here means a site of project up to the stage of its commissioning. A
"remote area" means an area located at least 40 kilometers away from a town having a
population not exceeding 20,000 as per the latest published all-India census.



II Perquisite on Motor car provided by the Employer [ Rule 3(2)]:

(1)    If an employer provides motor car facility to his employee, the value of such
perquisite shall be :
a) Nil, if the motor car is used by the employee wholly and exclusively in the performance
   of his official duties.
b) Actual expenditure incurred by the employer on the running and maintenance of motor
   car including remuneration to chauffeur as increased by the amount representing normal
   wear and tear of the motor car and as reduced by any amount charged from the employee
   for such use (in case the motor car is exclusively for private or personal purposes of the
   employee or any member of his household).
c) Rs. 1800/- (plus Rs. 900/-, if chauffeur is also provided) per month (in case the motor car
   is used partly in performance of duties and partly for private or personal purposes of the
   employee or any member of his household if the expenses on maintenance and running of
   motor car are met or reimbursed by the employer). However, the value of perquisite will
   be Rs. 2400/-(plus Rs. 900/-, if chauffeur is also provided) per month if the cubic capacity
   of engine of the motor car exceeds 1.6 litres.
d) Rs. 600/- (plus Rs. 900/-, if chauffeur is also provided) per month (In case the motor car is
   used partly in performance of duties and partly for private or personal purposes of the
   employee or any member of his household if the expenses on maintenance and running of
   motor car for such private or personal use are fully met by the employee). However, the
   value of perquisite will be Rs. 900/- (plus Rs. 900/-, if chauffeur is also provided) per
   month if the cubic capacity of engine of the motor car exceeds 1.6 litres.

(2)    If the motor car or any other automotive conveyance is owned by the employee but
the actual running and maintenance charges are met or reimbursed by the employer, the
method of valuation of perquisite value is different and as below:

a) where the motor car or any other automotive conveyance is owned by the employee but
   actual maintenance & running expenses (including chauffeur salary, if any) are met or
   reimbursed by the employer, no perquisite shall be chargeable to tax if the car is used
   wholly and exclusively for official purposes. However following compliances are
   necessary:

        The employer has maintained complete details of the journey undertaken for
        official purposes;
        The employer gives a certificate that the expenditure was incurred wholly for
        official duties.

However if the motor car is used partly for official or partly for private purposes then the
amount of perquisite shall be the actual expenditure incurred by the employer as reduced by
the amounts in c) referred to in (1) above.

Normal wear and tear of the motor shall be taken at 10 % per annum of the actual cost of the
motor car.

III Personal attendants etc. [Rule 3(3)]: The value of free service of all personal
attendants including a sweeper, gardener and a watchman is to be taken at actual cost
to the employer. Where the attendant is provided at the residence of the employee, full
cost will be taxed as perquisite in the hands of the employee irrespective of the
degree of personal service rendered to him. Any amount paid by the employee for such
facilities or services shall be reduced from the above amount.

IV Gas, electricity & water for household consumption [Rule 3(4)]: The value of
perquisite in the nature of gas, electricity and water shall be the amount paid by the
employer. Where the supply is made from the employer's own resources, the manufacturing
cost per unit incurred by the employer would be taken for the valuation of perquisite. Any
amount paid by the employee for such facilities or services shall be reduced from the
perquisite value.

V Free or concessional education [Rule 3(5)]: Perquisite on account of free or
concessional education for any member of the employee's household shall be determined as
the sum equal to the amount of expenditure incurred by the employer in that behalf.
However, where such educational institution itself is maintained and owned by the
employer or where such free educational facilities are provided in any institution by reason
of his being in employment of that employer, the value of the perquisite to the employee
shall be determined with reference to the cost of such education in a similar institution in or
near the locality if the cost of such education or such benefit per child exceeds Rs.1000/-
p.m. The value of perquisite shall be reduced by the amount, if any, paid or recovered from
the employee.

VI Carriage of Passenger Goods [Rule 3(6)]: The value of any benefit or amenity
resulting from the provision by an employer, who is engaged in the carriage of passengers or
goods, to any employee or to any member of his household for personal or private journey
free of cost or at concessional fare, in any conveyance owned, leased or made available by
any other arrangement by such employer for the purpose of transport of passengers or goods
shall be taken to be the value at which such benefit or amenity is offered by such employer
to the public as reduced by the amount, if any, paid by or recovered from the employee for
such benefit or amenity. This will not apply to the employees of any airline or the railways.

VII Interest free or concessional loans [Rule 3(7)(i)]: It is common practice,
particularly in financial institutions, to provide interest free or concessional loans to
employees or any member of his household. The value of perquisite arising from such
loans would be the excess of interest payable at prescribed interest rate over interest, if
any, actually paid by the employee or any member of his household. The prescribed
interest rate would now be the rate charged per annum by the State Bank of India as on
the 1st day of the relevant financial year in respect of loans of same type and for the same
purpose advanced by it to the general public. Perquisite value would be calculated on the
basis of the maximum outstanding monthly balance method. For valuing perquisites under
this rule, any other method of calculation and adjustment otherwise adopted by the
employer shall not be relevant. However, small loans up to Rs. 20,000/- in the aggregate are
exempt.

Loans for medical treatment of diseases specified in Rule 3A are also exempt, provided the
amount of loan for medical reimbursement is not reimbursed under any medical insurance
scheme. Where any medical insurance reimbursement is received, the perquisite value at the
prescribed rate shall be charged from the date of reimbursement on the amount
reimbursed, but not repaid against the outstanding loan taken specifically for this purpose.

VIII Perquisite on account of travelling, touring, accommodation and any other
expenses paid for or reimbursed by the employer for any holiday availed [Rule
3(7)(ii)]:

The value of perquisite on account of travelling, touring, accommodation and any other
expenses paid for or reimbursed by the employer for any holiday availed of by the employee
or any member of his household, other than leave travel concession (as per section 10(5) ),
shall be the amount of the expenditure incurred by the employer in that behalf. However,
any amount recovered from or paid by the employee shall be reduced from the perquisite
value so determined.
    Where such facility is maintained by the employer, and is not available uniformly to all
    employees, the value of benefit shall be taken to be the value at which such facilities are
    offered by other agencies to the public. If a holiday facility is maintained by the employer
    and is available uniformly to all employees, the value of such benefit would be exempt.

    Where the employee is on official tour and the expenses are incurred in respect of any
    member of his household accompanying him, the amount of expenditure with respect to the
    member of the household shall be a perquisite.


    IX Value of Subsidized / Free food / non-alcoholic beverages provided by employer to
    an employee[Rule 3(7)(iii)]:

    Value of taxable perquisite is calculated as under:

Expenditure incurred by the employer on the value of food / non-alcoholic beverages including
`paid vouchers which are not transferable and usable only at eating joints'              XXX
     Less: Fixed value of a sum of Rs. 50/- per meal                                 XXX
     Less: Amount recovered from the employee                                XXX         XXX
     Balance amount is the taxable as perquisites on the value of food
     provided to the employees                                                           XXX

    Note : Exemption is given in following situations :
           1. Tea / snacks provided in working hours.
           2. Food & non-alcoholic beverages provided in working hours in remote area or in an
    offshore installation.

    X Membership fees and Annual Fees [Rule 3(7)(v)]: Any membership fees and annual
    fees incurred by the employee (or any member of his household), which is charged to a
    credit card (including any add-on card) provided by the employer, or otherwise, paid for or
    reimbursed by the employer is taxable on the following basis:

            Amount of expenditure incurred by the employer                        XXX
            Less : Expenditure on use for official purposes                   XXX
            Less : Amount, if any, recovered from the employee                XXX XXX
             Amount taxable as perquisite                                         XXX

    However if the amount is incurred wholly and exclusively for official purposes it will be
    exempt if the following conditions are fulfilled
                   i)     Complete details of such expense, including date and nature of
                          expenditure, is maintained by the employer.
                   ii)    Employer gives a certificate that the same was incurred wholly and
                          exclusively for official purpose.

    XI Club Expenditure [Rule 3(7)(vi)]:
    Any annual or periodical fee for Club facility and any expenditure in a club by the
    employee (or any member of his household), which is paid or reimbursed by the employer is
    taxable on the following basis:

           Amount of expenditure incurred by the employer                            XXX
           Less : Expenditure on use for official purposes                    XXX
           Less : Amount, if any, recovered from the employee                 XXX XXX
           Amount taxable as perquisite                                           XXX
However if the amount is incurred wholly and exclusively for official purposes it will be
exempt if the following conditions are fulfilled
               i)     Complete details of such expense, including date and nature of
                      expenditure and its business expediency is maintained by the
                      employer.
               ii)    Employer gives a certificate that the same was incurred wholly and
                      exclusively for official purpose.

Note: 1) Health club, sport facilities etc. provided uniformly to all classes of employee by
the employer at the employer's premises and expenditure incurred on them are exempt.
2) The initial one-time deposits or fees for corporate or institutional membership, where
benefit does not remain with a particular employee after cessation of employment are
exempt. Initial fees / deposits, in such case, is not included.

XII Use of assets [Rule 3(7)(vii)]: It is common practice for a movable asset (other
than those referred in other sub rules of rule 3) owned by the employer to be used by the
employee or any member of his household. This perquisite is to be charged at the rate of
10% of the original cost of the asset as reduced by any charges recovered from the
employee for such use. However, the use of Computers and Laptops would not give rise to
any perquisite.

XIII Transfer of assets [Rule 3(7)(viii)]: Often an employee or member of his household
benefits from the transfer of movable asset (not being shares or securities) at no cost or at a
cost less than its market value from the employer. The difference between the original cost
of the movable asset (not being shares or securities) and the sum, if any, paid by the
employee, shall be taken as the value of perquisite. In case of a movable asset, which has
already been put to use, the original cost shall be reduced by a sum of 10% of such original
cost for every completed year of use of the asset. Owing to a higher degree of obsolescence,
in case of computers and electronic gadgets, however, the value of perquisite shall be
worked out by reducing 50% of the actual cost by the reducing balance method for each
completed year of use. Electronic gadgets in this case means data storage and handling
devices like computer, digital diaries and printers. They do not include household
appliance (i.e. white goods) like washing machines, microwave ovens, mixers, hot plates,
ovens etc. Similarly, in case of cars, the value of perquisite shall be worked out by reducing
20% of its actual cost by the reducing balance method for each completed year of use.

XIV Gifts [Rule 3(7)(iv)]:

The value of any gift or vouchers or token in lieu of which such gift may be received, given
by the employer to the employee or member of his household, is taxable as perquisite.
However gift, etc less than Rs. 5,000 in aggregate per annum would be exempt.

XV 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 method regarding valuation of perquisites are given in 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.

5.2.3 'Profits in lieu of salary' shall include

   I.   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 relating thereto;
   II.   any payment (other than any payment referred to in clauses (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.
         "Keyman insurance policy" shall have the same meaning as assigned to it in section
         10(10D);
   III. 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.

5.3 INCOMES           NOT      INCLUDED         UNDER        THE      HEAD        "SALARIES"
(EXEMPTIONS)

 Any income falling within any of the following clauses shall not be included in computing
the income from salaries for the purpose of section 192 of the Act :-

5.3.1 The value of any travel concession or assistance received by or due to an
employee from his employer or former employer for himself and his family, in connection
with his proceeding (a) on leave to any place in India or (b) after retirement from service,
or, after termination of service to any place in India is exempt under Section 10(5) subject,
however, to the conditions prescribed in Rule 2B of the Rules.

   For the purpose of this clause, "family" in relation to an individual means:

                (i) the spouse and children of the individual; and
                (ii) the parents, brothers and sisters of the individual or any of them, wholly
                or mainly dependent on the individual.

It may also be noted that the amount exempt under this clause shall in no case exceed the
amount of expenses actually incurred for the purpose of such travel.

5.3.2 Death-cum-retirement gratuity or any other gratuity is exempt to the extent
specified from inclusion in computing the total income under Section 10(10). Any death-
cum-retirement gratuity received under the revised Pension Rules of the Central Government
or, as the case may be, the Central Civil Services (Pension) Rules, 1972, or under any
similar scheme applicable to the members of the civil services of the Union or holders of
posts connected with defence or of civil posts under the Union (such members or holders
being persons not governed by the said Rules) or to the members of the all-India services or
to the members of the civil services of a State or holders of civil posts under a State or to the
employees of a local authority or any payment of retiring gratuity received under the
Pension Code or Regulations applicable to the members of the defence service is exempt.
Gratuity received in cases other than those mentioned above, on retirement, termination etc
is exempt up to the limit as prescribed by the Board. Presently the limit is Rs. 10 lakhs w.e.f.
24.05.2010 [Notification no. 43/2010 S.O. 1414(E) F.No. 200/33/2009-ITA-1 dated 11th
June 2010].

5.3.3 Any payment in commutation of pension received under the Civil Pensions
(Commutation) Rules of the Central Government or under any similar scheme applicable to
the members of the civil services of the Union or holders of posts connected with defence or
of civil posts under the Union (such members or holders being persons not governed by the
said Rules) or to the members of the all- India services or to the members of the defence
services or to the members of the civil services of a State or holders of civil posts under a
State or to the employees of a local authority] or a corporation established by a Central, State
or Provincial Act, is exempt under Section10(10A)(i). As regards payments in commutation
of pension received under any scheme of any other employer, exemption will be
governed by the provisions of section 10(10A)(ii). Also, any payment in commutation of
pension from a fund referred to in Section 10(23AAB) is exempt under Section 10(10A)(iii).

5.3.4 Any payment received by an employee of the Central Government or a State
Government, as cash-equivalent of the leave salary in respect of the period of earned
leave at his credit at the time of his retirement, whether on superannuation or otherwise,
is exempt under Section 10(10AA)(i). In the case of other employees, this 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 31.05.2002 at Rs. 3,00,000/- in relation to such
employees who retire, whether on superannuation or otherwise, after 1.4.1998.

5.3.5 Under Section 10(10B), the retrenchment compensation received by a workman
is exempt from income-tax subject to certain limits. The maximum amount of retrenchment
compensation exempt is the sum calculated on the basis provided in section 25F(b) of the
Industrial Disputes Act, 1947 or any amount not less than Rs.50,000/- as the Central
Government may by notification specify in the Official Gazette, whichever is less.
These limits shall not apply in the case where the compensation is paid under any scheme
which is approved in this behalf by the Central Government, having regard to the need
for extending special protection to the workmen in the undertaking to which the scheme
applies and other relevant circumstances. The maximum limit of such payment is Rs.
5,00,000/- where retrenchment is on or after 1.1.1997 as specified in Notification No. 10969
dated 25-06-1999.

5.3.6 Under Section 10(10C), any payment received or receivable (even if received in
installments) by an employee of the following bodies at the time of his voluntary
retirement or termination of his service, in accordance with any scheme or schemes of
voluntary retirement or in the case of public sector company, a scheme of voluntary
separation, is exempt from income-tax to the extent that such amount does not exceed Rs.
5,00,000/-:

       a)      A public sector company;
       b)      Any other company;
       c)      An Authority established under a Central, State or Provincial Act;
       d)      A Local Authority;
       e)      A Cooperative Society;
       f)      A university established or incorporated or under a Central, State or
               Provincial Act, or, an Institution declared to be a University under section 3
               of the University Grants Commission Act, 1956;
       g)      Any Indian Institute of Technology within the meaning of Section 3 (g) of
               the Institute of Technology Act, 1961;
       h)      Such Institute of Management as the Central Government may by
               notification in the Official Gazette, specify in this behalf.

The exemption of amount received under VRS has been extended to employees of
the Central Government and State Government and employees of notified institutions
having importance throughout India or any State or States. It may also be noted that where
this exemption has been allowed to any employee for any assessment year, it shall not be
allowed to him for any other assessment year. Further, if relief has been allowed under
section 89 for any assessment year in respect of amount received on voluntary retirement or
superannuation, no exemption under section 10(10C) shall be available.

5.3.7 Any sum received under a Life Insurance Policy (Sec 10(10D), including the sum
allocated by way of bonus on such policy other than the following is exempt under section
10(10D):
        i)    any sum received under section 80DD(3) or section 80DDA(3); or
        ii)   any sum received under a Keyman insurance policy; or
        iii)  any sum received under an insurance policy issued on or after 1.4.2003, but
              on or before 31-03-2012, in respect of which the premium payable for any of
              the years during the term of the policy exceeds 20 percent of the actual
              capital sum assured; or
        iv)   any sum received under an insurance policy issued on or after 1.4.2012 in
              respect of which the premium payable for any of the years during the term of
              the policy exceeds 10 percent of the actual capital sum assured; or
        v)    any sum received under an insurance policy issued on or after 1.4.2013 in
              cases of persons with disability or person with severe disability as per Sec 80U
              or suffering from disease or ailment as specified in Sec 80DDB, in respect of
              which the premium payable for any of the years during the term of the policy
              exceeds 15 percent of the actual capital sum assured

However, any sum received under such policy referred to in (iii), (iv) and (v) above, on the
death of a person would be exempt.

As per Section 10 (12A) of the Act, any payment from the National Pension System Trust to
an employee on closure of his account or on his opting out of the pension scheme referred to
in section 80CCD to the extent it does not exceed forty percent , of the total amount payable
to him at the time such closure of his opting out of the scheme.

As per section 10 (12B) of the Act, any payment from the National Pension System Trust to
an employee under the pension scheme referred to in section 80CCD, on partial withdrawal
made out of his account in accordance with the terms and conditions, specified under the
Pension Fund regulatory and Development Authority Act, 2013 (23 of 2013) and the
regulation made thereunder, to the extent it does not exceed twenty-five percent of the
amount of contribution made by him

5.3.8 Any payment from a Provident Fund to which the Provident Funds Act, 1925,
applies or from any other provident fund set up by the Central Government and notified by
it in the Official Gazette is exempt under section 10(11).

5.3.9 Under section 10(13A) of the Act, any special allowance specifically granted to an
assessee by his employer to meet expenditure incurred on payment of rent (by whatever
name called) in respect of residential accommodation occupied by the assessee is
exempt from Income-tax to the extent as may be prescribed, having regard to the area
or place in which such accommodation is situated and other relevant considerations.
According to Rule 2A of the Rules, the quantum of exemption allowable on account
of grant of special allowance to meet expenditure on payment of rent shall be the least of
the following:

       (a)     the actual amount of such allowance received by the assessee in respect of the
               relevant period i. e. the period during which the accommodation was
               occupied by the assesse during the financial year; or
       (b)    the actual expenditure incurred in payment of rent in excess of one-tenth of
              the salary due for the relevant period; or
                 (i) where such accommodation is situated in Bombay, Calcutta, Delhi or
                     Madras, 50% of the salary due to the employee for the relevant period;
                     or
                 (ii) where such accommodation is situated in any other places, 40% of the
                     salary due to the employee for the relevant period.

For this purpose, "Salary" includes dearness allowance, if the terms of employment so
provide, but excludes all other allowances and perquisites.

It has to be noted that only the expenditure actually incurred on payment of rent in
respect of residential accommodation occupied by the assessee subject to the limits
laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent
allowance granted to an employee who is residing in a house/flat owned by him is not
exempt from income-tax. The disbursing authorities should satisfy themselves in this
regard by insisting on production of evidence of actual payment of rent before excluding
the House Rent Allowance or any portion thereof from the total income of the employee.

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 upto Rs.3000/- 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.

Further if annual rent paid by the employee exceeds Rs 1,00,000 per annum, it is mandatory
for the employee to report PAN of the landlord to the employer. In case the landlord does
not have a PAN, a declaration to this effect from the landlord along with the name and
address of the landlord should be filed by the employee.

5.3.10 Section 10(14) provides for exemption of the following allowances :-

   (i) Any special allowance or benefit granted to an employee to meet the expenses
        wholly, necessarily and exclusively incurred in the performance of his duties as
        prescribed under Rule 2BB subject to the extent to which such expenses are actually
        incurred for that purpose.
   (ii) Any allowance granted to an employee either to meet his personal expenses at the
        place of his posting or at the place he ordinarily resides or to compensate him
        for the increased cost of living, which may be prescribed and to the extent as
        may be prescribed.

However, the allowance referred to in (ii) above should not be in the nature of a personal
allowance granted to the assessee to remunerate or compensate him for performing duties
of a special nature relating to his office or employment unless such allowance is related
to his place of posting or residence.

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. 1600 p. m. or Rs 3200 p.m. (for a person who is blind or deaf and dumb or is
orthopaedically handicapped with disabilities of lower extremes) vide notification S.O.No.
395(E) dated 13.05.98 r/w S.O. No. 1002 (E) dated 13.04.2015 & S.O. No. 2604 (E) dated
23.09.2015.

5.3.11 Under Section 10(15)(iv)(i) of the Act, interest payable by the Government on
deposits made by an employee of the Central Government or a State Government or a
public sector company out of his retirement benefits, in accordance with such scheme
framed in this behalf by the Central Government and notified in the Official Gazette
is exempt       from income-tax. By notification No.F.2/14/89-NS-II dated 7.6.89, as
amended by notification No.F.2/14/89-NS-II dated 12.10.89, the Central Government has
notified a scheme called Deposit Scheme for Retiring Government Employees, 1989 for
the purpose of the said clause.

5.3.12 Any scholarship granted to meet the cost of education is not to be included in total
income as per provisions of section 10(16) of the Act.

5.3.13 Section 10(18) provides for exemption of any income by way of pension received by
an individual who has been in the service of the Central Government or State
Government and has been awarded "Param Vir Chakra" or "Maha Vir Chakra" or "Vir
Chakra" or such other gallantry award as may be specifically notified by the Central
Government. Family pension received by any member of the family of such individual is
also exempt [Notifications No.S.O.1948(E) dated 24.11.2000 and 81(E) dated 29.1.2001,
which are enclosed as per Annexure VIII & IX]. "Family" for this purpose shall have the
meaning assigned to it in Section 10(5) of the Act.

DDO may not deduct any tax in the case of recipients of such awards after satisfying himself
about the veracity of the claim.

5.3.14 Under Section 17 of the Act, exemption from tax will also be available in respect
of:-

(a) the value of any medical treatment provided to an employee or any member of his
family, in any hospital maintained by the employer;
(b) any sum paid by the employer in respect of any expenditure actually incurred by
the employee on his medical treatment or of any member of his family:

       (i) 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;
       ii) in respect of the prescribed diseases or ailments as provided in Rule 3A(2) of the
       Rules in any hospital approved by the Chief Commissioner having regard to the
       prescribed guidelines as provided in Rule 3(A)(1)of the Rules,

(c) premium paid by the employer in respect of medical insurance taken for his
employees (under any scheme approved by the Central Government or Insurance
Regulatory and Development Authority) or reimbursement of insurance premium to the
employees who take medical insurance for themselves or for their family members (under
any scheme approved by the Central Government or Insurance Regulatory and Development
Authority);

(d) reimbursement, by the employer, of the amount spent by an employee in obtaining
medical treatment for himself or any member of his family from any doctor, not
exceeding in the aggregate Rs.15,000/- in an year;
(e) As regards medical treatment abroad, the actual expenditure on stay and treatment
abroad of the employee or any member of his family, or, on stay abroad of one
attendant who accompanies the patient, in connection with such treatment, will be
excluded from perquisites to the extent permitted by the Reserve Bank of India. It may
be noted that the expenditure incurred on travel abroad by the patient/attendant, shall be
excluded from perquisites only if the employee's gross total income, as computed
before including the said expenditure, does not exceed Rs.2 lakhs.

For the purpose of            availing exemption on expenditure incurred on medical
treatment, "hospital" includes a dispensary or clinic or nursing home, and "family" in
relation to an individual means the spouse and children of the individual. Family also
includes parents, brothers and sisters of the individual if they are wholly or mainly
dependent on the individual.

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 expense allowance on tour and transfer, daily allowance to
meet tour expenses as prescribed, medical facilities subject to conditions.

5.3.15 In this connection it is to be noted that as per sec. 10 (14) read wit rule 2BBany
allowance granted to meet the cost of travel on tour or on transfer includes any sum paid in
connection with transfer, packing and transportation of personal effects o such transfer shall
be exempt. Also any allowance, whether, granted for the period of journey in connection
with transfer, to meet the ordinary daily charges incurred by an employee on account of
absence form his normal place of duty shall be exempt.


5.4 DEDUCTIONS U/S 16 OF THE ACT FROM THE INCOME FROM SALARIES

5.4.1 Entertainment Allowance [Section 16(ii)]:

A deduction is also allowed under section 16(ii) in respect of any allowance in the nature
of an entertainment allowance specifically granted by an employer to the assessee, who is
in receipt of a salary from the Government, a       sum equal to       one-fifth of his
salary(exclusive of any allowance, benefit or other perquisite) or five thousand rupees
whichever is less. No deduction on account of entertainment allowance is available to non-
government employees.

5.4.2 Tax on Employment [Section 16(iii)]:

The tax on employment (Professional Tax) within the meaning of article 276(2) of the
Constitution of India, leviable by or under any law, shall also be allowed as a deduction
in computing the income under the head "Salaries".

It may be clarified that "Standard Deduction" from gross salary income, which was
being allowed up to financial year 2004-05 is not allowable from financial year 2005-06
onwards.

5.5 DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT

In computing the taxable income of the employee, the following deductions under Chapter
VI-A of the Act are to be allowed from his gross total income:
5.5.1 Deduction in respect of Life insurance premia, deferred annuity, contributions to
provident fund, subscription to certain equity shares or debentures, etc. (section 80C)

A.     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.1,50,000/-:

(1) Payment of insurance premium to effect or to keep in force an insurance on the life of
     the individual, the spouse or any child of the individual.
(2) Any payment made to effect or to keep in force a contract for a deferred annuity, not
     being an annuity plan as is referred to in item (7) herein below on the life of the
     individual, the spouse or any child of the individual, provided that such contract does
     not contain a provision for the exercise by the insured of an option to receive a cash
     payment in lieu of the payment of the annuity;
(3) Any sum deducted from the salary payable by, or, on behalf of the Government to any
     individual, being a sum deducted in accordance with the conditions of his service for
     the purpose of securing to him a deferred annuity or making provision for his spouse
     or children, in so far as the sum deducted does not exceed 1/5th of the salary;
(4) Any contribution made :

       (a) by an individual to any Provident Fund to which the Provident Fund Act, 1925
       applies;
       (b) to any provident fund set up by the Central Government, and notified by it in
       this behalf in the Official Gazette, where such contribution is to an account standing
       in the name of an individual, or spouse or children;
               [The Central Government has since notified Public Provident Fund vide
               Notification S.O. No. 1559(E) dated 3.11.05]
       (c) by an employee to a Recognized Provident Fund;
       (d) by an employee to an approved superannuation fund;

It may be noted that "contribution" to any Fund shall not include any sums in repayment of
loan or advance;

(5) Any sum paid or deposited during the year as a subscription :-

       (a) in the name of employee or a girl child of that employee including a girl child
           for whom the employee is the legal guardian in any such security of the Central
           Government or any such deposit scheme as the Central Government may, by
           notification in the Official Gazette, specify in this behalf;
               [The Central Government has since notified the scheme `Sukanya Samriddhi
               Account' vide Notification GSR No. 863(E) dated 02.12.2014]

       (b) to any such saving certificates as defined under section 2(c) of the Government
       Saving Certificate Act, 1959 as the Government may, by notification in the Official
       Gazette, specify in this behalf.

               [The Central Government has since notified National Saving Certificate
               (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05and National
               Saving Certificate (IXth Issue) vide Notification . G.S.R. 848 (E), dated the
               29th November, 2011, publishing the National Savings Certificates (IX-
               Issue) Rules, 2011 G.S.R. 868 (E), dated the 7th December, 2011,
               specifying the National Savings Certificates IX Issue as the class of
               Savings Certificates F No1-13/2011-NS-II r/w amendment Notification
               No.GSR 319(E), dated 25-4-2012 ]
(6) Any sum paid as contribution in the case of an individual, for himself, spouse or any
child,

               a. for participation in the Unit Linked Insurance Plan, 1971 of the Unit
                   Trust of India;
               b. for participation in any unit-linked insurance plan of the LIC Mutual
                   Fund referred to section 10 (23D) and as notified by the Central
                   Government.

      [The Central Government has since notified Unit Linked Insurance Plan (formerly
      known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E)
      dated 3.11.05.]
 (7) Any subscription made to effect or keep in force a contract for such annuity plan of the
Life Insurance Corporation or any other insurer as the Central Government may, by
notification in the Official Gazette, specify;

      [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I,
      New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification
      S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No.
      847(E) dated 1.6.2006 ]
(8) Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the
Administrator or the specified company referred to in Unit Trust of India (Transfer of
Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any
scheme as the Central Government, may, by notification in the Official Gazette, specify in
this behalf;

     [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for
     this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]
The investments made after 1.4.2006 in plans formulated in accordance with Equity Linked
Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for
deduction under section 80C.
(9) Any contribution made by an individual to any pension fund set up by any Mutual
Fund referred to in section 10(23D), or, by the Administrator or the specified company
defined in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central
Government may, by notification in the Official Gazette, specify in this behalf;

      [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for
      this purpose vide Notification S.O. No. 1563(E) dated 3.11.2005]
 (10) Any subscription made to any such deposit scheme of, or, any contribution made to
any such pension fund set up by, the National Housing Bank, as the Central Government
may, by notification in the Official Gazette, specify in this behalf;
(11) Any subscription made to any such deposit scheme, as the Central Government may,
by notification in the Official Gazette, specify for the purpose of being floated by (a)
public sector companies engaged in providing long-term finance for construction or purchase
of houses in India for residential purposes, or, (b) any authority constituted in India by, or,
under any law, enacted either for the purpose of dealing with and satisfying the
need for housing accommodation or for the purpose of planning, development or
improvement of cities, towns and villages, or for both.

       [The Central Government has since notified the Public Deposit Scheme of HUDCO
       vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section
       80C(2)(xvi)(a)].
(12) Any sums paid by an assessee for the purpose of purchase or construction of a
residential house property, the income from which is chargeable to tax under the head
"Income from house property" (or which would, if it has not been used for assessee's own
residence, have been chargeable to tax under that head) where such payments are made
towards or by way of any instalment or part payment of the amount due under any self-
financing or other scheme of any Development Authority, Housing Board etc.

The deduction will also be allowable in respect of re-payment of loans borrowed by an
assessee from the Government, or any bank or Life Insurance Corporation, or National
Housing Bank, or certain other categories of institutions engaged in the business of
providing long term finance for construction or purchase of houses in India. Any
repayment of loan borrowed from the employer will also be covered, if the employer happens
to be a public company, or a public sector company, or a university established by law, or a
college affiliated to such university, or a local authority, or a cooperative society, or an
authority, or a board, or a corporation, or any other body established under a Central or State
Act.

The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall
also be covered. Payment towards the cost of house property, however, will not
include, admission fee or cost of share or initial deposit or the cost of any addition or
alteration to, or, renovation or repair of the house property which is carried out after
the issue of the completion certificate by competent authority, or after the occupation of
the house by the assessee or after it has been let out. Payments towards any expenditure in
respect of which the deduction is allowable under the provisions of section 24 of the Act
will also not be included in payments towards the cost of purchase or construction of a house
property.

Where the house property in respect of which deduction has been allowed under these
provisions is transferred by the tax-payer at any time before the expiry of five years from
the end of the financial year in which possession of such property is obtained by him or
he receives back, by way of refund or otherwise, any sum specified in section
80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums
paid in such previous year in which the transfer is made and the aggregate amount of
deductions of income so allowed in the earlier years shall be added to the total income of the
assessee of such previous year and shall be liable to tax accordingly.

(13) 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, pre-nursery
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.

(14) Subscription to equity shares or debentures forming part of any eligible issue of
capital made by a public company, which is approved by the Board or by any public finance
institution.
(15) Subscription to any units of any mutual fund referred to in clause (23D) of Section
10 and approved by the Board, if the amount of subscription to such units is subscribed only
in eligible issue of capital of any company.
(16) Investment as a term deposit for a fixed period of not less than five years with a
scheduled bank, which is in accordance with a scheme framed and notified by the Central
Government, in the Official Gazette for these purposes.

[The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this
purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]
 (17) Subscription to such bonds issued by the National Bank for
Agriculture and Rural Development, as the Central Government may, by such notification in
the Official Gazette, specify in this behalf.
(18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004.
(19) Any investment as five year time deposit in an account under the Post Office Time
Deposit Rules, 1981.

B.      Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract
for a deferred annuity the amount of any premium or other payment made is restricted to:

 Policy issued before 1st April 2012                      20% of the actual capital sum
                                                          assured
 Policy issued on or after 1st April 2012                 10% of the actual capital sum
                                                          assured
 Policy issued on or after 1st April 2013 * - In cases of 15% of the actual capital sum
 persons with disability or person with severe assured
 disability as per Sec 80 U or suffering from disease
 or ailment as specified in rules made under Sec
 80DDB
       *Introduced by Finance Act 2013

Actual capital sum assured in relation to a life insurance policy means the minimum amount
assured under the policy on happening of the insured event at any time during the term of the
policy, not taking into account ­
                  i.    the value of any premium agreed to be returned, or
                 ii.    any benefit by way of bonus or otherwise over and above the sum
                        actually assured which may be received under the policy by any
                        person.

5.5.2 Deduction in respect of contribution to certain pension funds (Section 80CCC)

Section 80CCC allows an employee deduction of an amount paid or deposited out of his
income chargeable to tax to effect or keep in force a contract for any annuity plan of
Life Insurance Corporation of India or any other insurer for receiving pension from
the Fund referred to in section 10(23AAB). However, the deduction shall exclude interest
or bonus accrued or credited to the employee's account, if any and shall not exceed Rs.
1,50,000.

However, if any amount is standing to the credit of the employee in the fund referred to
above and deduction has been allowed as stated above and the employee or his nominee
receives this amount together with the interest or bonus accrued or credited to this account
due to the reason of
    (i) Surrender of annuity plan whether in whole or part
    (ii) Pension received from the annuity plan
then the amount so received during the Financial Year shall be the income of the employee
or his nominee for that Financial Year and accordingly will be charged to tax.

Where any amount paid or deposited by the employee has been taken into account for the
purposes of this section, a deduction with reference to such amount shall not be allowed
under section 80C.

5.5.3 Deduction in respect of contribution to pension scheme of Central Government
(Section 80CCD):

Section 80CCD(1) allows an employee, being an individual employed by the Central
Government on or after 01.01.2004 or being an individual employed by any other employer,
or any other assessee being an individual, a deduction of an amount paid or deposited out
of his income chargeable to tax under a pension scheme as notified vide Notification F. N.
5/7/2003- ECB&PR dated 22.12.2003 National Pension System-NPS or as may be notifed
by the Central Government. However, the deduction shall not exceed an amount equal to
10% of his salary (includes Dearness Allowance but excludes all other allowance and
perquisites).

As per section 80CCD(1B), an assessee referred to in 80CCD(1) shall be allowed an
deduction in computation of his income, of the whole of the amount paid or deposited in the
previous year in his account under the pension scheme notified or as may be notified by the
Central Government, which shall not exceed Rs. 50,000. The deduction of Rs. 50,000 shall
be allowed whether or not any deduction is allowed under sub-section(1). However, the
same amount cannot be claimed both under sub-section (1) and sub-section (1B) of section
80CCD.

As per Section 80CCD(2), where any contribution in the said pension scheme is made by the
Central Government or any other employer then the employee shall be allowed a deduction
from his total income of the whole amount contributed by the Central Government or any
other employer subject to limit of 10% of his salary of the previous year.

If any amount is standing to the credit of the employee in the pension scheme referred above
and deduction has been allowed as stated above, and the employee or his nominee receives
this amount together with the amount accrued thereon, due to the reason of
    (i) Closure or opting out of the pension scheme or
    (ii) Pension received from the annuity plan purchased and taken on such closure or
          opting out

then the amount so received during the FYs shall be the income of the employee or his
nominee for that Financial Year and accordingly will be charged to tax.

Provided that the amount received by the nominee, on the death of the assessee, under the
circumstances referred to in clause (i) above, shall not be deemed to be the income of the
nominee.

Where any amount paid or deposited by the employee has been taken into account for the
purposes of this section, a deduction with reference to such amount shall not be allowed
under section 80C.

Further it has been specified that w.e.f 01.04.09 any amount received by the employee from
the New Pension Scheme shall be deemed not to have been received in the previous year if
such amount is used for purchasing an annuity plan in the same previous year.
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.1,50,000/-. The
deduction allowed under section 80 CCD(1B) is an additional deduction in respect of
any amount paid in the NPS upto Rs. 50,000/-. 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.1,50,000/- provided under this section.

5.5.4 Deduction in respect of investment made under an equity savings scheme
(Section 80 CCG):

Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment
made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme 2012 has
been notified vide SO No 2777 E, dated 23.11.2012 (subsequent corrigendum SO NO.
2835E dated 05.12.2012) and amended vide notification SO No. 3693E dated 18.12.2013 as
a scheme under this section. The scheme was modified in December 2013 vide notification
SO 3693 dated 18.12.13 ( RGESS, 2013). The deduction under this section in accordance
with RGESS 2013 is available if following conditions are satisfied:

       (a) The assessee is a resident individual
       (b) His gross total income does not exceed Rs. 12 lakhs;
       (c) He has acquired listed shares in accordance with a notified scheme or listed units
       of an equity oriented fund as defined in section 10(38);
       (d) The assessee is a new retail investor;
       (e) The investment is locked-in for a period of 3 years from the date of acquisition in
       accordance with the above scheme;
       (f) The assessee satisfies any other condition as may be prescribed.

Amount of deduction ­The amount of deduction is at 50% of the amount invested in equity
shares/units. However, the amount of deduction under this provision cannot exceed Rs.
25,000.

Withdrawal of deduction ­ If the assessee, after claiming the aforesaid deduction, fails to
satisfy the above conditions, the deduction originally allowed shall be deemed to be the
income of the assessee of the year in which default is committed.

This deduction is allowed for three consecutive assessment years beginning with the AY in
which the listed equity shares or units were first acquired. If any deduction is claimed by a
taxpayer under this section in any year, he shall not be entitled to any deduction under this
section for any other year.

The deduction under this section shall only be allowed in respect of investment made only
up to 31st March, 2017. Therefore, no deduction under this section is allowed for investment
made on, or after 1st April, 2017.

5.5.5 Deduction in respect of health insurance premia paid, etc. (Section 80D)
Section 80D provides for deduction available for health insurance premia paid, etc. which is
calculated as under:

Sl    Persons for                Nature of payment                   Mode of      Allowable
No      whom                                                         payment      Deduction
       payment                                                                     (in Rs)
         made
 1    Employee       the whole of the amount paid to effect or          any       Aggregate
        or his       to keep in force an insurance on the              mode      allowable is
        family*         health of the employee or his family or      other       Rs 25,000/
                         any contribution made to the CGHS or than cash         (Rs 30000/-
                        such other scheme as may be notified by                  for senior
                        Central Government (Finance Act 2013)                     and very
 2                       any payment on account of preventive         any           senior
                        health check-up of the employee or           mode          citizen)
                        family, [restricted to Rs 5000/-; cash including
                        payment allowed here]                        cash
 3                       Whole of the amount paid on account of       any        Aggregate
                        medical expenditure incurred on health of    mode       allowable is
                        a very senior citizen and no amount has      other       Rs 30,000/
                        been paid to effect of keep in force an than cash
                        insurance on the health of such person
 4     Parent or         the whole of the amount paid to effect or    any        Aggregate
      Parents of        keep in force an insurance on the health     mode       allowable is
      employee*         of the parent or parents of the employee     other       Rs 25,000/
                                                                   than cash    (Rs 30000/-
 5                       any payment made on account of               any        for senior
                        preventive health check-up of the parent     mode         and very
                        or parents of the employee [restricted to including         senior
                        Rs 5000/-; cash payment allowed here]        cash          citizen)
 6                       Whole of the amount paid on account of       any        Aggregate
                        medical expenditure incurred on health of    mode       allowable is
                        a very senior citizen and no amount has      other       Rs 30,000/
                        been paid to effect of keep in force an than cash
                        insurance on the health of such person

*Aggregate of the sum allowable as deduction under Sl No 1, 2 & 3 and 4, 5 &6 above
shall not exceed Rs 30000/-

Here
   i) "family" means the spouse and dependent children of the employee.
   ii) Senior citizen" means an individual resident in India who is of the age of sixty years
       or more at any time during the relevant previous year.
   iii) Very senior citizen means an individual resident in India who is of the age of
       eighty years or more at any time during the relevant previous year

The DDO must ensure that the medical insurance referred to above shall be in accordance
with a scheme made in this behalf by-
   (a) the General Insurance Corporation of India formed under section 9 of the General
   Insurance Business (Nationalization) Act, 1972 and approved by the Central
   Government in this behalf; or
   (b) any other insurer and approved by the Insurance Regulatory and Development
   Authority established under sub-section (1) of section 3 of the Insurance Regulatory and
   Development Authority Act, 1999.
5.5.6 Deductions in respect of expenditure on persons or dependants with disability
5.5.6.1 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 Rs 75,000/- from his gross total income of that year.
However, where such dependant is a person with severe disability, an amount Rs 1,25,000/-
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.
5.5.6.2 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 Rs 75,000/-. However, where
such individual is a person with severe disability, a higher deduction of Rs 1,25,000/- 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 the 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.
3.      For the purposes of sections 80DD and 80 U some of the terms defined are as under:-

     (a) "Administrator" means the Administrator as referred to in clause (a) of section 2 of
     the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 ;
     (b) "dependant" means--
              (i)      in the case of an individual, the spouse, children, parents, brothers
                       and sisters of the individual or any of them;
               (ii)    in the case of a Hindu undivided family, a member of the Hindu
                       undivided family, dependant wholly or mainly on such individual or
                       Hindu undivided family for his support and maintenance, and who has
                       not claimed any deduction under section 80U in computing his total
                       income for the assessment year relating to the previous year;
   (c) "disability" shall have the meaning assigned to it in clause (i) of section 2 of the
   Persons with Disabilities (Equal Opportunities, Protection of Rights and Full
   Participation) Act, 1995 and includes "autism", "cerebral palsy" and "multiple
   disability" referred to in clauses (a), (c) and (h) of section 2 of the National Trust for
   Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple
   Disabilities Act, 1999;
   (d) "Life Insurance Corporation" shall have the same meaning as in clause (iii) of sub-
   section (8) of section 88;
   (e) "medical authority" means the medical authority as referred to in clause (p) of
   section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and
   Full Participation) Act, 1995 or such other medical authority as may, by notification, be
   specified by the Central Government for certifying "autism", "cerebral palsy",
   "multiple disabilities", "person with disability" and "severe disability" referred to in
   clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons
   with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999;
   (f) "person with disability" means a person as referred to in clause (t) of section 2 of
   the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full
   Participation) Act, 1995 or clause (j) of section 2 of the National Trust for Welfare of
   Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act,
   1999;
   (g) "person with severe disability" means--
               (i)     a person with eighty per cent or more of one or more disabilities, as
               referred to in sub-section (4) of section 56 of the Persons with Disabilities
               (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995;
               or
               (ii)    a person with severe disability referred to in clause (o) of section 2 of
               the National Trust for Welfare of Persons with Autism, Cerebral Palsy,
               Mental Retardation and Multiple Disabilities Act, 1999;
   (h) "specified company" means a company as referred to in clause (h) of section 2 of the
   Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.
5.5.7. Deduction in respect of medical treatment, etc. (Section 80DDB):
Section 80DDB allows a deduction in case of employee, who is resident in India, during the
previous year, of any amount actually paid for the medical treatment of such disease or
ailment as may be specified in the rules 11DD (1) for himself or a dependant. The deduction
allowed is equal to the amount actually paid is in respect of the employee or his dependant
or Rs. 40,000 whichever is less.
Now the deduction can be allowed on the basis of a prescription from an oncologist, a
urologist, nephrologist, a haematologist, an immunologist or such other specialist, as
mentioned in Rule 11DD. However, the amount of the claim shall be reduced by the amount
if any received from the insurer or reimbursed by the employer. Further in case of the person
against whom such claim is made is a senior citizen (60 age years or more) then the
deduction up to Rs 60,000/- is allowed and in case of very senior citizen (80 age years or
more) the deduction up to Rs 80,000/- is allowed.
For the purpose of this section, in the case of an employee, "dependant" means individual,
the spouse, children, parents, brothers and sisters of the employee or any of them, dependant
wholly or mainly on the employee for his support and maintenance.

Vide Notification SO No. 2791(E) dated 12.10.2015, Rules 11DD has been amended to do
away with the requirement of furnishing a certificate in Form 10-I. A prescription from a
specialist as specified in the Rules containing the name and age the patient, name of the
disease/ailment along with the name, address, registration number & qualification of the
specialist issuing the prescription would now be required.


 5.5.8 Deduction in respect of interest on loan taken for higher education (Section
80E):

Section 80E allows deduction in respect of payment of interest on loan taken from any
financial institution or any approved charitable institution for higher education for the
purpose of pursuing his higher education or for the purpose of higher education of his
spouse or his children or the student for whom he is the legal guardian.

The deduction shall be allowed in computing the total income for the Financial year in
which the employee starts paying the interest on the loan taken and immediately succeeding
seven Financial years or until the Financial year in which the interest is paid in full by the
employee, whichever is earlier.
For the purpose of this section -

       (a) "approved charitable institution" means an institution established for
       charitable purposes and approved by the prescribed authority section 10(23C), or
       an institution referred to in section 80G(2)(a);
       (b) "financial institution" means a banking company to which the Banking
       Regulation Act, 1949 applies (including any bank or banking institution referred to
       in section 51 of that Act); or any other financial institution which the Central
       Government may, by notification in the Official Gazette, specify in this behalf;
       (c) "higher education" means any course of study pursued after passing the Senior
       Secondary Examination or its equivalent from any school, board or university
       recognized by the Central Government or State Government or local authority or by
       any other authority authorized by the Central Government or State Government or
       local authority to do so;


5.5.9 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 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 the amount of donation exceeds Rs
2000/- unless the amount is paid by any mode other than cash.

5.5.10 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. 5,000/- 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.

5.5.11 Deductions in respect of certain donations for scientific research or rural
development (Section 80 GGA):

Section 80GGA allows deduction from total income of employee in respect of donations of
any sum as given in the Table below:
Sl                Donations made to persons            Approval /      Authority granting
No                                                     Notification        approval/
                                                      under Section      Notification
 1   A research association which has as its object u/s 35(1)(ii)     Central Government
     the undertaking of scientific research or to a
     University, college or other institution to be
     used for scientific research
 2   A research association which has as its object u/s 35(1)(iii)    Central Government
     the undertaking of research in social science or
     statistical research or to a University, college
     or other institution to be used for research in
     social science or statistical research
 3   an association or institution, which has as its furnishes the    Prescribed Authority
     object the undertaking of any programme of certificate u/s        under Rule 6AAA
     rural development, to be used for carrying out    35CCA (2)
     any programme of rural development approved
     for the purposes of section 35CCA
 4    an association or institution which has as its     furnishes the     Prescribed Authority
      object the training of persons for implementing    certificate u/s    under Rule 6AAA
      programmes of rural development.                   35CCA (2A)
 5    a public sector company or a local authority or    furnishes the     National Committee
      to an association or institution approved by the   certificate u/s     for Promotion of
      National Committee, for carrying out any            35AC(2)(a)       Social & Economic
      eligible project or scheme.                                                 Welfare
 7    a rural development fund                            notified u/s      set up and notified
                                                         35CCA (1)(c)         by the Central
                                                                               Government
 8    National Urban Poverty Eradication Fund             notified u/s      set up and notified
                                                         35CCA (1)(d)         by the Central
                                                                               Government

No deduction under this section is allowable in case:

     i) The employee has gross total income which includes income which is chargeable
         under the head "Profits and gains of business or profession".
     ii) The amount of donation exceeds Rs 10000 and is paid in cash.

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 donation and a receipt from the person to whom donation has been
made and ensure that the approval/notification has been issued by the right authority. DDO
must ensure a self-declaration from the employee that he has no income from "Profits and
gains of business or profession".

5.5.12  Deduction in respect of interest on deposits in savings account (Section
80TTA):
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.
The deduction is available if such savings account is maintained in a
         (a) banking company to which the Banking Regulation Act, 1949, applies (including
        any bank or banking institution referred to in section 51 of that Act);
         (b) co-operative society engaged in carrying on the business of banking (including a
        co-operative land mortgage bank or a co-operative land development bank); or
         (c) Post Office as defined in clause (k) of section 2 of the Indian Post Office Act,
        1898,

For this section, "time deposits" means the deposits repayable on expiry of fixed periods.

6.     REBATE OF Rs. 2500 FOR INDIVIDUALS HAVING TOTAL INCOME UPTO
Rs 3.5 LAKH [SECTION 87A]

Finance Act 2017 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
3,50,000/-. The amount of rebate available under section 87A is Rs 2,500/- or the amount of
tax payable, whichever is less from AY 2018-19.




7    TDS ON PAYMENT OF ACCUMULATED BALANCE UNDER
RECOGNISED PROVIDENT FUND AND CONTRIBUTION FROM APPROVED
SUPERANNUATION FUND:

7.1     The trustees of a Recognized Provident Fund, or any person authorized by the
regulations of the Fund to make payment of accumulated balances due to employees,
shall in cases where sub-rule(1) of Rule 9 of Part A of the Fourth Schedule to the Act
applies, at the time when the accumulated balance due to an employee is paid, make
therefrom the deduction specified in Rule 10 of Part A of the Fourth Schedule to the Act.

The accumulated balance is treated as income chargeable under the head "Salaries".

7.2     Where any contribution made by an employer, including interest on such
contributions, if any, in an approved Superannuation Fund is paid to the employee, tax on
the amount so paid shall be deducted by the trustees of the Fund to the extent provided in
Rule 6 of Part B of the Fourth Schedule to the Act. TDS should be at the average rate of tax
at which, the employee was liable to be taxed during the preceding three years or during the
period, if that period is less than three years, when he was member of the fund.

The deductor shall remain liable to deduct tax on any sum paid on account of returned
contributions (including interest, if any) even if a fund or part of a fund ceases to be an
approved Superannuation fund.

7.3     As per section 192A of the Act, w. e. f. 01.06.2015 the trustees of the EPF Scheme
1952 framed under section 5 of the EPF & Misc. Provisions Act, 1952 or any person
authorized under the scheme to make payment of accumulated balance due to employees,
shall, in a case where the accumulated balance due to an employee participating in a
recognized provident fund is includible in his total income owing to the provisions of Rule 8
of Part A of Fourth Schedule not being applicable at the time of payment of accumulated
balance due to the employee, deduct income tax thereon @ 10% if the amount of such
payment or aggregate of such payment exceeds Rs 50,000/-. In case the employee does not
provide his/her PAN or provides an invalid PAN then the deduction will have to be made at
maximum marginal rate.

   The Rule-8 of Part-A of fourth schedule excludes the following accumulated balance due
and becoming payable to the employee from the total income;

   (i)      If, he has rendered continuous service with his employer for a period of five years
               or more, or

   (ii)     If, though he has not rendered such continuous service, the service has been
              terminated by reason of -
           · the employees ill health, or
           · by the contraction or discontinuance of the employer's business or
           · other cause beyond the control of employee, or

   (iii)     if, on cessation of his employment, the employee obtains employment with any
              other employer, to the extent amount of such accumulated balance is transferred
             to his individual account in any recognized provident fund maintained by such
             other employer, or

   (iv)      if the entire balance standing to the credit of employee is transferred to his
              account under a pension scheme referred to in section 80 CCD and notified by
              the central Government.

          When the accumulated balance due and becoming payable to an employee includes
          any amount transferred from his individual account in any other recognized
          provident fund(s) maintained by his former employer(s), then in computing the
          period of continuous service the period or periods of continuous services rendered
          under former employer(s) shall be counted for the purposes of (i) and (ii) above.

          Under the above four situations at (i) to (iv), the accumulated balance due and
          payable to the employee is not liable for TDS under section 192 A.


8.   DDOS TO SATISFY THEMSELVES ABOUT 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. In case the
DDO is not satisfied about the genuineness of the employee's 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.


9. CALCULATION OF INCOME-TAX TO BE DEDUCTED:

9.1 Salary income for the purpose of section 192 shall be computed as follow:-

          (a) First compute the gross salary as mentioned in para 5.1 including all the
              incomes mentioned in para 5.2 and excluding the income mentioned in para 5.3.
          (b) Allow deductions mentioned in para 5.4 from the figure arrived at (a) above
              and compute the amount to arrive at Net salary of the employee
          (c) Add income from all other heads- `House property', `Profits & gains of Business
              or Profession', Capital gains and Income from other Sources to arrive at the
              Gross Total Income as shown in the form of simple statement mentioned para
              3.5. However it may be remembered that no loss under any such head is
              allowable by DDO other than loss under the Head "Income from House
              property" to the extent of Rs. 2.00 lakh.
          (d) Allow deductions mentioned in para 5.5 from the figure arrived at (c) above
              ensuring that the relevant conditions are satisfied. The aggregate of the
              deductions subject to the threshold limits mentioned in para 5.5 shall not exceed
              the amount at (b) above and if it exceeds, it should be restricted to that
              amount.

This will be the amount of total income of the employee on which income tax would be
required to be deducted. This income should be rounded off to the nearest multiple of ten
rupees.
9.2 Income-tax on such income shall be calculated at the rates given in para 2.1 of this
Circular keeping in view the age of the employee and subject to the provisions of sec.
206AA, as discussed in para 4.8. Rebate as per Section 87A up to Rs 2500/- to eligible
persons (see para 6) may be given. Surcharge shall be calculated in cases where applicable
(see para 2.2).

9.3 The amount of tax payable so arrived at shall be increased by educational cess as
applicable (2% for primary and 1% for secondary education) to arrive at the total tax
payable.

9.4 The amount of tax as arrived at para 9.3 should be deducted every month in equal
installments. 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.

10. MISCELLANEOUS:

10.1 These instructions are not exhaustive and are issued only with a view to guide
the employers to understand the various provisions relating to deduction of tax from
salaries. Wherever there is any doubt, reference may be made to the provisions of the
Income-tax Act, 1961, the Income-tax Rules, 1962, the Finance Act 2017, the relevant
circulars / notifications, etc.

10.2 In case any assistance is required, the Assessing Officer/the Local Public Relation
Officer of the Income-tax Department may be contacted.

10.3 These instructions may be brought to the notice of all Disbursing Officers and
Undertakings including those under the control of the Central/ State Governments.

10.4 Copies of this Circular are available at the following websites:

                       www.finmin.nic.in & www.incometaxindia.gov.in

Hindi version will follow.

                                                                            (Sandeep Singh)
                                                        Under Secretary to the Govt. of India

Copy to

   1.    All State Governments/Union Territories.
   2.    All Ministries/Departments of Government of India etc.
   3.    President's Secretariat
   4.    Vice-President's Secretariat
   5.    Prime Minister's Office
   6.    Lok Sabha Secretariat
   7.    Rajya Sabha Secretariat
   8.    Cabinet Secretariat
   9.    Secretary, U.P.S.C., Dholpur House, New Delhi
   10.   Secretary, Staff Selection Commission, Lodhi Complex, New Delhi
   11.   Supreme Court of India, New Delhi
   12.   Election Commission, New Delhi
   13.   Planning Commission, New Delhi
   14.   Secretariat of Governors/Lt. Governors of all States/Union Territories
15. All Integrated Financial Advisors to Ministries/Departments of Government of
    India
16. All Heads of Departments & Offices subordinate to the Department of Revenue CBDT,
    CBEC
17. Army Headquarters, New Delhi
18. Air Headquarters, New Delhi
19. Naval Headquarters, New Delhi
20. Director-General of Posts & Telegraphs, New Delhi(10 copies)
21. Comptroller & Auditor General of India (50 copies)
22. Accountant General - I, Andhra Pradesh, Hyderabad
23. Accountant General-II, Andhra Pradesh, Hyderabad
24. Accountant General, Assam, Shillong
25. Accountant General-I, Bihar, Ranchi
26. Accountant General-II, Bihar, Patna
27. Accountant General-I, Gujarat, Ahmedabad
28. Accountant General-II, Gujarat, Rajkot
29. Accountant General, Kerala, Thiruananthapuram
30. Accountant General, Madhya Pradesh, Gwalior
31. Accountant General, Tamil Nadu, Chennai
32. Accountant General-I, Maharashtra, Mumbai
33. Accountant General-II, Maharashtra, Nagpur
34. Accountant General, Karnataka, Bengaluru
35. Accountant General, Orissa, Bhubaneshwar
36. Accountant General, Punjab, Chandigarh
37. Accountant General, Himachal Pradesh, Simla
38. Accountant General, Rajasthan, Jaipur
39. Accountant General-I, II & III, Uttar Pradesh, Allahabad
40. Accountant General, West Bengal, Kolkata
41. Accountant General, Haryana, Chandigarh
42. Accountant General, Jammu & Kashmir, Srinagar
43. Accountant General, Manipur, Imphal
44. Accountant General, Tripura, Agartala
45. Accountant General, Nagaland, Kohima
46. Director of Audit(Central)Kolkata
47. Director of Audit(Central Revenue), New Delhi
48. Director of Audit (Central), Mumbai
49. Director of Audit, Scientific & Commercial Department, Mumbai
50. All Banks (Public Sector, Nationalized including State Bank of India)
51. Secretary, Reserve Bank of India Central Office P.B.No.406, Mumbai-400001 (25
    copies for distribution to its Branches).
52. Accounts Officer, Inspector General of Assam Rifles, (Hqrs), Shillong
53. All Chambers of Commerce & Industry
54. Lok Sabha /Rajya Sabha Secretariat Libraries(15 copies each)
55. All Officers and Sections in Technical Wing of CBDT
56. Asstt. Chief Inspector, RBI Inspection Deptt. Regional Cell Mumbai/Kolkata/
    Chennai/New Delhi/and Kanpur.
57. Controller of Accounts, Deptt. Of Economic Affairs, New Delhi
58. Manager , Reserve Bank of India, Public Debt Office, Ahmedabad/Bengaluru/
    Bhubaneswar/ Mumbai/Kolkata/Hyderabad/Kanpur/Jaipur/Chennai/Nagpur/New Delhi/
    Patna/ Guwahati/Trivandrum.
59. Accountant General, Post & Telegraph, Simla.
60. Controller General of Defence Accounts, New Delhi.
61. Directorate of Audit, Defence Services, New Delhi.
62. World Health Organisation, New Delhi.
63. International Labour Office, India Branch, New Delhi.
64. Secretary, Indian Red Cross Society, New Delhi
65. Atomic Energy Deptt. Mumbai.
66.   Secretary, Development Board, Ministry of Commerce&Industry.
67.   National Saving Organisation, Nagpur.
68.   Deputy Accountant General, Post & Telegraph, Kolkata.
69.   The Legal Adviser, Export-Import Bank of India, P.B.No.19969, umbai.4000021.
70.   Manager, State Bank of India, Local Head Office :-
                    i. Jeevan Deep Building, 1 Middleton Street, Kolkata.
                   ii. Circle Top House, Rajai Salai, Chennai-600001.
                 iii. Lucknow, Uttar Pradesh.
                  iv. Bank Street, Hyderabad-500001
                   v. Hamida Road, Bhopal-462001
                  vi. Shop Nos.101 to 105, Sector 17-B, Chandigarh
                 vii. New Amn.Building, Madam Cama Road, Mumbai-400021
                viii. 9, Parliament Street, New Delhi-110001
                  ix. Bhedru, Ahmedabad-380001
                   x. Judges Court Road, Post Box No.103, Patna-800001
                  xi. 59, Forest Park, Bhubaneshwar
                 xii. Guwahati, Assam
71.   Chief Controller of Accounts, CBDT, Lok Nayak Bhawan, Khan Market, New Delhi
72.   State Bank of Patiala, (Head Office), The Mall, Patiala
73.   State Bank of Bikaner and Jaipur, Head Office, Tilak Marg, 'C' Scheme Jaipur
74.   State Bank of Hyderabad, Head Office, Gun Factory, Hyderabad
75.   State Bank of Indore, 5 Yashwant Nivas Road, Indore.
76.   State Bank of Mysore (Head Office), K.G.Road, Bengaluru
77.   State Bank of Saurashtra, Behind Satyanarayan Road, Bhavnagar, Gujarat
78.   State Bank of Travancore, Post Box No.34, Thiruanathpuram
79.   N. S. Branch, Department of Economic Affairs, New Delhi
80.   The Editor, 'The Income-tax Reporter' Company Law Institute of India (P) Ltd., 88,
      Thyagaraja Road, Thyagaraja Nagar, Chennai-600017
81.   The Editor, Chartered Secretary, The Institute of Company Secretaries of India, 'ICSI
      House, 22, Institutional Area, Lodhi Road, New Delhi-110003
82.   The Editor, "Taxation" 174, Jorbagh, New Delhi
83.   The Editor, "The Tax Law Review" Post Box No.152, Jallandhar-144001
84.   The Editor, "Taxmann" Allied Services (P)Ltd., 1871, Kucha Chelan, Khari Baoli,
      Delhi-110006
85.   The Min. of Law (Deptt. of Legal Affairs), Shastri Bhawan New Delhi.
86.   Food Corporation of India, 16-17, Barakhamba Lane, New Delhi-110001
87.   IFCI, Bank of Baroda Building, 16, Parliament Street, New Delhi
88.   IDBI, IDBI Tower, Cuffe Parad, Mumbai-400 005
89.   ICICI, 163, Backbay Reclamation, Mumbai-400 020
90.   NABARD, Poonam Chambers, Dr.Annie Besant Road, P.B.No.552,Worli, Mumbai
91.   National Housing Bank, 3rd Floor, Bombay Life Building, 45, Veer Nariman Road,
      Mumbai
92.   IRBI, 19, Netaji Subhash Road, Kolkata
93.   All Foreign Banks operating in India
94.   Air India, New Delhi
95.   University Grants Commission, Bahadur Shah Jafar Marg, New Delhi
96.   The Deputy Director(Admn.), NSSO (FOD), Mahalonobis Bhavan, 6th Floor, 164,
      G.L.Tagore Road, Kolkata-700108.



                                                                           (Sandeep Singh)
                                                       Under Secretary to the Govt. of India
                                                                               ANNEXURE-I

                                        SOME ILLUSTRATIONS

                                                  Example 1

                                                                  For Assessment Year 2018-19

           (A) Calculation of Income tax in the case of an employee (Male or Female)
               below the age of sixty years and having gross salary income of:

                               i)        Rs.2,50,000/- ,
                               ii)       Rs.5,00,000/- ,
                               iii)      Rs.10,00,000/-
                               iv)       Rs.55,00,000/-. and
                               v)        Rs. 1,10,00,000/-

           (B) What will be the amount of TDS in case of above employees, if PAN is not
               submitted by them to their DDOs/Offices:

  Particulars                         Rupees        Rupees      Rupees      Rupees      Rupees
                                         (i)          (ii)       (iii)       (iv)         (v)
  Gross Salary Income                  2,50,000     4,00,000   10,00,000   55,00,000   1,10,00,000
  (including allowances)
  Contribution of G.P.F.                45,000        50,000    1,00,000    1,00,000      1,00,000


     Computation of Total Income and tax payable thereon

Particulars                           Rupees        Rupees      Rupees      Rupees       Rupees
                                         (i)          (ii)       (iii)        (iv)         (v)
Gross Salary                           2,50,000     4,00,000   10,00,000   55,00,000   1,10,00,000
Less: Deduction U/s 80C                  45,000       50,000    1,00,000    1,00,000      1,00,000
Taxable Income                         2,05,000     3,50,000    9,00,000   54,00,000   1,09,00,000

    (A)          Tax                        Nil       2,500*     92,500    14,32,500    30,82,500
          thereon
                   Surcharge                                               1,43,250       4,62,375
Add:
  (i) Education Cess @ 2%.                  Nil          50        1850     31,515         70,898
  (ii) Secondary and Higher                 Nil          25         925     15,758         35,449
       Education Cess @1%
          Total tax payable                 Nil        2,575     95,275    16,23,023    36,51,222
* After rebate of Rs 2500 u/s 87A
                                    Example 2
                                                      For Assessment Year 2018-19

Calculation of Income Tax in the case of an employee below the age of sixty years
having a handicapped dependent (With valid PAN furnished to employer).

S.No.                         Particulars                            Rupees
  1     Gross Salary                                                   4,20,000
  2     Amount spent on treatment of a dependant, being person             7000
        with disability (but not severe disability)
  3     Amount paid to LIC with regard to annuity for the                 60,000
        maintenance of a dependant, being person with disability(
        but not severe disability)

  4     GPF Contribution                                                  25,000

  5     LIP Paid                                                          10,000
  6     Interest Income on Savings Account                                12,000

Computation of Tax

S.No.                          Particulars                            Rupees
  1     Gross Salary                                                    4,20,000
  2     Add: Income from Other Sources                                 Rs 12,000
                              Interest Income on Savings Account
  3                                          Gross Total Income          4,32,000
  4     Less: Deduction U/s 80DD (Restricted to Rs.60,000/- only)          75,000

  5     Less: Deduction U/s 80C (i) GPF Rs.25,000/-                       35,000
                               (ii) LIP Rs.10,000/- =
        Rs.35,000/-

  6     Less: Deduction u/s 80TTA on Interest Income on savings            10000
        account (restricted to Rs 10000/-)
  7                                                  Total Income        3,12,000
  8                                   Income Tax thereon/payable              600
                   (includes Rebate of Rs 2500 as per Section 87A)
  9     Add:
        (i). Education Cess @2%                                                12
        (ii). Secondary and Higher Education Cess @1%                           6

 10                                    Total Income Tax payable              618
 11                                              Rounded off to              620
                                    Example 3

                                                      For Assessment Year 2018-19

Calculation of Income Tax in the case of an employee below age of sixty years
where medical treatment expenditure was borne by the employer (With valid
PAN furnished to employer).

S.No.      Particulars                                                Rupees
1       Gross Salary                                                    5,20,000
2       Medical Reimbursement by employer on the treatment of             35,000
        self and dependent family member
3       Contribution of GPF                                               20,000
4       LIC Premium                                                       20,000
5       Repayment of House Building Advance                               25,000
6       Tuition fees for two children                                     60,000
7       Investment in Unit-Linked Insurance Plan                          30,000
8       Interest Income on Savings Account                                 8,000
9       Interest Income on Time Deposit                                   15,000

Computation of Tax
S.No.                          Particulars                            Rupees
1     Gross Salary                                                      5,20,000
2     Add: Perquisite in respect of reimbursement of Medical              20,000
      Expenses
             In excess of Rs.15,000/- in view of Section 17(2)(v)
3     Income from Other Sources                                           23,000
              i)      Interest Income on Savings Account
                     Rs 8,000
              ii)     Interest Income on Time Deposit
                     Rs 15,000
4                                            Gross Total Income          5,63,000
5     a. Less: Deduction U/s 80C
      (i) GPF
      Rs.20,000/-
      (ii) LIC
      Rs.20,000/-
      (iii) Repayment of House Building Advance
      Rs.25,000/-
      (iv) Tuition fees for two children
      Rs.60,000/-
      (v) Investment in Unit-Linked Insurance Plan
      Rs.30,000/-
      Total         =Rs.1,55,000/-
                                                                         1,58,000
        Restricted to Rs. 1,50,000/-
        b. Less: Deduction u/s 80TTA on Interest Income on
        savings account (restricted to Rs 8000/- - available only
        on Savings account interest) Rs 8000
        Total deduction available Rs 1,58,000/-
6                                                  Total Income          4,05,000
7                     Income Tax thereon/payable                            7,750
8       Add:
     (i). Education Cess @2%                                   155
     (ii). Secondary and Higher Education Cess @1%              78
9                                 Total Income Tax payable    7983
10                                           Rounded off to   7980
                                     Example 4

                                                         For Assessment Year 2018-19

Illustrative calculation of House Rent Allowance U/s 10 (13A) in respect of
residential accommodation situated in Delhi in case of an employee below the age of
sixty years (With valid PAN furnished to employer).

S.No.     Particulars                                                   Rupees
1       Salary                                                             3,50,000
2       Dearness Allowance                                                 2,00,000
3       House Rent Allowance                                               1,40,000
4       House rent paid                                                    1,44,000
5       General Provident Fund                                               36,000
6       Life Insurance Premium                                                4,000
7       Subscription to Unit-Linked Insurance Plan                           50,000

Computation of total income and tax payable thereon

S.No.                             Particulars                           Rupees
1       Salary + Dearness Allowance + House Rent Allowance                6,90,000
        3,50,000+2,00,000+1,40,000 = 6,90,000
2                                                Total Salary Income        6,90,000
3       Less: House Rent allowance exempt U/s 10(13A):
        Least of:
        (a). Actual amount of HRA received=
        1,40,000
        (b). Expenditure of rent in excess of 10% of salary
             (including D.A. presuming that D.A. is taken
             for retirement benefit) (1,44,000-55,000)             =         89,000
        89,000
        (c). 50% of Salary(Basic+ DA)                              =
        2,75,000
                                                 Gross Total Income         6,01,000

        Less: Deduction U/s 80C
        (i) GPF                                        Rs.36,000/-
        (ii) LIC                                       Rs. 4,000
        (iii) Investment in Unit-Linked Insurance Plan Rs.50,000/-
        Total        =Rs.90,000/-                                            90,000

3                                                   Total Income            5,11,000
        Tax payable                                                            14700
        Add:
        (i). Education Cess @2%                                                 294
        (ii). Secondary and Higher Education Cess @1%                           147
                                        Total Income Tax payable              15141
                                                   Rounded off to             15140
                                        Example 5
                                                             For Assessment Year 2018-19

Illustrating valuation of perquisite and calculation of tax in the case of an employee below
age of sixty years of a private company in Mumbai who was provided accommodation in a
flat at concessional rate for ten months and in a hotel for two months ( With valid PAN
furnished to employer).
S.No.     Particulars                                                          Rupees
1       Salary                                                                    7,00,000
2       Bonus                                                                     1,40,000
3       Free gas, electricity, water etc. (Actual bills paid by                     40,000
        company)
4(a)    Flat at concessional rate (for ten month).  @                             3,60, 000
        Rs.36000/month
4(b     Hotel rent paid by employer (for two month)                                1,00,000
4(c)    Rent recovered from employee.                                                60,000
4(d)    Cost of furniture.                                                         2,00,000
5       Subscription to Unit Linked Insurance Plan                                   50,000
6       Life Insurance Premium                                                       10,000
7       Contribution to recognized P.F.                                              42,000

COMPUTATION OF TOTAL INCOME AND TAX PAID THEREON:
S.No.                               Particulars                             Rupees
1        Salary                                                                7,00,000
2        Bonus                                                                 1,40,000
3        Total Salary(1+2) for Valuation of Perquisites                        8,40,000
        Valuation of perquisites
4(a)     Perquisite for flat:
         Lower of (15% of salary for 10 months=Rs.1,05,000/-)
         and (actual rent paid= Rs 3,60,000) i.e. Rs. 1,05,000
4(b)     Perquisite for hotel :
         Lower of (24% of salary of 2 months=Rs 33,600)
         and (actual payment= Rs 1,00,000) i.e. Rs 33,600
4(c)     Perquisites for furniture(Rs.2,00,000) @ 10% of cost Rs.
         20,000
4(c)(i) Total of [4(a)+(b)+(c)] (1,05,000+ 33,600+
         20,000)Rs.158,600
         Less: rent recovered                                     (-)Rs.
         60,000
         =                                                          Rs.
         98,600                                                                1,38,600
4(d)     Add
         Perquisite for free gas, electricity, water etc. Rs.40,000 (+)
         Rs 98,600 [4(c)(i)] =      Rs1,38,600
                                                          Total perquisites
5        Gross Total Income (Rs.8,40,000+ 1,38,600)                            9,78,600
6        Gross Total Income                                                    9,78,600
7        Less: Deduction U/s 80C:
         (i). Provident Fund (80C)
         :42,000
         (ii). LIC (80C)
     :10,000
     (iii). Subscription to Unit Linked Insurance Plan(80C)
     :50,000/-                                                  1,02,000
                            Total                           =
     1,02,000
     Restricted to Rs 1,02,000 u/s 80C
8    Total Income                                               8,76,600
9    Tax Payable                                                  87,820
10   Add:
     (i). Education Cess @2%                                       1756
     (ii). Secondary and Higher Education Cess @1%                  878

11   Total Income Tax payable                                    90,454
12   Rounded off to                                              90,450
                                       Example 6
                                                            For Assessment Year 2018-19

Illustrating Valuation of perquisite and calculation of tax in the case of an employee
below the age of 60 years of a Private Company posted at Delhi and repaying House
Building Loan ( With valid PAN furnished to employer).

S.No.     Particulars                                                      Rupees
1       Salary                                                                4,00,000
2       Dearness Allowance                                                    1,00,000
3       House Rent Allowance                                                  1,80,000
4       Special Duties Allowance                                                12,000
5       Provident Fund                                                          60,000
6       LIP                                                                     10,000
7       Deposit in NSC VIII issue                                               30,000
8       Rent Paid by the employee for house hired by her                      1,20,000
9       Repayment of House Building Loan (Principal)                            60,000
10      Tuition Fees for three children (Rs.10,000 per child)                   30,000

Computation of total income and tax payable thereon

S.No.                              Particulars                             Rupees
1       Gross Salary (Basic+DA+HRA+SDA)                                      6,92,000
        Less: House rent allowance exempt U/s 10 (13A)
        Least of:
        (a). Actual amount of HRA received.
        :Rs.1,80,000
        (b). Expenditure on rent in excess of 10% of salary
             (Including D.A.)assuming D.A. is included for
             retirement benefits (1,20,000- 50,000)         :Rs.                70,000
        70,000
        (c). 50% of salary (including D.A)                  : Rs.
        2,50,000
2                                        Gross Total Taxable Income            6,22,000

        Less: Deduction U/s 80C
        (i). Provident Fund                             : 60,000
        (ii). LIP                                       : 10,000
        (iii). NSC VIII Issue                           : 30,000
        (iv). Repayment of HBA                         : 60,000
        (v). Tuition Fees (Restricted to two children) : 20,000
                                       Total            : 1,80,000
                                              Restricted to 1,50,000           1,50,000

                                                        Total Income           4,72,000
                       Income Tax thereon/payable                                11,100
        Add:
        (i). Education Cess @2%                                                    222
        (ii). Secondary and Higher Education Cess @1%                              111

                                          Total Income Tax payable              11,433
                                                    Rounded off to              11,430
                                       Example 7

                                                          For Assessment Year 2018-19

A.      Calculation of Income tax in the case of a retired employee above the age of
sixty years but below the age of 80 years and having gross pension of:

                        iv) Rs.4,50,000/-,
                        v) Rs.8,00,000/- ,
                        vi) Rs. 12,50,000/-.

B      What will be the amount of TDS in case of above employees, if PAN is not
submitted by them to their DDOs/Offices:

          Particulars                      Rupees       Rupees       Rupees
                                             (i)          (ii)        (iii)
          Gross Pension                    4,50,000     8,00,000     12,50,000
          Contribution of P.P.F.             70,000     1,00,000      1,50,000

Computation of Total Income and tax payable thereon
      Particulars                         Rupees            Rupees           Rupees
                                            (i)              (ii)            (iii)
      Gross Pension                         4,50,000          8,00,000        12,50,000
      Less: Deduction U/s 80C                  70,000         1,00,000          1,50,000
      Taxable Income                        3,80,000          7,00,000        11,00,000

               Tax thereon                     4,000               50,000        1,40,000
      Add:
      (i) Education Cess @ 2%.                     80               1000            2800
      (ii) Secondary and Higher                    40                500            1400
      Education Cess @1%
                   Total tax payable            4120               51,500        1,44,200
                                       Example 8

                                                               For Assessment Year 2018-19

A.     Calculation of Income tax in the case of a retired employee above the age of
80 years and having gross pension of:

                          i) Rs.5,00,000/-,
                          ii) Rs.8,00,000/- ,
                          iii) Rs. 12,50,000/-.

B      What will be the amount of TDS in case of above employees, if PAN is not
submitted by them to their DDOs/Offices:

            Particulars                           Rupees      Rupees      Rupees
                                                    (i)         (ii)        (iii)
            Gross Pension                         5,00,000    8,00,000    12,50,000
            Contribution of P.P.F.                  80,000    1,20,000     1,50,000

Computation of Total Income and tax payable thereon
        Particulars                    Rupees            Rupees          Rupees
                                         (i)               (ii)           (iii)
        Gross Pension                     5,00,000        8,00,000       12,50,000
        Less: Deduction U/s                  80,000       1,20,000        1,50,000
        80C
        Taxable Income                    4,20,000           6,80,000    11,00,000

        Tax thereon                               Nil         36,000      1,30,000
        Add:
        (i) Education Cess @                                     720         2600
        2%.                                                      360         1300
        (ii) Secondary and
        Higher Education
        Cess @1%
             Total tax payable                    Nil         37,080      1,33,900
                                       Example 9

                                Exemption u/s 10 (13A)

   1. Mr. A, employed with XYZ Ltd. Up to 31.10.2016, received following
      emoluments :

S.No.                              Particulars                             Rupees
  1.    Basic pay p.m.                                                       13,000
  2.    Bonus for the year received in July, 2015                             7,200
  3.    Club facility (for private use only) Expenditure by employer p.m.       700
  4.    House Rent Allowance p.m.                                             2,800
  5.    Employer's contribution to URPF p.m. (Mr. A also made equal           1,000
        contribution)
        W.e.f. 01.11.2015, Mr. A joined PQR Ltd., with following pay package :
 1.     Basic pay p.m.                                                         18,000
 2.     House Rent Allowance p.m.                                               1,600
 3.     Club Facility (for private use only) Expenditure by employer p.m.       1,100
 4.     Use of car for journey between office and residence ­ Employer's          600
        expenditure p.m.
 5.     Employer's contribution to RPF p.m. (Mr. A also made equal              2,000
        contribution)
                          Other particulars of Mr. A are as under :
 1.     Mr. A resides at Amritsar paying a monthly rent of                      3,500
 2.     Mr. A's income from other sources                                      95,000
 3.     Mr. A contributed to LIC/PPR/NSC etc.                                  20,000
           Compute Mr. A's taxable income and tax liability for A.Y. 2017-18.

Computation of Tax

S.No.                             Particulars                              Rupees
  1.  Income from Salary
      (a) From XYZ Ltd.
      Basic pay (Rs.13,000 x 7)                                               91,000
      Bonus                                                                    7,200
      Club facility (Rs.700 x 7)                               Rupees          4,900
      H.R.A. (Rs.2,800 x 7)                                    19,600
      Less : Exempt u/s 10(13A)                                15,400          4,200
      Employer's Contribution to U.R.P.F.                                   1,07,300
      (b) From PQR Ltd.                                        Rupees
      Basic pay (Rs.18,000 x 5)                                90,000
      H.R.A. (Rs.1,600 x 5)                                     8,000
      Less : Exempt u/s 10(13A)                                 8,000
      Club Facility (Rs.1,100 x 5)                              5,500
      Facility of Car (not taxable as perquisite)              15,400
      Employer's Contribution to R.P.F.                                       95,500
      Gross Salary                                                          2,02,800
      Less: Deduction                                                           -----
      Net Salary                                                            2,02,800
  2.  Income from Others Sources                                              95,000
      Gross Total Income                                                    2,97,800
Less : Deduction u/s 80C
    : Contribution to LIC/PPF/NSC                   Rs. 20,000
    : Contribution to RPF ( Rs.2000 x 5)            Rs. 10,000     30,000
                                                 Total Income    2,67,800
                  Computation of Tax Liability
Tax payable on Rs.2,67,800                                           8,90
Less : Rebate u/s 87A                                                8,90
Net Income-tax payable                                                Nil
Add : Surcharge                                                       Nil
Add : EC @ 2%                                                          ---
Add : S&HEC @ 1%                                                       ---
Total Tax Payable                                                     Nil
                                      Example 10

   2. One Computation of Taxable Salary and allowances, Deduction for Interest
      on Housing Loan and Deduction u/s 80C.

         Mr. X, a Central Govt. Officers in Delhi, is receiving Basic Pay Rs.40,000, DA at
prescribed rates, transport allowances @ Rs.3600+DA thereon, and HRA (existing- from
1st July 2017 @24% of basic pay (though living in his own house). His date of increment
is Ist July. The following are other particulars of his income. Compute his taxable income
and tax payable, for A.Y.2018-19.

S.No.                            Particulars                                   Rupees
  1.  Honorarium for valuation of answer books of a departmental                  3,000
      examination
  2.  Fee for work done for a private body (1/3rd of fees has been                  6,000
      retained by Govt.)
  3.  Contributions to G.P.F. p.m.                                                  4,700
  4.  Postal Life Insurance Premium financed from G.P.F. p.m.                         280
  5.  Contribution to Central Govt. Employees Group Insurance Scheme                  500
      p.m.
  6.  Life Insurance Premium (being a Life Insurance Policy of                     10,500
      Rs.1,00,000 taken in name of his wife before 1.04.2012)
  7.  Contribution to Public Provident Fund                                        10,000
  8.  Repayment of HDFC loan borrowed after 1.04.1999 EMI                        3,00,000
      Rs.25,000 (Towards loan Rs.95,000, towards interest Rs.2,05,000)

Computation of Tax

S.No.                           Particulars                                    Rupees
  1.  Income from Salary
      Basic Pay @ Rs 40,000 p.m
       (March to June '17)                                        1,60,000
      @ Rs 41,200 p.m * (July 2017 to Feb 2018)                   3,29,600       4,89,600

       Dearness Allowance
         1.3.2017 to 30.06.2017 @ 4% i.e., Rs 40,000 p.m             6,400
         1.7.2017 to 31.12.2017 @ 5% i.e. Rs 41,200 p.m             14,420
         1.1.2018 to 28.02.2018 @ 7% (assumed) i.e.,Rs.              5,768
       41,200 p.m                                                                5,16,188
       House Rent Allowance
         @ 30% of basic pay (on existing old pay & @
       24% from 01.07.2017)
        1.3.2017 to 30.06.2017 @ Rs 7,000                           21,000
       1.07.2017 to 28.2.2018 @ Rs 9,888                            79,104       1,00,104







       Transport Allowance
       1.3.2017 to 30.6.2017 @ Rs 3200 p.m                          12,800
       1.7.2017 to 31.12.2017 @ Rs 3780 p.m                         22,680
       1.1.2018 to 28.2.2018 @ Rs 3852 p.m                            7704
                                                                    43,184
         Less: Exempt u/s 10(14) @ 800 p.m                          19200          23984
                                                                       6,40,276
       Honorarium                                                         3,000
       Fees (2/3 retained by him)                                          4000
       Total Salary                                                    6,47,276
       Less: Standard Deduction                                               -
       Net Salary                                                      6,47,276
 2.    Income from House Property
       Self-occupied u/s 23(2)(a) deemed at nil
       Less: Interest on HDFC Loan                      2,00,000 (-)   2,00,000
       Gross Total Income                                              4,47,276
       Less: Deduction u/s 80 C
           - GPF @ Rs 4,700/-p.m                             56,400
           - CGEGIS @ Rs 500/- p.m                            6,000
           - Life Insurance Premium                         10, 500
           - Repayment of HDFC Loan                          95,000
           - Deposit in Public Provident Fund                10,000
                                                           1,77,900
                                                                       1,50,000
       Restricted to a maximum of Taxable Income                       2,97,276

                         Computation of Tax Liability
        Tax payable                                                      2,365
        Add: Surcharge                                                       -
        Add: Education Cess                                                 71
        Total Tax Liability                                               Nil*
* After rebate of Rs 2500 u/s 87A
                                                                                ANNEXURE-II


                                          FORM NO.12BA
                                         {See rule 26A(2)(b)}

       Statement showing particulars of perquisites, other fringe benefits or amenities and
       profits in lieu of salary with value thereof

       1) Name and address of employer :

       2) TAN

       3) TDS Assessment Range of the employer :

       4) Name, designation and PAN of employee :

       5) Is the employee a director or a person with :
       substantial interest in the company
          (where the employer is a company)

       6) Income under the head "Salaries" of the employee :
          (other than from perquisites)

       7) Financial Year :

       8) Valuation of Perquisites

S.No      Nature of perquisite           Value of          Amount, if        Amount of
              (see rule 3)           perquisite as per    any recovered      perquisite
                                          rules              from the     chargeable to tax
                                          (Rs.)             employee       Col(3) - Col(4)
                                                               (Rs.)            (Rs.)
 (1)                (2)                    (3)                  (4)              (5)
1      Accommodation
2      Cars/Other automotive
3      Sweeper, gardener,
       watchman or personal
       attendant
4      Gas, electricity, water
5      Interest        free     or
       concessional loans
6      Holiday expenses
7      Free or concessional travel
8      Free meals
9      Free Education
10     Gifts, vouchers etc.
11     Credit card expenses
12     Club expenses
13     Use of movable assets by
       employees
14     Transfer of assets to
     employees
15   Value of any other
     benefit/amenity/service/pri
     vilege
16   Stock      options      (non-
     qualified options)
17   Other benefits or amenities
18   Total value of perquisites
19   Total value of Profits in
     lieu of salary as per 17(3)


     9. Details of tax, -
                    (a) Tax deducted from salary of the employee u/s 192(1)                     .........
                    (b) Tax paid by employer on behalf of the employee u/s 192(1A)              .........
                    (c) Total tax paid                                                          .........
                    (d) Date of payment into Government treasury                                .........

                                  DECLARATION BY EMPLOYER

     I        ...................        s/o       ......................          working             as
     .................................(designation) do hereby declare on behalf of ......................
     (name of the employer) that the information given above is based on the books of
     account, documents and other relevant records or information available with us and the
     details of value of each such perquisite are in accordance with section 17 and rules framed
     thereunder and that such information is true and correct.


     Signature of the person responsible
                                                               for deduction of tax
     Place...
     Date...                                                       Full Name ........................

                                                         Designation..............................
                                                                                Annexure IIa
                                      FORM NO.12BB
                                       (See rule 26C)

1. Name and address of the employee:
2. Permanent Account Number of the
employee:
3. Financial year:

                          Details of claims and evidence thereof
Sl                           Nature of claim                           Amount    Evidence /
No.                                                                     (Rs.)    particulars
  (1)                                (2)                                 (3)         (4)
1       House Rent Allowance:
        (i) Rent paid to the landlord
        (ii) Name of the landlord
        (iii) Address of the landlord
        (iv) Permanent Account Number of the landlord

         Note: Permanent Account Number shall be furnished if
        the aggregate rent paid during the previous year exceeds
        one lakh rupees
2       Leave travel concessions or assistance
3       Deduction of interest on borrowing:
        (i) Interest payable/paid to the lender
        (ii) Name of the lender
        (iii) Address of the lender
        (iv) Permanent Account Number of the lender
        (a) Financial Institutions(if available)
        (b) Employer(if available)
        (c) Others
4       Deduction under Chapter VI-A
        (A) Section 80C,80CCC and 80CCD
           (i) Section 80C
                                                 (a)
                                                     ...............
                                                     .....
                                                 (b)
                                                     ...............
                                                     .....
                                                 (c)
                                                     ...............
                                                     .....
                                                 (d)
                                                     ...............
                                                     .....
                                                 (e)
                                                               ...............
                                                               .....
                                                         (f)
                                                               ...............
                                                               .....
                                                         (g)
                                                               ...............
                                                               .....
           (ii) Section 80CCC
           (iii) Section 80CCD
         (B) Other sections (e.g. 80E, 80G, 80TTA, etc.) under
         Chapter VI-A.
                             (i) section...................
                            (ii) section...................
                            (iii) section...................
                            (iv) section...................
                            (v) section...................
                                               Verification
I,.......................,son/daughter of............................. do hereby certify that the
information given above is complete and correct.
Place......................................................
                                                                                 (Signature of the
Date.......................................................                      employee)
Designation .........................................                            Full Name
                                                                        ANNEXURE III

POINT NO.4.4.2.1 OF CIRCULAR OF DEDUCTION OF TAX AT SOURCE ­
INCOME TAX DEDUCTION FROM SALARIES U/S 192 OF THE INCOME-TAX
ACT, 1961 ­ FINANCIAL YEAR 2015-16
Compulsory filing of Statement by PAO, Treasury Officer, etc. in case of payment of
TDS by Book Entry.
1. Procedure of preparation and furnishing Form 24G at TIN-Facilitation Centres
(TIN-FCs):
The Form 24G should be prepared by the PAO/DTO/CDDO (hereinafter referred to as
AOs) as per the data structure (File format) prescribed by the DIT (Systems), Delhi which
is available on TIN website www.tin-nsdl.com. The AOs can prepare Form 24G either by
using in-house facilities, third party software or by using form 24G Return Preparation
Utility (RPU) developed by NSDL e-Governance Infrastructure Limited (NSDL), which
is freely downloadable from the TIN web-site www.tin-nsdl.com.
After preparation of form 24G, the AO is required to validate the same by using the Form
24G File Validation Utility (FVU) which is freely available on TIN website.
Once file is validated through FVU, `.fvu file' in CD/DVD/Pen Drive along with physical
Statement Statistic Report (SSR) signed by the AO, to be furnished at TIN-FCs. On
successful acceptance of Form 24G at the TIN-FC, an acknowledgement containing 15
digit Token no. is provided to the AO. The AO can view the status of Form 24G on TIN
website.
Book identification Number (BIN) is generated for each `DDO record with valid TAN'
reported in Form 24G, which is further disseminated to the AOs on email ID mentioned
in Form 24G. AOs need to communicate the BIN details to respective DDOs. BIN is to be
quoted by the DDOs in quarterly e-TDS/TCS statements. BIN consists of receipt number
of Form 24G. DDO serial number and date of transfer voucher.
The AO is required to furnish Form 24G within ten days from the end of the month in
respect of tax deducted by the deductors and reported to him for that month. Only one
regular Form 24G for a `month-FY' can be submitted.
1.1 Correction in Form 24G:
AO can file a correction Form 24G for any modification or cancellation of Form 24G
accepted at TIN central system. Preparation and validation of correction Form 24G is in
line with regular form 24G. The validated Form 24G correction file (.fvu file) copied on a
CD/pen drive is to be submitted along with the provisional receipt of original Form 24G
and SSR to TIN-FC. On successful acceptance of correction Form 24G at the TIN-FC, an
acknowledgement containing 15 digit Token no. is provided to the AO. The AO can view
the status of Form 24G on TIN website.
2. Online upload of Form 24G at TIN websites:
For online upload of Form 24G at TIN website, the Accounts Office Identification
Number (AIN) is a pre-requisite. For online AIN registration, AO need to file at least one
Form 24G through TIN-FC. After AIN registration, AO can file Form 24G through AO
Account at TIN website. Preparation and validation of correction Form 24G is in line with
regular Form 24G (submitted at TIN-FC). The validated Form 24G correction file (.fvu
file) is to be uploaded at TIN website. There is no need to submit SSR in online upload.
For Form 24G accepted at TIN Central System an online acknowledgement containing a
15 digit token number is generated and displayed to the AO. The format of the
acknowledgement is identical to the one issued by the TIN-FC.
No charges are applicable to AOs for online upload of Form 24G.
On login, AO can also View/Download BIN details and update demographic details.
No Digital Signature Certificate (DSC) is required for registration and online uploading
of Form 24G.
2.1 Online uploading of correction Form 24G at TIN website:
AO can file a correction Form 24G for any modification or cancellation of Form 24G
accepted at TIN Central System. Preparation and validation of correction form 24G is in
line with regular form 24G. The validated Form 24G correction file (.fvu file) can be
uploaded online through AO account at TIN website. For correction Form 24G accepted
at TIN central system, an online acknowledgement containing a 15 digit token number is
generated and displayed to the AO. The format of the acknowledgement is identical to the
one issued by the TIN-FC. There is no need to submit SSR and provisional receipt of
original form 24G in online upload.
3. For FAQs and further details, AOs are advised to log on TIN website www.tin-
nsdl.com
                                        ******
                                                                           ANNEXURE IV

  Furnishing of Monthly Form No. 24G Statements by Pay and Accounts
 Officers (PAOs)/District Treasury Officers (DTOs)/Cheque Drawing and
                      Disbursing Officers(CDDOs)

   1. Under what income tax rule should Form 24G be filed?

Income-tax Department Notification no. 41/2010 dated May 31, 2010amended the Income
Tax Rule 30 which mandates that in case of an office of the Government, where tax has been
paid to the credit of Central Government without the production of a challan (associated with
deposit of the tax in a bank), the relevant PAO / CDDO / DTO or an equivalent office of
the government (herein after called as AO in this document) is required to file Form
24G on monthly basis.

   2. Who is the relevant PAO/CDDO/DTO who is liable for filing Form 24G?

A relevant PAO/CDDO/DTO is that office to whom the Deductor/DDO (TAN holder) reports
remittance of TDS/TCS through book adjustment. Generally, the Central Government DDOs
report TDS through book entry to their respective Pay and Accounts Officers (PAOs) and the
State Government DDOs report TDS through book entry to their respective District Treasury
Officers(DTOs). Such PAOs and DTOs are required to file Form 24G on monthly basis.

There are also cases of Cheque Drawing and Disbursing Officers (CDDOs) who report TDS
through book entry directly to State AG. For example, PWD, Forest Department etc. Such
CDDOs are also required to file Form 24G on monthly basis. Schematic Diagram at
Annexure-III clarifies the person responsible for filing Form 24G in different scenarios.

   3. Can the same office/officer also act as DDO and AO?

Ordinarily, the PAO office is the one to whom the DDO reports the TDS and therefore, both
should be from different offices. However, where the DDO and AO are the same, as in the
case of CDDOs, the statistics report of Form 24G should be counter signed by his superior
officer.

   4. What is AIN and who should apply?

Accounts Office Identification Number (AIN) is a unique seven digit which is allotted by the
Directorate of Income Tax (Systems), Delhi, to every AO. Each AO is uniquely identified in
the system by this number. AOs are required to apply for AIN with jurisdictional TDS office.
The AIN application can be downloaded from TIN site. Every AIN holder is required to file
Form 24G.

Each DDO is identified in the system by a Tax Deduction and Collection Account Number
(TAN). This number is allotted by Income Tax Department.

   5. Where should the Accounts Office Identification Number (AIN) application be
      submitted ?

        The duly filled and signed application for AIN allotment is to be submitted in
physical form by the PAO / CDDO / DTO to the jurisdictional CIT (TDS). Complete and
correct AIN application forms will be forwarded by the jurisdictional CIT (TDS) to NSDL e-
Governance Infrastructure Limited (NSDL), Times Tower, 1st Floor, Kamala Mills
Compound, SenapatiBapatMarg, Lower Parel, Mumbai - 400013 recommending allotment of
AIN to the PAO / CDDO / DTO.

   6. What information should be submitted through Form 24G?
Every AO should furnish one complete, correct and consolidated Form 24G every month
having details of each type of deduction / collection separately viz. TDS-Salary / TDS-Non
Salary / TDS-Non Salary Non Residents / TCS made by each DDO under his jurisdiction.

   7. Where should Form 24G be submitted?

Form 24G is to be furnished only in electronic form in a CD/pen drive at TIN-FCs or online
through AO Account at www.tin-nsdl.com web portal. The facility to submit Form No. 24G
online is available free of cost. Provisional Receipt Number (PRN) is issued as an
acknowledgement of the receipt of Form 24G.

   8. How to register for online facility?

Registration for AO Account is mandatory for filing Form No. 24G online through TIN
website, www.tin-nsdl.com. Registration AO Account is required once only. AO required to
submit the Form No. 24G at TIN-FC at least once to comply with the Know Your Customer
(KYC) norms for registration of the AO Account. After registration, it is optional for AO
either to submit the Form No.24G in CD/Pen drive at TIN-FC or online.

    9. What are the functionalities available with AO Account?
Through the AO Account, the AO can view the status of Form No. 24G filed, obtain BIN
(Book Identification Number) details, update AO profile and upload Form No. 24G. The
status tracking is based on AIN and concerned Provisional Receipt Number (PRN) of Form
24G.

   10. Can the AO furnish Form No. 24G in paper form?

No. Form 24G is to be filed only in electronic form.

   11. Can the AO submit the electronically prepared Form No.24G at the Income Tax
       Office?
       No. Electronically prepared Form No.24G can only be submitted at TIN-FC or online
       .

   12. What does Form 24G contain?

Every Form 24G should be prepared in accordance with the data structure prescribed by the
Income Tax Department (ITD). Form 24G contains-

   ·   Details of the AO filing Form 24G (AIN, name, demographic information, contact
       details).
   ·   Category of AO (Central / State Government) along with details of ministry / state.
   ·   Statement details (month and year for which Form 24G is being filed).
   ·   Payment summary; nature of deduction wise (TDS ­ Salary /TDS Non-salary / TDS ­
       Non-salary Non-resident / TCS).
   ·   DDO wise payment details (TAN of DDO, name, demographic details, total tax
       deducted and remitted to the Government account (A.G. / Pr.CCA).
   ·   DDOs which are associated with the AO. If the AO wants to add/delete or update
       details of DDO, same should be mentioned in the statement.

   13. What is the procedure to prepare the Form 24G statement?

The AOs can prepare Form 24G either by using in-house facilities, third party software or by
using Form 24G Preparation Utility developed by NSDL, which is freely downloadable from
the TIN web-site (www.tin-nsdl.com) or ITD website (www.incometaxindia.gov.in).
Once the statement is prepared, the AO shall validate the same by using File Validation
Utility (FVU) developed by NSDL and freely available at the TIN or ITD website. The
statement can be furnished in Compact Disk (CD) at any of the TIN-Facilitation Centres
(TIN-FC) managed by NSDL along with Form 24G Statement Statistics Report (generated
through File Validation Utility), duly signed by the AO. The list of TIN-FCs is available at
TIN or ITD website.

Once Form 24G is accepted by the TIN-FC, it will issue a provisional receipt with a unique
Provisional Receipt Number (PRN) to the AO as a proof of submission of the statement.

    14. What is Form 24G Preparation Utility?
The Form 24G Preparation Utility is a Java based utility. Form 24G Preparation Utility can be
freely downloaded from www.tin-nsdl.com. After downloading, it needs to be saved on the
local disk of the machine.

JRE (Java Run-time Environment) [versions: SUN JRE: 1.4.2_02 or 1.4.2_03 or 1.4.2_04 or
IBM JRE: 1.4.1.0] should be installed on the computer where Form 24G Preparation Utility is
being installed. JRE is freely downloadable from http://java.sun.com and
http://www.ibm.com/developerworks/java/jdk or you can ask your computer vendor
(hardware) to install the same for you.

Form 24G Preparation Utility can be executed on Windows platform(s) Win 2K Prof. / Win
2K Server/ Win NT 4.0 Server/ Win XP Prof. To run the `Form 24G Preparation Utility',
click on the `24GRPU.bat' file.

If JRE is not installed on the computer, then on clicking `24GRPU.bat', a message will be
displayed. In such cases, install JRE and try again. If appropriate version of JRE is installed,
then the `Form 24G Preparation Utility' will be displayed.

   15. What are the steps to download and install Form 24G Preparation Utility?

For assistance in downloading and using Form 24G Preparation Utility, please read the
instructions provided in `Help' in the Form 24G Preparation Utility. This utility can be used
for preparation of Form 24G with upto 75,000 records. Form 24G Preparation Utility (version
1.2) should be used for regular and correction statements.

   16. What is File Validation Utility (FVU)?

The AO should pass the Form 24G (Regular/Correction) file generated using Preparation
Utility through the File Validation Utility (FVU) to ensure format level accuracy of the file.
This utility is also freely downloadable from TIN website. In case the Form 24G contains any
errors, the AO should rectify the same. After rectifying the errors, user should pass the
rectified Form 24G through the FVU. This process should be continued till an error-free Form
24G is generated. Form 24G (regular/correction) prepared from F.Y. 2005-06 onwards can be
validated using this utility.

The Form 24G FVU is a Java based utility. JRE (Java Run-time Environment) [versions:
SUN JRE: 1.4.2_02 or 1.4.2_03 or 1.4.2_04 or IBM JRE: 1.4.1.0] should be installed on the
computer where the Form 24G FVU is being installed. JRE is freely downloadable
from http://java.sun.com and http://www.ibm.com/developerworks/java/jdk or you can
request your computer vendor (hardware) to install the same for you.

The Form 24G FVU setup comprises of two files, namely-

   ·   Form 24G FVU.bat: This is a setup program for installation of FVU.
   ·   Form 24G_FVU_STANDALONE.jar: This is the FVU program file.
These files are in an executable zip file (Form24GFVU.exe) (version 1.2). These files are
required for installing the Form 24G FVU.

Instructions for extracting and setup are given in:

    ·   Form 24G FVU Extract and Setup

17. After preparation of Form No. 24G statement through RPU, three files are
generated when such statement passes through FVU. Is the AO required to take all
three files in CD /Pen drive to TIN-FC?

When a valid file is passed through the FVU, the following three files are generated:-
        (a) The upload file
        (b) Form 24G statement Statistics Report and
        (c) Form 24G.
       Every Form 24G (upload file) mentioned at Sr. No. (a) is to be saved in CD and the
same should be accompanied with the Statement Statistic Report mentioned at Sr. No. (b), in
paper form duly signed by the Accounts Officer, which needs to be submitted at TIN-FCs.

        Form 24G: Form 24G, at serial number (c) above, is a reader friendly format of
TDS/TCS Book Adjustment form. This is like the physical form of Form 24G in html format.
It contains all the details of Accounts Officer as well as Drawing and Disbursement Officer.
There is no need to submit this file.
18. Can the Form 24G Statement be corrected?
Every Form 24G is to be prepared in accordance with the data structure prescribed by the
Income Tax Department (ITD). If it does not confirm to the new data structure it will be
rejected by TIN.

As per procedure, statements relating to Form 24G should be complete and correct. No
fragmented statements are expected to be filed (i.e. separate statements giving details for
deductions under different form type with respect to the same AIN, FY and month). However,
any mistake made in an original accepted statement can be rectified by submitting a
`correction statement'. For correction, the latest version of the RPU should be
downloaded from TIN website.

Form 24G corrections can also be uploaded directly at the TIN website. For direct upload at
TIN Central system, AO has to first register AIN at TIN website and upload the Form 24G
correction.

19. What are the different kinds of correction statements allowed?

There are two different types of correction statements that can be furnished by the AO. These
are listed below.

    · M (Modify) -: For any modification in the existing Form 24G statement.
    · X (Cancel) -: For cancellation of an existing Form 24G statement.
For preparation of correction statement, the receipt number of the original statement and
receipt number of the previous statement is mandatory.

In case of first correction, PRN of original statement should be provided in field "Receipt
number of Original Statement" and also in the field "Receipt number of Previous
Statement ".
In case a correction statement has already been filed earlier, PRN of original statement should
be provided in field "Receipt number of Original Statement" and PRN of last correction to
be mentioned in field "Receipt number of Previous Statement".

20. What is M ­Type of Correction Statement?

This type of correction statement is to be furnished by AO, if it wishes to update any of its
details like its name, address, Responsible person details, category, Ministry, State or deletion
and addition of DDO (Drawing & Disbursing Officer) etc. Modifications in AIN (Account
office Identification Number), Financial Year and Month are not allowed.

There are three modes by which changes can be made in the DDO details provided in original
Form 24G statement:

    ·  Add: DDO records can be added to the original Form 24G statement
    ·  Update: details of DDO (i.e. TAN, TAN Name, demographic and contact details,
               amount of tax deducted and remitted, nature of deduction) can be updated for
               the DDO records provided in original or subsequent correction statement
   · Delete: DDO records provided in original Form 24G or subsequent correction
       statement       can be deleted
M-type correction statement will always contain AO details and details of DDO which are
added and/or deleted.

21. What is X­Type of Correction Statement?

This type of correction statement is to be furnished by AO if it wishes to cancel an existing
Form 24G statement. Filing of Correction type X will allow AOs to file regular Form 24G for
the same primary key (AIN, Financial year and Month). This type of correction is to be filed
only if the Form 24G has been filed with wrong AIN, F.Y. or Month.

22. What is BIN?

BIN stands for "Book Identification Number" for each form type mentioned in the accepted
monthly form No. 24G. BIN consists of the following:
(i) Receipt Number: Receipt number is a seven digit unique number generated on successful
    acceptance of Form 24G.
(ii) DDO Serial Number: It is a five digit unique number generated for every DDO
    transaction reported in Form 24G statement.
(iii) Transfer Voucher Date: It is the last date of month for which Form 24G statement is
filed.

BIN is required to be disseminated to the respective DDOs who in turn are required to report
the same in the TDS/TCS Statement. The quoting of BIN has been made mandatory w.e.f
01stFebruary, 2012. BIN is a unique number to verify the claim of TDS deposited without
production of challan. As it is a verification key, it is advised that valid BIN disseminated by
AO to the respective DDO should be correctly filled in TDS statement.
23. When is BIN generated?

On processing of accepted Form 24G statement, BIN is generated for each DDO record (with
valid TAN) present in Form 24G statement. BIN are generated at TIN Central System and
intimated to the PAOs with details of TAN and Form Type.

24. What do the PAO and DDO have to do with the BIN?
PAOs have to disseminate the BINS to respective DDOs. While preparing the quarterly
TDS/TCS statement, DDO has to quote the said BIN details, if tax has been paid through
transfer voucher (book adjustment).

BINs generated for a particular 24G are mailed to the AO on the e-mail id provided in Form
24G. In addition, AO may also download the BIN details through AO login at TIN site.

25. Under what circumstances will BIN be generated?

       ·   BIN will be generated for valid TAN-DDO records added in Form 24G correction
           statement.
       ·   BIN will be generated for DDO records where invalid TANs/TAN not present in
           Income Tax Department database is updated with a valid TAN.
       ·   New BIN will not be generated for any update made in TAN name, demographic and
           contact details, amount of Tax deducted and remitted or nature of deduction.
       ·   BIN details will not be generated for deleted DDO records.

26. What is the utility of BIN?
The BIN details and amount of TDS reported in the quarterly TDS/TCS Statement filed by
the DDO will be matched with the respective details filed in Form No.24G filed by the PAO
for verification purpose.

27. Are there instances where BIN details and amount of TDS reported in TDS/TCS
statements do not match with that reported in Form 24G? What are the consequences of
such mismatch?

(i)     Instances of wrong/incorrect reporting of BIN by the DDOs in the TDS/TCS
Statement have been observed. Reporting of incorrect BINs and corresponding amount in
TDS statement will lead to mismatch with the respective amount as reported in the Form No.
24G. In this situation, the corresponding deductees may not get credit of the TDS/TCS.
Therefore, the BIN as disseminated by the respective PAO should be reported correctly along
with the corresponding amount in the TDS/TCS Statement filed by the DDOs.
(ii)    In a number of cases, one distinct DDO has been found to be reported by more than
one AO in the Form No. 24G for the same form type of TDS statement which is not a valid
scenario. The DDOs and respective AOs are advised to reconcile the issue and one DDO
should be mapped to one AO only for a particular form type for a particular month.

28. What are the duties of PAOs/DTOs/CDDOs?

   i.      To apply for AIN with jurisdictional TDS office. AIN application can be downloaded
           from TIN site.
  ii.      To obtain correct TAN from the reporting DDOs.
 iii.      To file Form No. 24G (in CD, DVD, Pen Drive), within 10 days from the end of the
           month, electronically either at TIN-FC or by direct online upload at TIN website.
 iv.       To track status of the filed Form No. 24G through TIN website.
  v.       To download Book Identification Number (BIN) generated on the basis of 24G
           statement.
 vi.       To disseminate BIN to the respective DDOs.

29. What are the duties of DDOs?

 i.     To provide correct TAN to their PAOs/DTOs/CDDOs to whom the DDO/Deductor
   reports     the tax so deducted & who is responsible for crediting such sum to the credit
   of the      Central Government.
 ii.    To report to PAOs/DTOs/CDDOs, the details of tax deducted and credited to the
    Central     Government account through book adjustment.
iii.    To quote BIN in the quarterly TDS/TCS Statement (24Q, 26Q, etc) for the tax
        deducted and credited through book adjustment.
iv.     Filing of TDS/TCS statement (24Q, 26Q etc) within the due date.
 v.     To download Form 16/26A from TRACES website (www.tdscpc.gov.in) and timely
        issuance of the same to the deductees.

30. What are the consequences of non-quoting of BIN details in quarterly TDS/TCS
statement?

 (a) BIN details and amount of TDS reported in the quarterly TDS/TCS Statement filed
       by the DDO will be matched with the details filed in Form No.24G filed by the PAO
     for verification purpose.
 (b) Any wrong information reported by the DDOs in TDS/TCS Statement may lead to
     mismatch due to which credit to the respective deductee will not be available in the
     deductee's Form 26AS.
 (c) Further details are available at TIN website www.tin-nsdl.com and ITD website
     www.incometaxindia.gov.in.

31. What is the format of Form 16/16A to be issued to the deductees?

   It is mandatory to download and generate the Form 16/16A from the TRACES portal
   only. Deductor is allowed to issue manually only part `B' of Form 16 for salary details.

32. Is there any scenario where the DDO is also required to obtain the AIN?

Yes, if the deductor is in the capacity of CDDO and directly reports tax deduction through
transfer voucher to State AG, in that case CDDO is required to obtain the AIN and file 24G
for the respective book adjustment entries and then also required to file the TDS/TCS
statement as a TAN holder.
For example in the case of Executive Engineer in state Government who are making
payments to the contractors after deducting the TDS/TCS through cheque are liable to file
Form 26Q for reporting such TDS transactions. They will be required to obtain the AIN and
file form 24G for monthly reporting of these book adjustment entries and file quarterly TDS
statements as TAN holder by quoting the corresponding BINs.
                                            ***
                                                                      ANNEXURE V

"Person Responsible for filing Form No. 24G in case of State Govt. Departments"



                                 AG (State)




                                                                      F

                                              PAO/DTO
     E
                                                 A

                         D
                                                      Sub Treasury Office


                                       C                   B
   CDDO                  CDDO




                                                     DDO



                Type of Reporting of          Person Responsible (AIN
                    Book Entry                 holder) for filing 24G.
                         A                          PAO / DTO
                         B                          PAO / DTO
                         C                          PAO / DTO
                         D                          PAO / DTO
                         E                             CDDO
                         F                              STO

                    AG               Accountant General
                   PAO             Pay & Accounts Officer
                   DTO             District Treasury Office
                   STO               Sub Treasury Office
                   DDO          Drawing & Disbursing Officer
                  CDDO       Cheque Drawing & Disbursing Officer
                                                                                                 ANNEXURE VI

POINT NO.4.9 OF DRAFT CIRCULAR OF DEDUCTION OF TAX AT SOURCE
FROM SALARIES U/S 192 OF THE INCOME TAX ACT, 1961 ­ FINANCIAL
YEAR 2015-16- PROCEDURE OF PREPARATION OF QUARTERLY
STATEMENT OF DEDUCTION OF TAX UNDER SECTION 200(3) OF THE ACT

1. Quarterly e-TDS statement/return should be prepared by Deductor/DDO as per the data
structure (File Format) prescribed by the DIT (Systems), Delhi which is available on TIN
website www.tin-nsdl.com. Deductor/DDO can prepare e-TDS statement/return either by
using in-house facilities, third party software or by using Return Preparation Utility
(RPU) developed by NSDL e-Governance Infrastructure Limited (NSDL), which is freely
downloadable from the TIN website.
After preparation of e-TDS statement/return, the Deductor/DDO is required to validate
the same by using the File Validation Utility (FVU) which is freely available on TIN
website.
2. Procedure of furnishing of e-TDS statement/return at TIN Facilitation Centres
(TIN-FCs):
Once file is validated through FVU, `.fvu file' is generated. Copy of this `.fvu file' in
CD/DVD/Pen Drive along with physical Form 27A duly filled and signed by the
Deductor/DDO or by the person authorized by the Deductor/DDO, to be furnished at
TIN-FC, an acknowledgement containing a unique 15 digit token number is provided to
the Deductor/DDO. Deductor/DDO can view the status of e-TDS statement/return on TIN
website.
Only one regular e-TDS statement/return for a `FY-Quarter-TAN-Form' can be
submitted.
2.1 Correction in e-TDS statements/returns:
2.1.1 CPC-TDS portal (www.tdscpc.gov.in) has also introduced online correction of
statements whereby personal information, PAN correction, add/update of challan
information, add/update of salary detail, add/update/movement of deductee row etc. can
be done in the statements filed by the deductors, with or without the digital signatures.
For further details, kindly refer the matrix below:

                   Default     Personal      Challan       PAN          PAN           Add      Interest,   Modify/    Delete/Add
                  Summary    Information    Correction   Correction   Correction    Challan      Levy        Add        salary
                    View                   (Unmatched,   (Annex.I)     (Annex.         to      Payment     deductee    deducted
                                             matched                     II)       statement                 rows        rows
                                            Deductee +
                                             Deductee
                                            Movement
 Online             Y            Y             Y            Y            Y            Y           Y          Y           Y
 Correction
 (with digital
 signature,
 2013-14
 onwards)
 Online             Y            Y             Y            N            N            Y           Y          N           N
 Correction
 (with digital
 signature,
 prior to 2013-
 14 onwards)
 Online             Y            N             Y            N            N            Y           Y          N           N
 Correction
 (without
 digital
 signature,
 2013-14
 onwards)
 Online             Y            N             Y            N            N            Y           Y          N           N
 Correction
 (withoutdigital
 signature,
 prior to 2013-
 14 onwards)


For more information, deductors are advised to refer to e-tutorials/FAQs available on
TRACES portal. Online correction entails no charges and does away with the
requirement of downloading conso file and visiting TIN-FCs.

2.1.2 With effect from 1st January, 2015, TRACES will be providing a correction
window of 7 days from date of processing at CPC-TDS (generally 2 days after date
of filing of statement). This facility will enable the filer to correct PAN errors and
challan mismatch cases identified by CPC-TDS and avoiding of issuance of demand
notices. Therefore, deductors are advised to check the processing status promptly so
as to utilize this facility.

2.1.3 Deductor/DDO can also file a correction e-TDS statement for any modification in
the e-TDS statement. Correction statement can be prepared by using the TDS
Consolidated file that is available at TRACES (www.tdscpc.gov.in). Validation of
correction statement is in line with regular e-TDS statement, physical Form 27A duly
signed and Statement Statistical Report at TIN-FC. On successful acceptance of
correction e-TDS statement at the TIN-FC, an acknowledgement containing a unique 15
digit token no. is provided to the Deductor/DDO. Deductor/DDO can view the status of
e-TDS statement on TRACES website.

3. Procedure of preparation and furnishing of paper TDS statement/return at TIN-
Facilitation Centres (TIN-FCs):
All statement/return in Form 24Q are required to be furnished in computer media except
in case where the number of deductee records are equal to or less than 20. Paper
statement/return duly filled and signed by the Deductor/DDO can be furnished at TIN-FC.
On successful acceptance of paper statement/return at the TIN-FC, an acknowledgment
containing a unique 15 digit token no. is provided to the Deductor/DDO. Deductor/DDO
can view the status of paper statement/return on TIN website. No charges are applicable
for paper TDS statement/return.

3.1 Correction in paper statements/returns:
The physical TDS statement/return is to be filed again in case of any correction to a
physical TDS statement/return accepted at TIN. The deductor will submit the duly filled
and signed physical TDS statement/return along with a copy of provisional receipt of
regular paper statement/return at TIN-FC. On successful acceptance of correction paper
statement/return at the TIN-FC, an acknowledgement containing a unique 15 digit token
number is provided to the Deductor/DDO. Deductor/DDO can view the status of paper
statement/return on TIN website.

4. Procedure of furnishing of e-TDS statement/return online at TIN website:
Deductor/DDO is required to procure Digital Signature Certificate (DSC) for online
upload of e-TDS statement/return. After registration on TIN website, an authorization
letter by the Deductor/DDO should be provided on the letter head of the organisation to
NSDL. Once application is approved by NSDL, user ID is created and intimated to
Deductor/DDO on their registered email ID provided at the time of registration.
Preparation and validation of e-TDS statement is in line with regular e-TDS
statement/return (submitted at TIN-FC).Deductor/DDO can login with its user ID and
DSSC and upload the validated e-TDS file (.fvu file) generated by the FVU to the TIN
website. On successful acceptance of e-TDS statement/return at TIN, an
acknowledgement containing a unique 15 digit token no. and 8 digit receipt number is
generated and displayed. There is no need to submit physical form 27A in online upload.
Deductor/DDO can view the status of e-TDS statement/return on TIN website.
No charges are applicable for online upload of e-TDS statement/return.
4.1 Correction of e-TDS statement/return online at TIN website:
Deductor/DDO can file a correction e-TDS statement/return for any modification in e-
TDS statement/return accepted at TIN central system. Correction statement/return can be
prepared by using the TDS consolidated file only, available at the CPC-TDS portal
www.tdscpc.gov.in through TAN registration. Preparation and validation of e-TDS
statement is in line with regular e-TDS statement/return (submitted at TIN-FC)
Deductor/DDO can login with its user ID and DSC and upload the validated e-TDS file
(.fvu file) generated by the FVU to the TIN website. On successful acceptance of
correction e-TDS statement/return at TIN, an acknowledgement containing a unique 15
digit token number is generated and displayed. There is no need to submit copy of
provisional receipt of regular e-TDS statement/return, physical Form 27A and SSR in
online upload. Deductor/DDO can view the status of e-TDS statement/return on TIN
website.
5. For FAQs and further details, Deductors/DDOs are advised to log on website www.tin-
nsdl.com
                                         *******
                                                                            ANNEXURE-VII
                                 MINISTRY OF FINANCE
                              (Department of Economic Affairs)
                                   (ECB & PR Division)
                                     NOTIFICATION
                             New Delhi, the 22nd December, 2003

F.No. 5/7/2003-ECB &PR- The government approved on 23rd August, 2003 the proposal to
implement the budget announcement of 2003-04 relating to introducing a new restructured
defined contribution pension system for new entrants to Central Government service, except
to Armed Forces, in the first stage, replacing the existing system of defined benefit pension
system.

  i.          The system would be mandatory for all new recruits to the Central Government
         service from 1stof January 2004 (except the armed forces in the first stage). The
         monthly contribution would be 10 percent of the salary and DA to be paid by the
         employee and matched by the Central government. However, there will be no
         contribution form the Government in respect of individuals who are not Government
         employees. The contribution and investment returns would be deposited in a non-
         withdrawable pension tier-I account. The existing provisions of defined benefit
         pension and GPF would not be available to the new recruits in the Central
         Government service.
 ii.          In addition to the above pension account, each individual may also have a
         voluntary tier-II withdrawable account at his option. This option is given as GPF will
         be withdrawn for new recruits in Central government service. Government will make
         no contribution into this account. These assets would be managed through exactly the
         above procedures. However, the employee would be free to withdraw part or all of
         the `second tier' of his money anytime. This withdrawable account does not
         constitute pension investment, and would attract no special tax treatment.
iii.          Individuals can normally exit at or after age 60 years for tier-I of the pension
         system. At the exit the individual would be mandatorily required to invest 40 percent
         of pension wealth to purchase an annuity (from an IRDA- regulated life insurance
         company). In case of Government employees the annuity should provide for pension
         for the lifetime of the employee and his dependent parents and his spouse at the time
         of retirement. The individual would receive a lump-sum of the remaining pension
         wealth, which he would be free to utilize in any manner. Individuals would have the
         flexibility to leave the pension system prior to age 60. However, in this case, the
         mandatory annuitisation would be 80% of the pension wealth.

Architecture of the new Pension System

       (i)     It will have a central record keeping and accounting (CRA) infrastructure,
               several pension fund managers (PFMs) to offer three categories of schemes viz.
               option A, B and C.
       (ii)    The participating entities (PFMs and CRA) would give out easily understood
               information about past performance, so that the individual would be able to
               make informed choices about which scheme to choose.

2.     The effective date for operationalization of the new pension system shall be form 1 st of
       January, 2004.

                                                                         U.K. SINHA, Jt. Secy.
                                                                                   ANNEXURE-VIII
                                    MINISTRY OF FINANCE
                                     Department of Revenue
                                  (Central Board of Direct Taxes)
                                            Notification
                                                         New Delhi, the 24th November, 2000

                                           INCOME- TAX
S.O.1048 (E) - In exercise of the powers conferred by sub-clause (i) of clause (18) of
Section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, hereby
specifies the gallantry awards for the purposes of the said Section, mentioned in column
2 of the table below awarded in the circumstances as mentioned in corresponding
column 3 thereof:-
                                                  Table
-----------------------------------------------------------------------------------------------------------
-----------
Sl. No. Name of gallantry award                                         Circumstances for eligibility
-----------------------------------------------------------------------------------------------------------
-----------
(1)               (2)                                                                     (3)
-----------------------------------------------------------------------------------------------------------
-----------
1.     Ashok Chakra                                            When awarded to Civilians for
gallantry
2.     Kirti Chakra                                                              - do -
3.     Shaurya Chakra                                                            - do -
4.     SarvottanJeevanRaksha                          When awarded to Civilians for bravery
Padak                                                 displayed by them in life saving acts.
5.     UttamJeevanRaksha Medal                                                   - do -

6.    JeevanRakshaPadak                                                        - do -
7.    President's Police Medal                                When        awarded for          acts     of
exceptional
for gallantry                                        courage displayed by members of police
                                                            forces, Central police or security
                                                            forces and certified to this effect by
                                                            the head
                                                            of the department concerned
                             .
8.   Police Medal for Gallantry                                                 - do -

9.   Sena Medal                                                When awarded for acts of courage
or
                                                              conspicuous gallantry and supported
                                                              by certificate issued to this effect by
                                                              relevant service headquarters.
10. NaoSena Medal                                                              - do -
11. VayuSena Medal                                                    - do ­
12. Fire Services Medal for Gallantry                           When awarded for acts of courage
                                                               or conspicuous gallantry and
                                                               supported
                                                               by certificate issued to this effect by
                                               the
                                               last Head of Department.
13. President's Police & Fire                                -do-
    Services Medal for Gallantry
14. President's Fire Services Medal for
    Gallantry                                                -do-
15. President's Home Guards and                             -do-
    Civil Defence Medal for Gallantry
16. Home Guard and Civil Defence
    Medal for Gallantry                                     -do-

( Notification no. 1156/F.No. 142/29/99-TPL)
                                                                     T.K. SHAH
                                                                        Director
                                                                     ANNEXURE IX

                              MINISTRY OF FINANCE
                               Department of Revenue
                             Central Board of Direct Taxes


                                                       New Delhi, the 29th January,2001

            S.O.81(E)- In exercise of the powers conferred by sub-clause (i ) of clause
(18) of Section 10 of the Income ­tax Act, 1961 (43 of 1961)), the Central Government,
hereby specifies the gallantry awards for the purposes of the said Section and for that
purpose makes the following amendment in the notification of the Government of India in
the Ministry of Finance, Department of Revenue (Central Board of Direct Taxes) number
S.O.1048(E), dated the 24th November 2000, namely:-

        In the said notification, in the Table, against serial numbers 1,2 and 3 under
column (3) relating to "Circumstances for eligibility" the words "to civilians" shall be
omitted.

 (Notification No.22/F.No.142/29/99-TPL)


                                                                           T.K. SHAH
                                                                              Director
                                                                                      ANNEXURE-X

                              FORM NO. 10BA
                               (See rule 11B)
                  DECLARATION TO BE FILED BY THE ASSESSEE
                       CLAIMING DEDUCTION U/S 80 GG



I/We......................................................................................................
...........
                   ( Name of the assessee with permanent account number)
do hereby certify that during the previous Year.............I/We had occupied the
premise...............................(full address of the premise) for the purpose of my/our
own residence for a period of.......................months and have paid Rs. ...................
In cash/through crossed cheque, bank draft towards payment of rent to
Shri/Ms/M/s............................(name and complete address of the landlord).


It is further certified that no other residential accommodation is owned by

    a) me/my spouse/my minor child/our family (in case the assessee is HUF), at
       ......................where I/we ordinarily reside/perform duties of officer or
       employment or carry on business or profession, or
    b) me/us at any other place, being accommodation in my occupation, the value of
       which is to be determined u/s 23(2)(a)(i) of u/s 23(2)(b).

                                              *********

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