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 2018-19
CIRCULAR NO 01 /2019
NEW DELHI, the 1st January, 2019
Index
Para No. Page No.
1. General 1
2. RATES OF INCOME-TAX AS PER FINANCE ACT, 2018 1
2.1 Rates of tax 1
2.2 Surcharge of Income tax 2
2.3.1 Health and Education Cess 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 7
4.3 Deduction of Tax at Lower Rate 7
4.4 Deposit of Tax Deducted 7
4.4.1 Due dates for payment of TDS 7
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) 9
4.7Mandatory Quoting of PAN and TAN 12
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 13
Statement of TDS]
4.10 TDS on Income from Pension 14
4.11 Matters pertaining to the TDS made in case of Non Resident 15
5 COMPUTATION OF INCOME UNDER THE HEAD SALARIES 15
5.1 Income chargeable under the head Salaries: 15
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) 24
5.4 Deduction u/s 16 of the Act form the Income from Salaries 29
5.5 Deductions under Chapter VI-A of the Act 30
6 REBATE OF RS. 2500 FOR INDIVIDUAL HAVING TOTAL 42
INCOME UPTO RS. 3.5 LAKH (SECTON 87A)
7 TDS ON PAYMENT OF ACCUMULATD BALANCE UNDER 42
RECOGNISED PROVIDENT FUND AND CONTIBUTION FROM
APPROVED SUPERANNUATION FUND.
8 DDOS TO SATISFY THEMSELVES OF THE GENUINENESS OF 44
CLAIM
9 CALCULATION OF INCOME-TAX TO BE DEDUCTED 44
10 MISCELLANEOUS 45
ANNEXURE
1 SOME ISSUTRATIONS 47-59
II FORM NO 12BA 60-61
IIa FORM NO 12BB 62-63
III REVISED PROCEDURE FOR FURNISHING QTLY E-TDS/TCS 64-65
STATEMENT BY DEDUCTORS/COLLECTORS
IV THE PROCEDURE OF FURNISHING FORM 24G 66-72
V PERSON RESPONSIBLE FOR FILING FORM 24G IN CASE OF 73
STATE GOVT DEPARTMENTS/CENTRAL GOVT
DEPARTMENTS
VI PROCEDURE OF PREPARATION OF QUARTERLY 74-76
STATEMENT OF DEDUCTION OF TAX u/s 200 (3)
VII DEPTT. OF ECO. AFFAIRS NOTIFICATION DATED 22.12.2013 77
VIII BOARD`S NOTIFICATION DATED 24.11.2000 78-79
IX BOARD`S NOTIFICATION DATED 29.01.2001 80
X FORM NO. 10 BA 81
CIRCULAR NO : 01 /2019
F.No. 275/192/2018-IT(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
******
North Block, New Delhi
Dated the 1st January, 2019
SUBJECT: INCOME-TAX DEDUCTION FROM SALARIES DURING THE
FINANCIAL YEAR 2018-19 UNDER SECTION 192 OF THE
INCOME-TAX ACT, 1961.
*****
Reference is invited to Circular No. 29/2017 dated 05.12.2017 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
2017-18, 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 2018-19 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, 2018:
As per the Finance Act, 2018, income-tax is required to be deducted under Section 192 of
the Act from income chargeable under the head "Salaries" for the financial year 2018-19
(i.e. Assessment Year 2019-20) 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/-
1
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 or section 112A of the Act, shall
be increased by a surcharge for the purpose of the Union, calculated, 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,-
(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
2.31 Health and Education Cess
Education Cess on income-tax and Secondary and Higher Education Cess on income-tax
shall be discontinued. However, a new cess, by the name "Health and Education Cess"
shall be levied at the rate of four percent of income tax including surcharge wherever
applicable, No marginal relief shall be available in respect of such cess.
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 2018-19. 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 a 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
3
Tax on Total Salary (including Cess) Rs. 10,400/-
Average Rate of Tax [(10, 400/4,50,000) X 2.31/%
100]
Tax payable on Rs.50,000/= (2. 31% of 50,000) Rs. 1155
Amount required to be deposited each month Rs. 96( Rs 96.25)= 1155/12
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 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
4
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)
5
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.
As discussed in para 4.6.5 section 192(2D) read with rule 26C makes it mandatory
for the DDO to obtain following details/evidences in respect of Interest deductible.
(i) Interest payable or paid
(ii)Name of the lender
(iii) Address of the lender
(iv) PAN of the lender
PAN of the lender being financial institution or employer, is mandatory if it is
available with the employee however in case of other lender obtaining of PAN is
mandatory by the DDO.
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,
6
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 employer 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 employee; 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 opted 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
th th
2 30 September 7 October
3 31st December 7th January
4 31st March th
30 April next Financial Year
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
7
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. {Rule 30(7)}
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
8
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 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. A copy of Form 16 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
9
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:
10
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,
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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 01.10.1987]. 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
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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. Health and Education cess @ 4% 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. Date of ending of quarter Due date
No. of financial year
1 30th 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. [Rule 3A(3)].
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
13
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 as abolished vide CBDT circular no.
761 dated 13.1.98.
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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
15
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 therefore, 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
16
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.
17
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.
18
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)]:
(I) 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. 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.
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.
19
(II) 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
20
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
21
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
22
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 As per the amendment vide Finance Act,
2018, the total amount of medical re-imbursement is to be taken as perquisite under section
17(2).
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.
23
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.
As discussed in para 4.6.5 section 192 (2D) read with the rule 26C makes it mandatory for
the DDO to obtain details/evidence in respect of claim of exemption for leave travel
concession or assistance before allowing the said exemption the relevant form for furnishing
details by employee is Form 12BB
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).
24
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.
25
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.
Under section 10 (12A) of the Act, any payment from the National Pension System Trust
to an assessee 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 shall be exempt.
Under 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 and the regulation
made thereunder, to the extent it does not exceed twenty-five percent of the amount of
contribution made by him shall be exempt.
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
26
(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.
As discussed in para 4.6.5 section 192 (2D) read with rule 26C makes it obligatory for the
DDO to obtain following details/evidences in respect of exemptions for house rent
allowance.
(i) Rend paid to the landlord
(ii) Name of the landlord
(iii) Address of the landlord
(iv) PAN of the landlord
Where the aggregate rent paid during the financial year exceeds one lakh Rs the employee is
required to furnish these details in Form 12BB.
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.
It is further clarified that any allowance granted to an employee which is not exempted under
section 10(14) read with rule 2BB or the sum of allowance exceeding the amount prescribed
under rule shall be chargeable to tax under the head income from salary. For example no
exemption is provided in rule 2BB for the training allowance paid for the posting in any
training institute hence whole of the training allowance shall be included in the salary.
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). Rule 2BB
has been amended and the exemption in respect of transport allowance for financial year
2018-19 shall be available upto Rs. 3200 per month only to the person who is blind or
27
orthopedically handicapped with disabilities of lower extremities, to meet the his
expenditure for the purpose of commuting between the place of the residence and the place
of his duties.
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);
28
(d)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 with rule 2BB any
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 Standard deduction under section 16 (ia):
From F.Y. 2018-19 a deduction of forty thousand rupees or the amount of salary whichever
is less shall be allowed as standard deduction.
5.4.2 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.
5.4.3 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".
29
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
30
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
31
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
32
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
st
Policy issued on or after 1 April 2012 10% of the actual capital sum
assured
st
Policy issued on or after 1 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.
33
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.
Subject to provisions of section 10 (12A) and section 10 (12B) discussed in para 5.3.7, 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.
Further, the amount received by the nominee, on the death of the assessee, on closure or
opening of the pension not be deemed to be the income of the nominee.
34
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 for F.Y. 2018-19 shall be allowed to an employee who has
claimed deduction under this section for F.Y 2016-17 if he is otherwise eligible to claim
deduction as per provisions of this sections.
35
5.5.5 Deduction in respect of health insurance premia paid, etc. (Section 80D)
Particulars Case-1 Case-2 Case-3
Self & Parents Self & Parents Self & Parents
Family (no (no one Family (atleast Family (atleast
one of them of them (no one of one of (atleast one one of
is a senior is a them is a them is a of them is a them is a
citizen) senior senior senior senior senior
citizen) citizen) citizen) citizen) citizen)
Medical 25,000 25,000 25,000 50,000 50,000 50,000
Insurance,
etc.*
Medical -- -- -- 50,000 50,000 50,000
Expenditure**
Maximum 25,000 25,000 25,000 50,000 50,000 50,000
deduction
allowable
Aggregate
amount of 50,000 75,000 1,00,000
deduction
allowable
under section
80D
* Includes (i) contribution to the Central Government Health Scheme/notified scheme for
self & family; and (ii) amount paid for preventive health check-up up to Rs. 5,000/-.
** Allowable only if no amount is paid for medical insurance.
Note 1 : The payment for preventive health check-up can only be made in cash, other
payments must be made by non-cash mode.
Note 2 : Finance Act, 2018 amended section 80D of the Act to provide that in case of single
premium health insurance policy having cover of more than one year, the deduction shall be
allowed on proportionate basis for the number of years for which health insurance cover is
provided, subject to the monetary limits specified above.
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.
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.
(II) Lump sum payment of health insurance premium
36
In case, a lump sum amount is paid to effect or to keep in force an insurance on
health for more than a year, proportionate deduction (appropriate fraction) will be allowable
for the year in which it was paid and for subsequent year/years in accordance with sub-
section (4A) of Section 80D.
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
37
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.
38
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 one lakh rupees 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;
39
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/
40
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 introduced from the Financial Year 2012-13 allows to an employee, not
being a senior citizen 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
41
(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.
Section 80TTB introduced from Financial Year 2018-19 allows a deduction up to Rs.
50,000 in respect of interest income from deposits held by senior citizens 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 fifty
thousand rupees, the whole of such amount; and
(ii) in any other case, fifty 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) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act,
1898.
For this section, 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.
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
42
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.
43
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 OBTAIN EVIDENCE/PROOF OF CLAIMS:
For the purpose of estimating income of the assesse or computing tax deductions,
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); 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.
Further, as per section 192 (2D) read with the rule 26C, it is mandatory for the DDOs to
obtain details/evidence in respect of claim of exemption for leave travel concession or
assistance before allowing the said exemption. The relevant form for furnishing details by
employee is Form 12BB.
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 as increased by the surcharge if applicable so arrived at shall be
increased by Health and education Cess at the rate of 4% to arrive at the total tax payable.
44
9.4 The amount of total tax payable 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 2018, 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
45
20.Director-General of Posts & Telegraphs, New Delhi
21.Comptroller & Auditor General of India
22.Accountant Generals of all State Governments
23.Director of Audit(Central)Kolkata, New Delhi, Mumbai.
24.All Banks (Public Sector, Nationalized including State Bank of India)
25.Secretary, Reserve Bank of India Central Office P.B.No.406, Mumbai-400001 (25
copies for distribution to its Branches).
26.Accounts Officer, Inspector General of Assam Rifles, (Hqrs), Shillong
27.All Chambers of Commerce & Industry
28.Lok Sabha /Rajya Sabha Secretariat Libraries(15 copies each)
29.All Officers and Sections in Technical Wing of CBDT
30.Asstt. Chief Inspector, RBI Inspection Deptt. Regional Cell Mumbai/Kolkata/
Chennai/New Delhi/and Kanpur.
31.Controller of Accounts, Deptt. Of Economic Affairs, New Delhi
32.Manager, Reserve Bank of India, Public Debt Office, Ahmedabad/Bengaluru/
Bhubaneswar/ Mumbai/Kolkata/Hyderabad/Kanpur/Jaipur/Chennai/Nagpur/New Delhi/
Patna/ Guwahati/Trivandrum.
33.Controller General of Defence Accounts, New Delhi.
34.Directorate of Audit, Defence Services, New Delhi.
35.National Saving Organisation, Nagpur.
36.Deputy Accountant General, Post & Telegraph, Kolkata.
37.The Legal Adviser, Export-Import Bank of India, P.B.No.19969, umbai.4000021.
38.Chief Controller of Accounts, CBDT, Lok Nayak Bhawan, Khan Market, New Delhi
39.N. S. Branch, Department of Economic Affairs, New Delhi
40.The Min. of Law (Deptt. of Legal Affairs), Shastri Bhawan New Delhi.
41.All Foreign Banks operating in India
42.Air India, New Delhi
43.University Grants Commission, Bahadur Shah Jafar Marg,
New Delhi
(Sandeep Singh)
Under Secretary to the Govt. of India
46
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: Health & Education Nil 100 3700 63,030 1,41,795
Cess @ 4%.
Total tax payable Nil 2600 96,200 16,38,780 36,86,670
* After rebate of Rs 2500 u/s 87A
47
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.75,000/- only) 60,000
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 2,97,000
8 Income Tax thereon/payable Nil
(includes Rebate of Rs 2500 as per Section 87A)
9 Add:
Health & Education Cess @ 4%. Nil
10 Total Income Tax payable Nil
11 Rounded off to Nil
48
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/-
Restricted to Rs. 1,50,000/-
b. Less: Deduction u/s 80TTA on Interest Income on
savings account (restricted to Rs 10,000/- - available only on
Savings account interest) Rs 8000
Total deduction available Rs 1,58,000/- 1,58,000
6 Total Income 4,05,000
7 Income Tax thereon/payable 7,750
8 Add:
Health & Education Cess @ 4%. 310
9 Total Income Tax payable 8060
49
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 [Bombay/Kolkata/Delhi/Chennai] or 40% of salary
(Basic + DA) in case of other cities
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:
Health & Education Cess @ 4%. 588
Total Income Tax payable 15288
Rounded off to 15290
50
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(Cities having population>25 lakh as per
2000 census)
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 @ 10% of cost (10% of Rs.
2,00,000) 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. 1,38,600
98,600
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)
51
: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:
Health & Education Cess @ 4%. 3513
11 Total Income Tax payable 91,333
12 Rounded off to 91,330
52
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 for house hired by employee 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:
Health & Education Cess @ 4%. 444
Total Income Tax payable 11,544
Rounded off to 11,540
53
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:
Health & Education Cess @ 160 2,000 5,600
4%.
Total tax payable 4,160 52,000 1,45,600
54
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 80C 80,000 1,20,000 1,50,000
Taxable Income 4,20,000 6,80,000 11,00,000
Tax thereon Nil 36,000 1,30,000
Add:
Health & Education Cess Nil 1,440 5,200
@ 4%.
Total tax payable Nil 37,440 1,35,200
55
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
56
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 : Health & Education Cess @ 4%. ---
Total Tax Payable Nil
57
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 `18) 1,60,000
@ Rs 41,200 p.m * (July 2017 to Feb 2018) 3,29,600 4,89,600
Dearness Allowance
1.3.2018 to 30.06.2018 @ 7% i.e., Rs 40,000 p.m 11,200
1.7.2018 to 31.12.2018 @ 9% i.e. Rs 41,200 p.m 22,248
1.1.2019 to 28.02.2019 @ 11% (assumed) i.e.,Rs. 9,064
41,200 p.m 5,32,112
House Rent Allowance 1,17,504 6,49,616
Transport Allowance
1.3.2018 to 30.6.2018 @ Rs 3200 p.m 12,800
1.7.2018 to 31.12.2018 @ Rs 3780 p.m 22,680
1.1.2019 to 28.2.2019 @ Rs 3852 p.m 7704
43,184
Less: Exempt u/s 10(14) @ 800 p.m 19200 23984
6,73,600
Honorarium 3,000
Fees (2/3 retained by him) 4000
Total Salary 6,80,600
58
Less: Standard Deduction -
Net Salary 6,80,600
2. Income from House Property
Self-occupied u/s 23(2)(a) where property is Nil
acquired/constructed with borrowed capital on or
after 1.4.1999 and such acquisition/construction
computed within five years from the end of FY in
which capital was borrowed.
Less: Interest on HDFC Loan (upto Rs. 2,00,000) 2,00,000 (-) 2,00,000
Gross Total Income 4,80,600
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 3,30,600
Computation of Tax Liability
Tax payable 4,030
Add: Surcharge -
Add: Health & Education Cess @4% 161
Total Tax Liability 1691*
* After rebate of Rs 2500 u/s 87A
59
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
60
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..............................
61
Annexure IIa
FORM NO.12BB
(See rule 26C)
Statement showing particulars of claims by an employee for deduction of tax under
section 192
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)
62
...............
.....
(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
63
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.
64
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
******
65
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.
66
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?
67
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.
68
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.
69
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?
70
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.
71
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.
***
72
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
73
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)
74
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
75
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
*******
76
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.
77
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
78
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
79
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
80
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).
*********
81
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