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Deduction for Salaried Employee, who are elligible for Sec. 80D, 80DD, 80U, 80DDB etc. for Asstt. Year 2015-16 - Part-III

As per the recently issued a circular by Central Board of Direct Taxes for Salaried Employee regarding calculation of Exemption under Chapter VI-A to compute Income Tax for Asstt. Year 2015-16.  In this  circular many amendments has been made including Tax Exemption Limit increased for Asstt. Year 2015-16.  In the 2nd Part you will see all the deductions u/s. 80CCC, 80CCD, 80CCG etc.  This is the Third part to cover important Deductions under Chapter VI-A regarding Medical Reumbersment, Memdical Treatment, Physical Disability etc for Salaried Employee for Asstt. Year 2015-16 which is as under :

DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT FOR THE ASSTT. YEAR 2015-16 FOR SALARIED EMPLOYEE

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


Here
  1. family - means the spouse and dependent children of the employee.
  2. Senior citizen - means an individual resident in India who is of the age of sixty years [For AY 2013-14 onwards] 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-
  • 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
  • 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.

Deductions in respect of expenditure on persons or dependants with disability

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 -
  • incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or
  • paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the employee shall be allowed a deduction of a sum of fifty thousand rupees from his gross total income of that year.

However, where such dependant is a person with severe disability, an amount of one hundred thousand rupees shall be allowed as deduction subject to the specified conditions.

The deduction under (b) above shall be allowed only if the following conditions are fulfilled:-
  1. 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;
  2. 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.

Deductions in respect of a person with disability (section 80U):  Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of fifty thousand rupees. However, where such individual is a person with severe disability, a higher deduction of one lakh rupees shall be allowable.

DDOs should note that 80DD deduction is in case of the dependent of the employee whereas 80U deduction is in case of the employee himself. However under both the Sections the employee shall furnish to the DDO following:
1. A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein.
2. Further in cases where the condition of disability is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO.
3. For the purposes of section 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, 200 ;
  (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 subsection (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.

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 or Rs. 40,000 whichever is less. Further the amount paid should also be reduced by the amount received if any under insurance from an insurerer or reimbursed by an employer. In case of a senior citizen (an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year) the amount of deduction allowed is Rs. 60,000/-.

DDO must ensure that the employee furnishes a certificate in Form 10-I from a neurologist, an oncologist, a urologist, nephrologist, a haematologist, an immunologist or such other specialist, as mentioned in Rule 11DD.

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.

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Updated Income Tax Calculator after circular No. 17/2014 for Salaried Employee for Asstt. Year 2015-16


Income Tax Department. CBDT has issued recently circular No. 17/2014 for Salaried Employee regarding Deduction from Salaries during the Financial Year 2014-15 under section 192 of the income Tax Act, 1961.



As per the recent circular of CBDT the Rates of Income Tax all deduction and exemption covered in the Tax Calculation utility. This Tax Calculation utility i.e. specially for Salaried Employee with monthly salary statement is here available.  Now, all Salaried Employee can download this Income Tax Calculation Utility for Asstt. Year 2015-16 to deduct TDS from monthly salary.


Download Updated Income Tax Calculator for
Asstt. Year 2015-16

Latest 13th Amendment for limit of 50% Govt. grant for deeming university/hospitals as substantially funded by Govt.

Recently, CBDT has made 13th Amendment in Income Tax by Insertion of Rule 2BBB for limit of 50% Government grant for deeming university/hospitals as substantially funded by Government on 12nd December, 2014.

In the Income-tax Rules, 1962, after rule 2BBA the following rule shall be inserted, namely:-
“ 2BBB.Percentage of Government Grant for considering university, hospital etc. as substantially financed by the Government for the purposes of clause (23C) of section 10.  For the purposes of sub-clauses (iiiab) and (iiiac) of clause (23C)of section 10, any university or other educational institution, hospital or other institution referred therein, shall be considered as being substantially financed by the Government for any previous year, if the Government grant to such university or other educational institution, hospital or other institution exceeds fifty percent. of the total receipts including any voluntary contributions, of such university or other educational institution, hospital or other institution, as the case may be, during the relevant previous year.”.


Details of deductions u/s. 80CCC, 80CCD, 80CCG for Salaried Employee for Asstt. Year 2015-16 - Part-II

Recently for current Financial Year and Assessment Year 2015-16, the current Government after Budget-2014 has issued a circular for Salaried Employee regarding computation of income.  In this  circular many amendments has been made including enhancement of  Tax Exemption Limit. Yesterday the First part has published on this blog. To read Part-I Deductions under Chapter VI-A for Salaried Employee for Asstt. Year 2015-16 Click Here. The Part-II is as under :

DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT FOR THE ASSTT. YEAR 2015-16 FOR SALARIED EMPLOYEE

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 lakh.

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 
  1. Surrender of annuity plan whether in whole or part
  2. 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.

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 or by any other employer on or after 01.01.2004, 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). The deduction under section 80CCD(1) shall not exceed Rs. 1,00,000/-.

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

If any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above, and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of
  1. Closure or opting out of the pension scheme or
  2. 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. 

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 that any amount received by the employee from the new pension scheme shall be deemed not to have 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/-. However, the deduction under Section 80CCD(1)shall not exceed Rs.1,00000 but contribution made by the Central Government or any other employer to a pension scheme u/s 80CCD(2) shall be excluded from the limit ofRs.1,00,000/- provided under this Section.

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

Section 80CCG provides deduction w.e.f .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 as a scheme under this section. The scheme was modified in December 2013 vide notification SO No. 3693 dated 18.12.2013 as RGESS 2013.

The deduction under this section in accordance with RGESS 2013, is available if following conditions are satisfied:
  • The assessee is a resident individual
  • His gross total income does not exceed Rs. 12 lakhs;
  • 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);
  • The assessee is a new retail investor;
  • The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
  • The assessee satisfies any other condition as may be prescribed.

Amount of deduction –The amount of deduction is at 50% of 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.

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Now Taxpayee Login for e-filing Income Tax Return through Bank Account.

This new utility recently provided by www.incometaxindiaefiling.gov.in, by this facility taxpayee can login through Bank Account instead of Password in case when Taxpayee forgetten login password to sign. The forgotten option can be used to recover Passwod  at incometaxindiaefiling.gov.in using the net-banking facility of your bank.  Still this facility is not available in all Indian Banks, it is only available in some banks detailed below :

At this time the facility of direct e-Filing Login through Net banking is available through the following banks:
  • Corporation Bank-Retail Banking: https://www.corpretail.com/RetailBank
  • Corporation Bank-Corporate Banking: https://www.corpbank.biz/CorpBank/
  • Union Bank of India: https://www.unionbankonline.co.in/
  • Oriental Bank of Commerce: https://www.obconline.co.in/
  • City Union Bank Ltd: https://www.onlinecub.net/
  • Bank of India: http://www.bankofindia.co.in/english/home.aspx
  • Kotak Mahindra Bank: https://www.kotak.com/
  • Punjab National Bank: https://netbanking.netpnb.com/
The detailed steps are as follows -
  • Taxpayer should be a registered user of Income Tax e-Filing Portal.
  • Taxpayer should have already submitted the PAN details to the Bank. PAN is required to identify the taxpayer’s e-Filing account with the Income Tax Department.
  • Taxpayer have to first go to the Internet/ Net / Online Banking website of the Bank which has already registered for this facility with the Department.
  • Taxpayer after logging into his Net Banking account should select “Income Tax e-Filing Login” tab/menu item
  • Taxpayer should Select the account number and enter the PAN for verification and click Submit
  • Taxpayer should Accept the Rules and Regulations details
  • Taxpayer should confirm that he may be redirected to his Income Tax Department e-Filing account – home page.
  • Taxpayer can now reset the password and also avail of all services provided by the e-Filing Website of Income Tax Department, including, filing Income Tax Return.
Advantages of using this new facility
  • Taxpayer gets direct access to his e-Filing account even if he has forgotten his password.
  • Taxpayer gets a secure and safe way to login into his e-Filing account.
  • Taxpayer can safeguard his e-Filing account by selecting/opting for “Password Resetting” only by using Digital Signature Certificate or through this new facility of direct login from his net-banking account, thereby preventing others from unauthorized access to his account. (coming soon….)
  • Other benefits (coming soon…..)
Detailed steps using example of Corporation Bank Net banking
  • Go to https://www.corpretail.com/RetailBank/
  • Login in to your Corporation Bank Net banking account using your Bank provided User ID and password
  • Corporation Bank Net banking Homepage < Select Utility Payments < Select “Income Tax e-Filing Login”

Select Account Number (IFSC Code) from the drop down
  • Enter PAN
  • Accept the Terms & Conditions
  • Click on Submit

  • Click OK to get re-directed and automatically logged into Income tax Department e-Filing account (https://incometaxindiaefiling.gov.in)
  • You will get re-directed to Income Tax Department e-Filing website (https://incometaxindiaefiling.gov.in) and the home page showing the “Dashboard” after login will appear.
  • e-Filing Portal Taxpayer Dashboard
  • You may now reset your password using “Profile Settings” or avail of any service offered.
  • Remember: This facility is a safe and secure method for direct login to your Income Tax Department e-Filing account only and is available ONLY through your Bank website after you have logged in and not through any other organization or entity or website.
  • Note: Your net-banking User ID or password is NOT shared by the bank to the Department

Deduction for Salaried Employee under Chapter VI-A for Asstt. Year 2015-16 - Part-I

Recently, Current Government after Budget-2014 has issued a circular for Salaried Employee to compute Income Tax.  In this  circular many amendments has been made including increases Tax Exemption Limit for Asstt. Year 2015-16.  This is the First part to cover some important Deductions under Chapter VI-A for Salaried Employee for Asstt. Year 2015-16 which is as under :

DEDUCTIONS UNDER CHAPTER VI-A OF THE ACT FOR THE ASSTT. YEAR 2015-16 FOR SALARIED EMPLOYEE

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:

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 subscription :-
       (a) to 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;
       (b) to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf.
           [The Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E) dated 3.11.05and National Saving Certificate (IXth Issue) vide Notification . G.S.R. 848 (E), dated the 29th November, 2011, publishing the National Savings Certificates (IX-Issue) Rules, 2011 G.S.R. 868 (E), dated the 7th December, 2011, specifying the National Savings Certificates IX Issue as the class of Savings Certificates F No1-13/2011-NS-II r/w amendment Notification No.GSR 319(E), dated 25-4-2012 ]

   (6) Any sum paid as contribution in the case of an individual, for himself, spouse or any child,
       a. for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India;
       b. for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to section 10 (23D) and as notified by the Central Government.
          [The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E) dated 3.11.05.]

   (7) Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify;
       [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I, New Jeevan Akshay, New Jeevan Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E) dated 3.11.05 and Jeevan Akshay-III vide Notification S.O. No. 847(E) dated 1.6.2006 ]

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

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

  (10) Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf;

  (11) Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.
       [The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No.37(E), dated 11.01.2007, for the purposes of Section 80C(2)(xvi)(a)].

  (12) Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc.
       The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.
       The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.
       Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly.

  (13) Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.
       Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes.
       It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.

  (14) Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.

  (15) Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.

  (16) Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes.
       [The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28.7.2006]

  (17) Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.

  (18) Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004. 

  (19) Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.

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

*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

Salaried Employee's Income Exempt from Income under the head of "Salaries".

As per recently issued a circular by Income Tax Department for Salaried Taxpayee, a few Income exempt from under the head of "Salary".

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 :

Leave Travel Concession (LTC): 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.
 
The following are the important points, to be taken into consideration:
 
Number of Trips - The exemption shall be available in respect of 2 journeys performed in the block of 4 calendar years.
  • Without performing any journey and incurring expenses thereon, no exemption can be claimed.
  • The quantum of exemption will be subject to the following maximum limits for journeys performed on or after 01.10.1997

This exemption is limited to the actual expenses incurred on the journey which in turn is strictly limited to expenses on air fare, rail fare and bus fare only. No other expenses like local conveyance, sight-seeing expense etc., shall qualify for exemption.
 
Where the journey is performed in a circuitous route, the exemption is limited to what is admissible by the shortest route. Likewise, where the journey is performed in a circular form touching different places, the exemption is limited to what is admissible for the journey from the place of origin to the farthest point reached in India, by the shortest route.
 
Restriction on children - The exemption will not be available to more than 2 surviving children of an individual born after 01.10.1998. This restriction shall not apply in respect of children born before 01.10.1998 and also in case of multiple births after one child. It may be noted that section 2 (15B) of the Act defines a child as includes a step child and an adopted child of the individual.
 
Definition of Family - As per the provisions of the Rules, family means:
  • Spouse and children of the individual.
  • Parents, brothers and sisters who are wholly or mainly dependent on the individual.
Foreign Travel - As per the provisions of the Rules, exemption is not allowable in case of travel abroad.
 
Obligation of the employer - The employer has to satisfy the obligation that leave travel (fare) concession is not taxable in view of section 10(5) and he is not only required to be satisfied about the provisions of the said clause but also to keep and preserve evidence in support thereof.

Some important points to be considered are as under:
  1. It is uniform for all employees
  2. Where an employee does not avail LTC, either one or on both the occasions during the block of 4 calendar years, the value of LTC first availed during the first calendar year of the immediately succeeding block shall be eligible for exemption in lieu of exemption not availed during the preceding block Only one trip can be carried forward to be availed in the immediately succeeding block.
  3. Quantum of Exemption - The basic rule is that quantum of exemption will be limited to the actual expense incurred on the journey.
Any Leave encashed for the purpose of Leave travel or home travel concession is taxable.

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].

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).

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.

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 of 25-06-1999.

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 public sector company;
  • Any other company;
  • An Authority established under a Central, State or Provincial Act;
  • A Local Authority;
  • A Cooperative Society;
  • 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;
  • Any Indian Institute of Technology within the meaning of Section 3 (g) of the Institute of Technology Act, 1961;
  • 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.
 
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):
  1. any sum received under section 80DD(3) or section 80DDA(3); or
  2. any sum received under a Keyman insurance policy; or
  3. 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
  4. 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
  5. 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.
 
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).

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:
  • 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
  • the actual expenditure incurred in payment of rent in excess of one-tenth of the salary due for the relevant period; or
  • where such accommodation is situated in Bombay, Calcutta, Delhi or Madras, 50% of the salary due to the employee for the relevant period; or
  • where such accommodation is situated in any other places, 40% of the salary due to the employee for the relevant period,
For this purpose, "Salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.
 
It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee subject to the limits laid down in Rule 2A, qualifies for exemption from income-tax. Thus, house rent allowance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on production of evidence of actual payment of rent before excluding the House Rent Allowance or any portion thereof from the total income of the employee.
 
Though incurring actual expenditure on payment of rent is a pre-requisite for claiming deduction under section 10(13A), it has been decided as an administrative measure that salaried employees drawing house rent allowance upto Rs.3000/- per month will be exempted from production of rent receipt. It may, however, be noted that this concession is only for the purpose of tax-deduction at source, and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent.
 
Further if annual rent paid by the employee exceeds Rs 1,00,000 per annum, it is mandatory for the employee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.

Section 10(14) provides for exemption of the following allowances :-
  1. 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.
  2. 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.
 
CBDT has prescribed guidelines for the purpose of Section 10(14) (i) & 10 (14) (ii) vide notification No.SO 617(E) dated 7th July, 1995 (F.No.142/9/95-TPL)which has been amended vide notification SO No.403(E) dt 24.4.2000 (F.No.142/34/99-TPL). The transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of duty is exempt to the extent of Rs.800 p. m. or Rs1600 p.m (for a blind person) vide notification S.O.No. 395(E) dated 13.5.98.

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.

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.

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]. ¢wFamily¡ΓΌ 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.

Under section 17 of the Act, exemption from tax will also be available in respect of:-
  • the value of any medical treatment provided to an employee or any member of his family, in any hospital maintained by the employer;
  • 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:
  • 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;
  • 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.
  • 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);
  • reimbursement, by the employer, of the amount spent by an employee in obtaining medical treatment for himself or any member of his family from any doctor, not exceeding in the aggregate Rs.15,000/- in an year;
  • 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.

Interest Rate reduces by RBI on Special Deposit Schemes

Recently, Reserve Bank of India has declared on 12th December, 2014 that the Interest Rate reduces on Special Deposit Scheme 1975 from 8.8% to 8.7%. This reduced interest rate will effect from 01st January, 2014 to 31st December, 2014.  This is great loss of Special Deposit Schemes account holders during the calendar year 2014.

In this connection, we advise that interest for the calendar year 2014 may be promptly disbursed to the SDS account holders @ 8.7% per annum from January 01, 2014 to December 31, 2014 through electronic mode such as ECS/NECS/ NEFT/RTGS or by way of account payee cheques on January 01, 2015 itself, subject to instructions, as applicable, contained in paragraphs 3 and 4 of our circular CO.DT.No.15.01.001/H-3527/2003-04 dated December 30, 2003.

Download Reduces Interest Rates on Special Deposit Schemes (SDS) Click Here.

Penalty u/s. 271H on Failuer of furnining statment or Incorrect Information.

Recently, CBDT has issued a circular for computation of Income of Salaried Person for Asstt. Year 2015-16.  In this circular the detailed information about Income Tax Deduction, Returns and other exemptions along with some penalties and many more.  Thus the big part of Penalty is that for non-filing of statement or furnining incorrect infromation u/s. 271H which is as under:

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.

At the time of preparing statements of tax deducted, the deductor is required to:
  1. mandatorily quote his tax deduction and collection account number (TAN) in the statement;
  2. mandatorily 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;
  3. mandatorily quote PAN of all deductees; 
  4. furnish particulars of the tax paid to the Central Government including book identification number or challan identification number, as the case may be.
  5. 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.
It may be noted that under the new TDS procedure, TAN of the deductor/ 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 deductee. Hence due care should be taken in filling these particulars. Due care should also be taken in indicating correct CIN/ BIN in TDS statements.

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