Any Income accounted Properly Is an income received Properly Income received during a Financial Year is subject to payment of tax to the Government. The salary disbursing authorities at Regional and Central Office level are responsible for deduction of Income Tax and remittance. Hence, Officers are requested to plan their investment in advance and ensure deduction of Income Tax every month from April to avoid last minute burden and violation of system.: ITEMS TO BE TREATED AS INCOME FOR COMPUTATION OF INCOME TAX : 1. Salary & allowances for the financial year. 2. Bonus & ex-gratia received during the financial year 3. Advance/arrears of salary if any, received, during the financial year. 4. Taxable portion of LFC 5. Leave encashment received during the financial year. 6. Taxable portion of leave encashment/ gratuity on retirement/resignation 7. Value of perquisites (i.e on accommodation, furniture, interest free or concessional loans) 8. Taxable medical perquisite (i.e. amount of medical reimbursement received for self / family Hand Book on Duties and Rights - 2017 331
over & above Rs.15000/- for the treatment undergone in the hospitals not notified under IT Act). 9. Overtime wages, 10. Cash prize if any, Cash incentive 11. Personal Allowance, Half yearly allowance 12. Adjustment/deputation allowance ITEMS TO BE TREATED AS EXEMPTED / DEDUCTED WHILE COMPUTING INCOME TAX : 1. House rent Exemption: (U Sec. 10 (13 A) : Those who are in receipt of house rent allowance and paying rent for his/ her residential accommodation, the HRA received will be reduced from the total income subject to certain clauses as below : a) Actual HRA Received OR b) Excess of rent paid over 1/10th of the Salary OR c) An amount equal to 50% of the Salary if accommodation is at Delhi, Mumbai, Kolkata and Chennai Or 40% of the Salary if the accommodation is at other areas WHICHEVER IS LESS. (Salary for this purpose is Basic Pay only). 2. Porfession Tax/Tax on employment: Amount paid towards tax on profession is eligible for 100% exemption from total income. 3. Deduction towards premium paid on Health Insurance policy (Mediclaim): Premium paid towards Health Insurance Policy is eligible for 100% exemption for a maximum of Rs.25,000/- for Self and Rs.30,000/- for Dependent Senior Citizen. (Sec. 80 E). 4. Deduction in respect of Maintenance including medical treatment of dependent with disability: Sec 80DD Amount of deduction : Rs.50000/ (OR) Rs.75000/- depending upon the severity of disability of dependent persons (detailed in medical certificate given by the approved medical authorities) 5. Deduction in respect of expenditure on medical treatment for notified ailments like cancer,aids,renal failure, heamophilia & thalassaemia u/s 80 DDB. Maximum eligible amount is For self & dependents : Rs.40000/-, Dependent senior citizen : Rs.60000/- 332 Hand Book on Duties and Rights - 2017
6. Deduction in respect of interest on loan taken for higher education : Sec.80 EE: The interest paid towards payment of loan availed for higher education of wards during the financial year is eligible for exemption of 100% from the income (Principal amount paid NOT eligible). 7. Donations u/s 80 G : In respect donation under salary recovery is deductible at source. Other contributions/donations eligible for deduction under IT Act has to be claimed from the IT Authorities while filing their annual return. 8. Deduction under Chapter VI A of ITact.= 80C : Amounts paid / invested under the following heads/schemes are eligible for 100% exemption subject to a maximum of Rs.1.50 lacs. Insurance premia,deferred annuity, contribution to Provident Fund, contribution.to superannuation fund, voluntary contribution to Provident Fund, deposit under Central Govt. deposit scheme, Public Provident Fund, investment in National saving Certificate, Unit linked Insurance Plan, Annuity plans, subscription to any pension fund set up by any Mutual fund, Tution fees paid, Housing loan instalments paid towards Principal in the case of Subhagruha Loan and Original Loan instalment in the case of SHL, subscription to units of mutual funds, Term deposit with a scheme notified by Govt. (Tax saving deposits), upto 10% of salary contribution to NPS under Sec.80C. 10. Income Tax Rates to be applied for the financial year 2014-15) Taxable income in respect of : All employees: Upto Rs.2,50,000 - NIL Rs.2,50,001-5,00,000-10% of the amount which exceeds Rs.2,50,000 Rs.5,00,001-10,00,000 - Rs.25,000 + 20% of the amount which exceeds Rs.5,00,000 Exceeds Rs.10,00,000- Rs.1,25,000 + 30 % of the amount which exceeds Rs.10,00,000/- Education Cess @ 3% of tax payable should be added to arrive at total tax payable. (For senior citizens above 80 yrs, no tax upto Rs. 5 lacs & for those between 60 and 80 years no tax upto Rs. 3.00 lacs. Hand Book on Duties and Rights - 2017 333
PS: Those employees whose annual income exceeds Rs.1,50,000 must have PAN issued by IT authorities. It is mandatory on the part of every employee to file his/her Income Tax Return before 31st July every year for income earned during the previous \financial year, provided the income exceeds the threshold limit. AN EXAMPLE IS PROVIDED HEREBELOW ALL POSSIBLE INCOME AND DEDUCTIONS OF AN EMPLOYEE AND HIS/HER INCOME TAX LIABILITY. EXAMPLE : Salary / Investments particulars of a Male member working in a Metropolitan Branch: (Amt.in Rs.) Gross Salary 9,90,216 Profession Tax 2,190 Medical Insurance premia paid: PF 50,000 - for self & family members 25,000 Housing Loan repayment 64,000 - for Parents aged 65 years of age 30,000 Expenses for dependant disabled child 30,000 Tuition fees for his ward LIC Premia for various polices 50,000 Investment in LIC/UTI for the benefit of the disabled child 30,000 20,000 Interest on borrowed capital on Housing Loan 15,000 Premia under Jeevan Interest on Subha Gruha Loan 30,000 Suraksha (Pension Scheme) 14,000 Interest paid during the financial year on 30,000 Education Loan availed for his son Rent received on sub. gr. house 60,000 Taxes paid on Subha Gruha House 3,000 Other particulars: The staff member resides in his own house and another house under Subha Gruha 334 Hand Book on Duties and Rights - 2017
FOR THE ABOVE EMPLOYEE, THE INCOME TAX CALCULATION WILL BE AS BELOW: (Amount in Rs.) I Gross Salary 9,90,216 I Less: Prof.Tax u/s 16(ii) 2190 9,88,026 III Income/Loss on House property: a) Since he resides in own House, annual value to be taken as Nil b) Rent received : 60,000 less: Taxes paid : 3,000 57,000 30% for repairs : 17100 Int. on borr.cap. : 15000 Int. on borr.cap : 30000 62,100 (-)5100 9,82,926 Net Loss Interest on borrowed capital IVLess: Deduction u/s 80 D: a) Medical Insurance premia for his family (Maximum) 25,000 b) Medical Insurance premia for his parents (Sr.Citizen) 30,000 9,27,926 (Maximum) Less: Deduction u/s 80 DD: Maintenance of physically handicapped son Rs.30000 +Rs,30000 (restricted to maximum of Rs.50,000/-) 50,000 8,77,926 VLess: Deduction u/s 80 E: Interest paid on Education Loan availed for his son 30,000 8,47,926 GROSS TOTAL INCOME 8,47,926 Hand Book on Duties and Rights - 2017 335
VI Less: Deduction u/s 80 C: A) PF: Rs.50000 + LIC: Rs.20000 Tuition Fees: Rs.50,000 + HL repayment : Rs. 64000 TOTAL : Rs.1,84,000 B) Jeevan Suraksha u/s 80 CCC : Rs. 14,000 Total of (A) + (B) Rs.1,98,000 Restricted to Rs.1.50 Lakh u/s 80 CC 1,50,000 6,97,926 TAXABLE INCOME [rounded off to Rs.10 u/s 288(A)] 6,97,926 VII Income Tax payable : All staff: Upto Rs.2.50 Lac - Nil Rs.2.50 Lac to Rs.5 Lac (10 % of Rs.250000) - Rs.25000 >Rs.5 Lac (20% of Rs.197926) - Rs. 39585 64585 Add: Education Cess @ 3% on Rs.68585 1938 66523 336 Hand Book on Duties and Rights - 2017