THE KERALA STATE FINANCIAL ENTERPRISES LIMITED REGD.OFFICE: "Bhadratha", THRISSUR - 680 020. From To The Deputy General Manager (P&HR), All Unit Heads, Head Office, Thrissur. Our Ref: 2805/IT 01.10.2012 Sub: Income Tax for the financial year 2012-2013 (Assessment Year 2013-2014) salary income computation estimate forwarding of reg:-... All the employees coming under Tax bracket are urgently required to furnish their investment proposals and also the proof of original investments already made, if any, so that the tax recovery could be regulated at source. A statement showing the estimated income and tax liability of the employees for the year 2012-2013 is published in http://pop.ksfe.com/downloads. Please note that, the estimated tax liability outstanding for the year will be recovered in 6 equal monthly instalments from October 2012 onwards. The employees are also required to furnish details of income from other sources received or accrued during the year in Form No.12 C of Income Tax Rule 1962. The details of risk allowance (gold & cashiers ) and sugama interest (on salary account) paid from the branch as on date may also be intimated to H.O, in the prescribed format, (Format enclosed), as these allowances and interest are to be considered for income computation. The recomputation of income will be made only on receipt of adequate proof for investments made and tax recovery regulated accordingly in such cases only. Hence copies of all investments made during the year 2012-13 should reach at H.O before 31.12.2012. Moreover, those who have already crossed `. 1 Lakh limit under Sec 80C need not send details of further investments and proposals for considering under the section. The following details are given for the information of employees for planning their investments. Income Tax rates for Individuals The tax rates for the assessment year 2013-2014 (financial year 2012-2013) are given below:- For individuals (Except those above the age of 60 years) Income Slab Upto `. 2,00,000 Nil Rate of Tax `. 2,00,001 - `. 5,00,000 10% of the amount by which the total income exceeds `. 2,00,000/- `. 5,00,001 `. 10,00,000 `. 30,000/- plus 20 percent of the amount by which the total income exceeds `. 5,00,000/- `. 10,00,001 and above `. 1,30,000/- plus 30 percent of the amount by which the total income exceeds `. 10,00,000/- Education Cess:- At the rate of 3% on the income tax.
2 Exemption in respect of HRA If HRA is to be exempted for the purpose of computation of income in the case of individuals occupying rented accommodation, a declaration to the effect that he/she is staying in rented house specifying the amount of rent paid and other details should be given in specified Form No.10BA (Format enclosed). The details of House No., Address of the building owner, rate of rent and period of payment should be specifically mentioned in the declaration. The limit of exemption in respect of HRA u/s 10(13 A) & Rule 2A will be as under. 1. HRA Received 2. 40% of the salary. Whichever is less. 3. Excess of rent paid over 10% of salary Deductions from Total Income The following deductions are allowed from the gross total income in order to arrive at the net income (Deductions generally applicable for our employees only are listed) (a) Section 80C Deduction in respect of Life Insurance Premia, deferred annuity, contributions to provident fund, Subscription to certain equity shares or debentures etc. Section 80C provides deduction in respect of the following investments/ contributions/deposits/payments made by the taxpayer during the financial year. 1) Life Insurance Premium paid to effect or to keep in force insurance on his own life or on the life of the spouse or any child. 2) Contribution to any Provident Fund to which Provident Funds Act, 1925 applies 3) Contribution towards 15 year Public Provident Fund 4) Contribution towards an approved Superannuation Fund 5) Subscription to National Savings Certificate, VIII issue. (Accrued interest thereon is also qualified for deduction for first five years) 6) Contribution for participating in the Unit linked Insurance Plan (ULIP) of Unit Trust of India/LIC mutual fund. 7) Any sum paid as tuition fees (excluding any payment towards development fees/ donation/payment of similar nature) whether at the time of admission or otherwise to any University/College/Educational Institutions in India for full time education of any two children of the assessee. This is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes. 8) Subscription to any units of any mutual fund referred to in Clause 23D of Section 10 of the Income Tax Act. 9) Repayment of principal amount borrowed for purchase or construction of a residential house 10) Contribution made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation of India or any insurer as the Central Government may by notification in the official gazette specify 11) Contribution by an individual to any pension fund set up by any Mutual Fund notified under clause (23 D) of Section 10 or by the Administrator or the Specified Company, as the Central Government may, by notification in the official gazette, specify in this behalf. 12) Subscription to any security of Central Government or any such deposit scheme notified by the Government. 13) Term deposit for a fixed period of not less than five years with a scheduled bank and which is in accordance with a scheme framed and notified, by the Central Government, in the Official Gazette.
3 14) Subscription to any notified bonds of National Bank for Agriculture and Rural Development (NABARD). The maximum amount of deduction allowed u/s 80C is limited to `. 1,00,000/- per annum. Moreover, the aggregate amount of deduction u/s. 80C, 80CCC and 80CCD should not exceed `. 100000/- b) Other Deductions:- a) Section 80 CCC : Deposit in Annuity Plan:- The deduction under this section is available for amount paid or deposited under an annuity plan of LIC of India or any other insurer for the purpose of receiving pension, from the fund set up by the insurer under any pension scheme and in accordance with provisions of Section 10 (23AAB). The maximum amount of deduction available during the previous year would be `.1,00,000/- (It may be noted that, the aggregate amount of deduction u/s 80C, 80CCC and 80CCD shall not, in any case, exceed `. 1,00,000/- in a financial year). b) Section 80CCG Deductions under this section is available with effect from the AY 2013-2014. The conditions to be satisfied are:_ i. Gross total income of the employee does not exceed `. 10 lakhs. ii. He has acquired listed shares in accordance with the notified scheme. iii. The assessee is a new retail investor as specified in the above notified scheme. iv. The investment is locked in for a period of 3 years. The amount of deduction is 50% of amount invested in equity shares limited to `. 25000/-. If any deduction is claimed by a taxpayer under Sec 80CCG in any year, he shall not be entitled for deduction under this section in any subsequent year. c) Section 80D :- The following amendmends have been made to Sec 80D from the AY 2013-2014:- 80D deductions include Payment on account of Medical Insurance Premium, Contrbution to Central Government Health Scheme (only for self, spouse and children.) and Preventive Health Check Up. The maximum amount of deductions available under Mediclaim insurance and contribution to Central Govt Health Scheme is `. 15000/- for self, spouse and children. In case the payment of medical insurance policy is made by the assessee for parents, whether dependent or not and any one of them is a senior citizen, a further deduction of `. 5000/- is available as deduction. Again a deduction limited to an agrregate amount of `. 5000/- is availabe for preventive health check up.
4 d) Section 80 DD:- Deduction in respect of maintenance including medical treatment of handicapped dependent: - Deduction under this section is allowed on the following payments :- (i) Expenditure incurred for medical treatment (including nursing, training and rehabilitation of a handicapped dependent or (ii) Amount paid or deposited under specified schemes of LIC or any other insurer In case the dependent is a person with severe disability (i.e. with 80% or more of one or more disabilities) the maximum amount allowable under this section is `. 1,00,000/-, and for ordinary disability (i.e. 40% to 79% of disability) deduction is allowed up to `. 50,000/ Handicapped dependent means a person who is a relative (spouse, children, parents, brothers and sisters) of the assessee and is not a dependent on any other person for his/her support and maintenance and who has not claimed deduction U/s 80 U e)section 80 DDB:- Deduction against expenditure on medical treatment, etc:- Under this section an assessee, who has actually incurred any expenditure for medical treatment of the assessee himself or a dependent relative (spouse, children, parents, brothers and sisters) for such disease or ailment as may be specified in the rules, shall be allowed a deduction of the amount actually paid or a sum of `. 40,000/- whichever is less in respect of that previous year in which such amount was actually paid. However, where the expenditure is incurred in respect of the assessee or his dependent relative and who is a senior citizen, the maximum deduction allowable is `. 60,000/-. For this purpose, the following are the eligible diseases/ ailments. (1) Neurological diseases where the disability level has been certified to be 40% and above. (2) Malignant Cancers (3) Full Blown acquired Immune Deficiency Syndrome (AIDS) (4) Chronic Renal Failure. (5) Hematological disorders The deduction under this section shall be reduced by the amount received from an insurance company or from the employer, for the medical treatment of the insured. f) Section 80E :- Deduction in respect of loan taken for higher education:- In computing the total income of an individual, any amount paid by him in the previous year, out of his income chargeable to tax by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his spouse and children. Income Tax concession under this section will also be extended to parents who have legally adopted a child.
5 g) Section 80G :- Deduction in respect of donations to certain funds, charitable institutiions etc:- Provides 100% deduction for donation made to National Defence Fund, PM s National Relief Fund etc. In any other eligible case, 50% of the aggregate of the sum specified in sub sec. (2) of Sec. 80 G. This Section has been amended with effect from the AY 2013-2014 to the effect that any payment exceeding `.10,000/- shall be allowed as deduction if such sum is paid by any mode other than cash. No deduction should be allowed by the DDO (Drawing and Disbursing Officer) from the salary income in respect of any donations made for charitable purposes. In other words, Claim for exemption of tax under Sec 80 G is to be made by the employee in the return of income unless the deduction was done through the employer. h) Section 80U :- Deduction for Own Disability :- Under this section, an assessee will get a deduction of `.50,000/- if he has partial disability and `. 1,00,000/- in case the disability is severe. The deduction will be allowed if the assessee is suffering from blindness/low vision/leprosy-cured/ hearing impairement/locomotors disability/mental retardation/ mental illness. DEDUCTION IN RESPECT OF REPAYMENT OF HOUSING LOAN (PRINCIPAL AMOUNT u/s 80 C AND INTEREST ON LOAN u/s 24 (B) ):- In order to claim the benefits of interest on House Building Advance and also for the repayment of principal amount, the employee concerned will have to comply with the following rules/criteria. No.1: No.2: No.3: No.4: No.5: The acquisition or construction should be completed within 3 years, from the end of the financial year in which the capital was borrowed/loan taken. The Bank/Financial Institution extending the loan certifies that such interest is payable in respect of amount advanced for acquisition or construction of the house or as refinance of the principal amount outstanding under an earlier loan taken for such acquisition or construction. The ownership of the property should vest with the loanee (employee) who avails the tax benefits In the case of joint ownership of the property, each co-owner can claim interest u/s 24(b) and deduction on principal repayment u/s.80c separately, based on their respective share, which is definite and ascertainable, provided the repayments also done accordingly by the coowners. If the repayment of loan is not made in the proportionate ratio, then the ratio in which the repayment is made will be considered to determine the amount of deduction of interest and principal repayment allowable individually to both the co-owners. The principal portion of loan availed for reconstruction, modernization, renewal, addition etc. will not qualify for deduction, but will be eligible for interest repayments (up to `. 30,000/-).
6 A person having taxable income under the head salary is entitled for deduction of interest paid on money borrowed for acquiring, constructing, repairing, renewing or reconstructing the house property. The existing deduction available to individual on interest payment is as follows: (i) (ii) Period If the property is acquired/constructed/ renewed before 01.04.1999 If the property is acquired or constructed with capital borrowed on or after 01.04.1999 and such acquisition or construction is completed within 3 years Maximum Deduction per annum `. 30,000/- `. 1,50,000/- Amount received in excess of `. 15,000/- on account of reimbursement of hospital expenses will be taxable unless the hospital in which treatment was undergone is not approved by the Income Tax Department of India. Relief under Sec.89(1) If an individual receives any portion of his salary in arrears or in advance, he/she can claim relief under Sec. 89(1). Those who intend to avail the various deductions under the Act are required to produce the documentary proof (attested by Unit Head/self attested) at the earliest, so as to further regulate/relax the tax deduction from the salary. In this context it is to further remind that, once the Income Tax is deducted and remitted to the Central Government, subsequent refund of tax cannot be made by the employer under any circumstances. However, the concerned employees can claim refund of the TDS remitted, directly from the Income Tax Department by filing their return of income. Permanent Account Number (PAN) PAN furnished in the income computation statement should be verified and correction, if any, to be intimated to H.O. without fail. The Income Tax assessees who have not yet applied for Permanent Account Number are directed to obtain PAN immediately and intimate the same to H.O. at the earliest. Any failure in this matter will be viewed very seriously and the penalty, if any, imposed by the Income tax authorities will be recovered from the concerned employees. For THE KERALA STATE FINANCIAL ENTERPRISES LIMITED, Sd/- DEPUTY GENERAL MANAGER (P&HR)