A Guide To Your Personal Income Tax

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A Guide to your Personal Income Tax

contains:Current Tax Rates & Slabs Tax Treatment of Various Salary Heads Various Tax Saving Schemes/Deductions Guidelines for availing deduction on investment / exemptions Instructions to fill in your Data Form Blank Data Form (to be filled in by you) Form No.12B (wherever Applicable) Performa towards declaration of Other Income (wherever Applicable) Chapter I Chapter II Chapter III Chapter IV

Chapter V Chapter VI Chapter VII Chapter VIII

CHAPTER I CURRENT TAX RATES & SLABS


TAX RATES Upto Rs.1,60,000/ Rs.1,60,000/- to Rs.5,00,000/ Rs.5,00,000/- to Rs.8,00,000/: NIL : 10% of the amount by which the total Income exceeds Rs.160,000/: Rs.34000/- plus 20% of the amount by which the total income exceeds Rs.5,00,000/: Rs.94000/- plus 30% of the amount

Rs.8,00,000/- and above by which the total income exceeds Rs.8,00,000/Basic Exemption limit for women

: Rs.190,000/-

Basic Exemption limit for senior citizen (above 65 Yrs) : Rs.240,000/-

EDUCATION CESS
3% of Income Tax Payable

CHAPTER II TAX TREATMENT OF VARIOUS SALARY HEADS

A. SALARY & ALLOWANCES


1. FULLY TAXABLE HEADS Basic Salary, Performance Bonus, MGB, Incentive, Bonus, Ex-Gratia, Commission, Special Duty Allowance, Utility Allowance, Research Grant, Special Training Grant, Holiday Reward, Awards, Holiday Travel, Interest Subsidy on Housing Loan, Notice Pay, Disturbance Subsidy. 2. PARTIALLY / CONDITIONALLY EXEMPTED HEADS - House Rent Allowance - Conveyance / Car Allowance - Education Allowance : Fully / Partially Exempt subject to certain conditions. : Exempt to the extent of Rs.800/- p.m. : Exempt to the extent of Rs.100/- per child p.m. for education & Rs.300/- for Hostel (Maximum of Two children) - Leave Encashment on Retirement : Exempted conditionally. - Gratuity : Partially exempt subject to certain conditions. CONDITIONS FOR LTA EXEMPTIONS - Exemption can be availed twice in a block of Four Years. - Exemption is available maximum to Air Fare (Economy Class) or 1st AC Train Fare actually incurred on Travel. - Exemption can be availed for Self, Spouse and dependent members of the Family as defined under the Act subject to furnishing of following proofs. (i) Declaration as per Data Form (ii) Original Train Ticket or Jacket (In case of Travel by Air)

B. PERQUISITES
As per perquisite rules, tax on different perquisites provided to an employee will be charged in the following manner. 1. Residential Accommodation Value of Residential Accommodation

S.no. Category A 1.1 B Co. Leased Accommodation

Residential Accommodation C 15% of Salary or Actual Rent paid (whichever is lower)

Furnished Accommodation D Value as per Col. C plus 10% of the Cost of Furniture / Furnishing etc. made available.

1.2

Accommodation provided in a Hotel / Guest House NIL - Upto 15 days on Transfer Lower of 24% of salary or Actual - Beyond 15 days charges paid (from day one)

Note : Where two accommodation are provided due to transfer of an employee for a period not exceeding 90 days, perk value of only one accommodation (having a lower value) shall be charged. 2. Other Moveable Assets / Hard Furnishing The assets provided by the company to an employee will be taxable in the hands of an employee in the following manner.

- Computers & Laptops - NIL - Other Assets - 10% of original cost (p.a.) or hire charges paid will be treated as Income for Tax Purposes. 3. Car The perquisites in respect of Car / Cars will be chargeable to Tax as per Rates specified in the Rules.

4. Interest Free or Concessional Loans to employee or members of his Household. The Perquisite value for any interest free or concessional loan exceeding aggregate Rs.20,000/- p.a. shall be determined as under :(i) For Medical Treatment Exempted. However, this exemption shall not apply to so much of the loan as has been reimbursed to the employee under any Medical Insurance Scheme. (ii) For Housing, Conveyance & other Loans Perk value shall be difference between the interest paid by an employee and the deemed interest as may be specified by the Govt. 5. Transfer of Moveable Assets to an employee The value of transfer of moveable assets will be determined on the basis of the amount representing the actual cost of such assets to the employer as reduced by the cost of normal wear & tear calculated as under, for each completed years during which the assets was put to use by the employer. - On Computers & electronic items - On Motor Cars - On all other moveable assets - @ 50% by reducing balancing method - @ 20% by reducing balancing method - @ 10% of original cost

If the assets is sold at a value lower than the value so determined the differential amount shall be charged as perquisite value in the hands of the employee. 6. Superannuation Contribution made by company in superannuation fund in excess of Rs. 1 Lac in a financial year is chargeable to tax as perquisite in the hands of employee. 7. Others The value of any other benefit or amenity, service, right or privilege provided by the employer shall be determined on the basis of cost to the employer under an arms' length transaction as reduced by the employees' contribution, if any for the purpose of deduction of tax at source.

CHAPTER III TAX SAVING SCHEMES / DEDUCTIONS A. DEDUCTION UNDER SECTION 80C

Tax deduction u/s 80C is available to an employee in respect of saving / contributions in various Schemes. Given below are the important schemes entitled for Tax Deduction u/s 80C of the Income Tax Act.

1. Public Provident Fund 2. National Savings Certificates (Series VIII) 3. Life Insurance (Specified Policies) 4. Unit Linked Insurance Plan 1971 of UTI (ULIP) 5. Repayment of Loan taken for purchase / construction of New House 6. Deposit in Post Office (10/15 years cumulative time deposits) 7. Notified Equity Linked Savings Scheme 8. Investment in Mutual Fund (Tax Saving Scheme) 9. Loan linked Deposit Scheme of National Housing Bank 10. Notified Deposit Scheme of Housing Finance Company 11. Tuition Fee incurred in India for Two Children 12. Contribution to Pension Fund 13. Specified Fixed Deposit for not less than Five Years with a Scheduled Bank/Post Office. Ceiling for Qualifying Amount : Deduction is Rs.1 Lac. An assessee can make investment/payment in any item given above for availing the complete deduction of Rs.1 Lac. There is no ceiling / limit specified for any particular type of investment except for PPF where the upper limit for investment is still Rs.70,000/-

B. DEDUCTION UNDER SECTION 80CCF


An additional deduction of Rs.20,000/- would be allowed u/s 80CCF on investments made in long term notified infrastructure bonds which will be over and above the existing saving limit of Rs.100,000/- u/s 80C.

C. OTHER DEDUCTIONS
1. Medical Insurance Premium u/s 80D: Any sum paid (by cheque) by an assessee individual during the year towards Medical Insurance is allowable as deduction subject to maximum of Rs.15,000/-.Further an additional deduction of Rs.15,000/- is also available for health insurance premium paid in respect of parents. 2. Deduction in respect of interest on loan taken for higher education u/s 80E : Repayment of interest on loan will be qualifying as deduction u/s 80E subject to certain conditions as per Income Tax Act. 3. Deduction of interest on loans borrowed to acquire / construct house under section 24(i)(vi) The deductions on account of interest on loan on or after 01/04/99 for constructing and/or acquiring a Residential House is available to the extent of Rs.1,50,000/- (Rupees One Lac Fifty Thousand Only). However, deduction on account of interest on loan taken prior to 01/04/99 is restricted to Rs. 30,000/-. To be able to claim this benefit, the employee is required to strictly compliance with the following conditions : The employee will produce the proof of ownership of the house / property for which deduction on account of interest is claimed. The house / property must be self occupied or let out house as the case may be and the proof of ownership of the said property issued by the competent authority must also be enclosed. It may be noted that deduction on account of interest on loan taken for the property incomplete / not occupied cannot be allowed. The employee should furnish the proof of disbursal of loan for acquiring / construction of house by lending bank / company / financial institutions. Provisional certificate from the lending institutions / bank with regard to payment of interest during the F.Y.2010-2011 must be enclosed with the Data Form. However, Final certificate is to be submitted latest by 04.04.2011.

If the property / house is co-owned by spouse or any other person, the deduction on account of interest will be allowed on pro-rata basis. Copy of the Ration Card / Electricity Bill / Telephone Bill must be enclosed with Data Form.

Performa towards declaration of other Income duly filled & signed by the employee must be enclosed with the Data Form.

CHAPTER - IV GUIDELINES FOR AVAILING DEDUCTION ON INVESTMENTS / EXEMPTIONS


Important note Please note that as per Income Tax Rules an employer is restrained to allow any suo-motto refund in respect of any excess tax deducted due to any reason (including any mis-declaration / nonsubmission of Investment proofs by an Employee). Such refund, if any, will now be required to be claimed by an employee from the Income tax department while filing their annual income tax return. Accordingly following guidelines are being provided for claiming any deductions / exemptions by an Employee.

1. All deductions / exemptions will be allowed only after receipt of proper & valid proof of Investments / any other relevant documents. No deduction will be allowed based on a mere declaration made by the Employee unless the same is supported by proper and valid proof of investments.

2. The deduction on account of investment made/exemptions claimed in a particular month, will be given if appropriate proofs are received by the Corporate Payroll Hub by 15 th day of the relevant month. Benefit in respect of Investment proofs received after 15 th of the month will be extended in the proceeding months except for the month of March. No benefit / deduction, with regard to investment made / deductions claimed, will be extended, if such proofs are received after 15th Feb., 2011.

3. The exemption, with regard to LTA will be extended only after receipt of proper and valid train / air ticket / taxi bill (as the case may be) along with declaration as specified in the Income Tax Data Form. Taxi Bill/Train Ticket should be self attested. 4. The exemption on account of HRA will henceforth be extended on receipt of at least one rent receipt in a quarter.

CHAPTER - V INSTRUCTIONS TO FILL IN YOUR DATA FORM


A. DATA FORM 1. Blank Data Form is enclosed as Chapter VI. However hard copy of Data Form is being sent separately for your convenience.

2. Please fill in all the relevant columns of the data form. 3. Do not forget to mention your Employee Code & SAP Code. 4. It is mandatory to mention your Permanent Account No.(PAN) in Data Form. Non mention of PAN No. may attract panel provisions / penalties by the Income Tax Authorities. 5. Please send your Data Form duly complete in all respects on or before 15th December, 2010. 6. There are five declarations. Please sign all the relevant declarations applicable to you. B. PROOF OF INVESTMENTS Please attach Supports (Wherever applicable) as under:1. Copies of Certificate (Proof of payment) issued by the Post Office / Bank / LIC etc. 2. Documentary proof of ownership of the House along with Certificate confirming Repayment of Loan & interest or Certificate from Concerned Accounts Manager in case deductions are made through Salary confirming amount of Repayment of Loan & interest. 3. In case employee joins during the year, Form-16 issued by previous employer along with Form 12-B (in prescribed format). 4. Employees having Income Other than salary : Please provide Performa towards declaration of other income in respect of repayment received during the F.Y. from ELSS, NSS, JEEVAN DHARA and other Schemes eligible for deductions u/s 80CCA / 80CCB and also Other Income for considering deductions of Tax at Source. 5. Please enclose all proofs / supports with Data Form in respect of Investments made upto 30.11.2010. In respect of Investments made after 30.11.2010 the proofs / supports must reach us latest by 15.02.2011. 6. In order to avail the benefit of investments made, please ensure to send all investment proofs in respect of investments made upto 30.11.2010 along with Data Form. Any investment made prior to or subsequent to sending Data Form will be considered only on receipt of proof of such investment. 7. Please do not forget to mention following details on each proof of investment :- Name, - Employee Code & SAP Code - Relationship with the person (in whose name the investments are made) 8. To avoid any communication gap it is suggested that physical dispatch of hard copy of each proof of investment may be followed by an e-mail message, for which acknowledgement will be provided.

YOUR INCOME TAX RETURN


As per provisions of the Income Tax Act, 1961, every salaried employee having total income (before deduction of chapter VI-A) in excess of Rs.1,60,000/- in a financial year is required to file his/her personal income tax return with the Income Tax Department even if tax on salaries is fully deducted by the employer at source. The last date to file return in respect of salaried employees is 31.07.2011. The necessary TDS Certificates in Form No.16 will be provided by us after computing your tax at the end of the year, based on the details/investments proofs sent by you. Please note that under the Income Tax Act, the onus to furnish correct and authentic details in the Income Tax Return is on the concerned assessee / employee. You are therefore advised to ensure that authentic and correct information is furnished in your Data Form and appropriate proof of investments are submitted enable us to provide a correct TDS Certificate.

CHAPTER - VI BLANK DATA FORM (To be filled in by you)

CHAPTER -VII FORM NO.12B (Wherever applicable)

CHAPTER -VIII PROFORMA TOWARDS DECLARATION OF OTHER INCOME (Wherever applicable)

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