3.1 Method of Tax Calculation:
Click to view Part I
Income Tax on Salaries – Circular No. 17/2014
Click to view Part II
RATES OF INCOME-TAX AS PER FINANCE (No. 2) ACT, 2014
Every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2014-15. The income-tax is required to be calculated on the basis of the rates given above, subject to the provisions related to requirement to furnish PAN as per sec 206AA of the Act, and shall be deducted at the time of each payment. No tax, however, will be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds Rs. 2,50,000/- or Rs.3,00,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of the employee.(Some typical illustrations of computation of tax are given at Annexure-I).
3.2 Payment of Tax on Perquisites by Employer:
3.2.1 Computation of Average Income Tax:
|Income Chargeable under the head ―Salaries inclusive of all perquisites||Rs. 4,50,000/-|
|Tax on Total Salary (including Cess)||Rs.20,600/-|
|Average Rate of Tax [(20,600/4,50,000) X 100]||4.57%|
|Tax payable on Rs.50,000/= (4.57% of 50,000)||Rs. 2285/-|
|Amount required to be deposited each month||Rs.190 ((Rs. 190.40) =2285/12)|
The tax so paid by the employer shall be deemed to be TDS made from the salary of the employee.
3.3 Salary From More Than One Employer:
3.4 Relief When Salary Paid in Arrear or Advance:
3.4.2 With effect from 1/04/2010 (AY 2010-11), no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in section 10(10C)(i) (read with Rule 2BA), a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under section 10(10C) in respect of such, or any other, assessment year.
3.5 Information regarding Income under any other head:
I, …………………. (name of the assessee), do declare that what is stated above is true to the best of my information and belief.
It is reiterated that the DDO can take into account any loss only under the head ―Income from house property‖. Loss under any other head cannot be considered by the DDO for calculating the amount of tax to be deducted.
3.6 Computation of income under the head “ Income from house property:
a) Gross annual rent/value
b) Municipal Taxes paid, if any
c) Deduction claimed for interest paid, if any
d) Other deductions claimed
e) Address of the property
f) Amount of loan, if any; and
g) Name and address of the lender (loan provider)
3.6.1 Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation of Income From House Property [Section 24(b)]:
Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-
(i) the deduction is allowed only in case of house property which is owned and is in the occupation of the employee for his own residence. However, if it is actually not occupied by the employee in view of his place of the employment being at other place, his residence in that other place should not be in a building belonging to him.
(ii) the quantum of deduction allowed as per table below:
|Sl No||Purpose of borrowing capital||Date of borrowing capital||Maximum Deduction allowable|
|1||Repair or renewal or reconstruction of the house||Any time||Rs. 30,000/-|
|2||Acquisition or construction of the house||Before 01.04.1999||Rs. 30,000/-|
|3||Acquisition or construction of the house||On or after 01.04.1999||Rs. 1,50,000/- (upto AY 2014-15)
Rs. 2,00,000/- (w. e. f. AY 2015-16)
3.7 Adjustment for Excess or Shortfall of Deduction:
The provisions of Section 192(3) allow the deductor to make adjustments for any excess or shortfall in the deduction of tax already made during the financial year, in subsequent deductions for that employee within that financial year itself.
3.8 Salary Paid in Foreign Currency:
ANNEXURE 1 – SOME ILLUSTRATIONS – For Assessment Year 2015-16
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