TDS on Salary - Stepwise Procedure

CA.Tarun Maheshwari , Last updated: 03 March 2009
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STEP BY STEP PROCEDURE FOR DEDUCTION OF TAX AT SOURCE FROM THE SALARIES OF EMPLOYEES FOR ASST. YEAR 2009 – 2010

REFERENCE

CODE

1	Gross salary as per Acquitance Register Plus Other Remuneration paid and minus Education, Transport, Hostel allowances (See Note 1)	A
2	If (A) includes House Rent Allowance (HRA) deduct the least of the following three. If rent is paid actually (give a declaration in the enclosed form.)	B
	a) 40% of the Salary (Salary means Basic + D.A). b) H.R.A actually received by the employee which is included in (A) abov c) Excess of rent paid over 10% of salary (salary means Basic + D.A).
3	Deduct B from A.	C
4	a) Deduct Professional Tax as shown in the Acquaintance Register	D
5	Gross Salary = C – D	E
6	Add to (F)
	a) Any other Income reported by the employee in writing in Form No.12C (Performa of Form is enclosed).	G
	b) HOUSE PROPERTY INCOME: If computation under this head is negative deduct from ‘F’ (See Note 2)	H
7	Gross Income = (F+G) – H or (F+G+H) as the case may be	I
	From Gross Income (I) deduct the following as Applicable
	80C	Savings like LIC, PF, NSCs, Tuition fee , Housing loan principal, infra-structure bonds etc. which were hitherto claimed rebate u/s 88 (for details see note no.4 below)	Max of Rs. 1,00,000 along with Section 80CCC
	80CCC	Pension Fund premium paid	Max of Rs. 10,000
	80D	Medical Insurance Premium on health for self and dependents	Max of Rs. 15,000
		Additional amount - On dependent Senior Citizen	Max of Rs. 5,000
	80DD	Medical treatment of Handicapped dependent (See Note 3)	Max of Rs. 50,000
	80DDB	Actual Expenditure towards medical treatment for self and dependents (Obtain Form 10-I from any doctor registered with Indian medical Association) (see note 7 below)	Actual Expenditure or Rs.40,000 and in case of Senior Citizen it extends to Rs.60, 000/- whichever is less
	80E	Repayment of Loan taken for Higher Education of Self or Dependent	Max of Rs. 40,000
	80GG	House Rent Paid by employee (Declaration in Form 10BA) When (A) does not include HRA)	1.House rent paid @ Rs.2000 p.m. 2.25% of (I) above 3.Actual Rent paid 10% of (I) above
	80U	Employee who suffers from total blindness or permanent physically handicapped (Medical Certificate to be produced)	Rs. 50,000
8	Total the above deductions	J
9	Total Income before 80G = (I- J)	K
10	Deduction U/s 80G is restricted to 50% or 100% of Donation amount subject to a maximum of 10% of K (See Note 5)	L
11	Total Taxable Income (K-L)	M
012	Calculation of tax for women assesses Calculate Tax on M as under Net Income Range (M) Rate if Income – Tax: Up to Rs.1,80, 000/- NIL Rs. 1,80,000 – 3,00,000 10 percent of the amount by which The total income exceeds Rs.1,80,000. Rs. 3,00,000 – 5,00,000 Rs. 12,000 plus 20 percent of the Amount by which the total income Exceeds Rs. 3,00,000. Rs.5,00,000 and above Rs. 52,000 plus 30 percent of the Amount by which the total income Exceeds Rs.5,00,000
	Calculation of tax for senior citizens Calculate Tax on M as under Net Income Range (M) Rate if Income – Tax: Up to Rs.2,25, 000/- NIL Rs. 2,25,000 – 3,00,000 10 percent of the amount by which the total income exceeds Rs.2,25,000 Rs. 3,00,000 – 5,00,000 Rs. 7,500 plus 20 percent of the Amount by which the total income Exceeds Rs. 3,00,000. Rs.5,00,000 and above Rs. 47,500 plus 30 percent of the Amount by which the total income Exceeds Rs.5,00,000
	Calculation of tax for all others Calculate Tax on M as under Net Income Range (M) Rate if Income – Tax: Up to Rs.1,50, 000/- NIL Rs. 1,50,000 – 3,00,000 10 percent of the amount by which The total income exceeds Rs.1,50,000. Rs. 3,00,000 – 5,00,000 Rs. 15,000 plus 20 percent of the Amount by which the total income Exceeds Rs. 3,00,000. Rs.5,00,000 and above Rs. 55,000 plus 30 percent of the Amount by which the total income Exceeds Rs.5,00,000	0
13	The “(O)” is subject to surcharge as follows. Rate of Surcharge on “O” If ‘M’ does not exceed Rs.10,00,000/- NIL If ‘M’ exceeds Rs. 10,00,000/- and above 10%	P
14	For the tax payable as in ‘P’ above add 2% education cess and Secondary & Higher Education Cess of 1% on ‘P’	Q

NOTES:

1. If (A) includes the following payments, Deduct the following amount as shown against each of the

Following along with HRA before arriving at (C).

A Transport allowance @ Rs. 800 p.m (Rs.1200/- per month if severally handicapped)

B Education allowance per child @ Rs.100/- p.m subject to a maximum of two children.

C Hostel allowance per child @ Rs.300/- p.m subject to a maximum of two children.

2. Where house property is acquired/constructed with borrowed capital on or after 01-04-1999 and such acquisition/construction is completed on or before three years, only then the deduction is allowable to the maximum extent of Rs. 1,50,000 from the year of completion. However, if the above loan is availed before 01-04-1999 deduction is restricted to maximum of Rs.30, 000/-

3. Please give certificate of doctor working in a government hospital certifying the percentage of disability as prescribed in the definition of Handicapped dependant in section 80DD, along with actual expenditure Incurred . In case of severe disability Rs.75,000/- may be allowed.

4. The following Investments are eligible for deduction u/s 8OC (submit a Xerox copy of investment).

a. Investments in capital issues of equity shares and/or Debentures and/or Units of Mutual Funds/Public limited Companies, Engaged in developing, maintaining or operating an infrastructure/power generation or distribution/Telecom facility, approved by Central Board of direct taxes (CBDT) will be eligible for tax rebate upto Rs. 1,00,000 (either entirely or in combination with other avenues U/s 88)

b. Interest accrued on National Savings Certificates, (VIII Issue) is eligible for tax relief under Section 8OC of the Income Tax Act, 1961. The rates of interest are given behind the certificate.

i. LIC Premium paid - obtain photocopy of LIC receipts

ii. Payment by a person in respect of non-commutable deferred annuity.

iii. Contribution to statutory PF and recognized PF.

iv. Contribution to 15 years P.P.F.

v. Contribution towards approved superannuation fund.

vi. Any sum paid as subscription to Home Loan Account Scheme of the National Housing Bank.

vii.Any sum paid as subscription to National Saving Certificate issues

viii.Contribution to ULIP of UTI.

ix. Contribution to ULIP of LIC. (I.e., Dhanaraksha of LIC). Jeevan Dhara/Jeevan Akshay.

x. Contribution to Equity – Linked Saving Scheme of a Mutual Fund/UTI.

xi. A) Any installment as part payment of the amount due under any self financing or other scheme

of any development authorities, Housing Board engaged in the construction and sale of the

house property

B) Any installment as part payment of the amount due to any company or co-operative society of

which the individual is a scheme holder or member towards the cost of the house

Properties.

C) Repayment of the amount borrowed by the individual from.

1. Central or State Government.

2. Any Bank including Co-operative Bank.

3. LIC.

4. National Housing Bank.

5. Any Public Company with the main object of providing long term finance for

Construction/purchase of houses.

xii. Any amount deposited in scheduled bank fixed deposit scheme for a period exceeding 5 years

xiii. Any amount paid towards annuity plan of any other insurer provided by the insurance regulatory

And development authority shall also be eligible for tax rebate.

xiv) Any contribution by an individual to any notified pension fund setup by notified mutual fund or UTI.

xv).Tuition Fees: subject to the following conditions

1) The taxpayer is an individual.

2) He has paid tuition fees. It does not include payments towards any development fees or donation or payment of similar nature

3) Such fee is paid at the time of admission or thereafter.

4) It is paid to a university, college, school or other educational institutions situated in India.

5) It is paid for full time education.

6) It is paid for any two children of the taxpayer. Children may (or may not) be dependent upon the taxpayer; moreover, children may (or may not) be minor.

If the aforesaid conditions are satisfied, then the tuition fees paid per child subject to a maximum of 2 children. (Only those payments, which were made between 1st April to, 31^st March has to be considered and proper receipt for the same has to be produced to the concerned disbursing officer)

5. Under section 192 (TDS Provision for salaries) – No deduction is to be made from the salary income in respect of any donations for charitable purposes i.e., relief under section 80G. The tax relief admissible under section 80G in respect of such donations will have to be claimed by the employee at the time of finalization of his assessment i.e., at the time of filing the return.

Exceptions to above: Any donations to Prime Minister’s Drought Relief Fund, National Defense Fund, and The chief Ministers Earth quake relief fund, National Blood Transfusion Council, Chief Minister’s Relief Fund, National Sports Fund, The National Foundation for Communal Harmony.

6. Return of TDS has to be submitted quarterly in Form No. 24Q starting from quarter ended 3oth June. The said return is to be submitted before 15^th of the month following the end of a quarter. However, the Annual Return in Form No.24 has to be submitted as usual at the end of the year.

7. Deduction under section 80DDB cannot be allowed by the employer for the purpose of deduction of tax at source. The same is to be claimed in the income tax return to be filed by the employee along with the copy of Form No.10-I.