INCOME TAX

STUDY NOTES

Income from Salary Computation of taxable income under the head salary Particulars Amount
Basic Salary /wages Advance / Arrears Salary Annuity or Pension Fees, Commission Bonus. Excess contribution to R.P.F. by employer over 12% of salary Excess interest received from R.P.F. over 9.5% rate of interest

Allowances:Dearness Allowance Entertainment Allowance Fixed Medical Allowance City Compensatory Allowance Servant Allowance Commission as a percentage on turnover House Rent Allowance ***1 Children Education Allowance***2 Children Hostel Allowance ***3

Perquisites:
Rent free accommodation ***4 Motor Car***5 Medical Benefit***6 Educational Facilities***7 *** Free meals during office hours ***8 Service of sweeper, gardener or watchman or personal attendant provided by employer ***9 *** Gas, electricity or water provided by employer ***10 Use of movable assets: ***11 movable assets sold by employer: ***12 Interest free loan: ***13 13

Profits in lieu of salary:salary: Amount received at retirement

Gratuity***14 Commuted pension***15 ***1 leave salary***16 VRS Compensation***17 ***1 Retrenchment Compensation***18

Gross income from salary Less:- Deductions

Entertainment Allowance(Gov Allowance t.emp)***19 Employment tax***20

Taxable income from Salary

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX Scale or grade of pay.

STUDY NOTES

Salary grade means that at which starting salary of any employee is been fixed at the time of appointment and during the entire service. Period, what will be his increment per year and what will be his maximum salary after which there will be no increment. For Example: - 2000-500-4000 4000-200-5000 .Due dates of salary First day of next month Last day of same month D.P. Dearness pays March 2010 Feb2011. (govt and semi-govt employees) April 2010 March2011. (Non-Govt employees) always taken it is always under the terms of employment

D.A. Dearness allowance (if) it enters to retirement benefits or under the terms of employment then itself it is taken or enters to recognized provident fund. For salary definition ALLOWANCES Fully Taxable Allowances Partly Taxable (i) House Rent Allowance [u/s 10(13A)] (ii) Special Allowances [u/s 10(14)] Fully Exempt (i) Allowance granted to Government employees outside India. (ii) Sumptuary allowance granted to High Court or Supreme Court Judges (iii) Allowance paid by the United Nations Organization. (iv) Compensatory Allowance received by a judge

(i) Entertainment Allowance

(ii) Dearness Allowance (iii) Overtime Allowance (iv) Fixed Medical Allowance (v) City Compensatory Allowance (vi) Interim Allowance (to meet increased cost of living in cities) (vii) Servant Allowance (viii) Project Allowance (ix) Tiffin/Lunch/Dinner Allowance (x) Any other cash allowance (xi) Warden Allowance (xii) Non-practicing Allowance (xiii) Commission as a percentage on turnover (xiv) Fees (xv) Family Allowance (xvi) Leave encashment during service

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX Name of Allowances

HRA

3 Allowances:-

STUDY NOTES

Sec.
10(13A)

Rule
2A

Provisions
1.50% of Salary at Bombay, Delhi, Calcutta, 1 Chennai & 40% of Salary for other cities. 2. Actual received 3. Rent paid Minus 10% of Salary.

Exempted Amt.
Whichever is less

Traveling

10(14)

1. The amount of allowance received 2. The amt. spent for that purpose

Whichever is less

Conveyance

10(14)

1. The amount of allowance received 2. The amt. spent for that purpose

Whichever is less

Daily

10(14)

1. The amount of allowance received 2. The amt. spent for that purpose

Whichever is less

Helper

10(14)

1. The amount of allowance received 2. The amt. spent for that purpose

Whichever is less

Research

10(14)

1. The amount of allowance received 2. The amt. spent for that purpose

Whichever is less

Uniform

10(14)

1. The amount of allowance received 2. The amt. spent for that purpose 2BB

Whichever is less

For Transport Employee Children Education Hostel Expenditure Transport Special Compensatory Border Area Tribal/Scheduled Area Compensatory Field Area Compensatory Modified Area Counter Insurgency Under Ground High Altitude Area Highly Active Field Area Island Duty

10(14)

1. 70 % of allowance received 2. 6000 per month Rs. 100 per month per child up to max. of two children. Rs. 300 per month per child up to max. of two children. Rs. 800 per month & 1600 per month in case of an employee, who is blind, orthopaedically handicapped. Exemption varies from 300 p/m to 7000 p/m.

Whichever is less

10(14) 10(14) 10(14)

2BB 2BB 2BB

10(14) 10(14) 10(14) 10(14) 10(14) 10(14) 10(14) 10(14) 10(14) 10(14)

2BB 2BB 2BB

Exemption varies from 200 p/m to 1300 p/m. Rs. 200 p/m in case of prescribed tribal area. Exemption is limited to Rs. 2600 p/m in some cases.

2BB Exemption is limited to Rs. 1000 p/m in some cases. 2BB Exemption is limited to Rs. 3900 p/m in some cases. 2BB 2BB 2BB 2BB 2BB Exemption is limited to Rs. 800 p/m. Exemption is up to Rs. 1060 p/m or 1600 p/m depending upon height of altitude. Exemption is up to Rs. 4200 p/m. Exemption is up to Rs. 3250 p/m.

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

STUDY NOTES

Perquisites OR Perk
It is a benefit or amenities granted to employee by employer to motivate to work.

Tax-free Perquisites 1.Free medical facilities as given u/s 17(2) 2.Free refreshment during working hours 3.Free recreational facilities 4.Provition of telephone whether basic or cellular 5.Free meals provided in remote area or at offshore installation are fully exempted. 6.Free education, training or refresher course for employees 7.Goods sold at concessional rates. 8.Free ration received by members of armed forces. 10.Perquisites allowed by Govt. to its employees posted abroad. 11.Rent free house given to an officer of parliament, a union minister, & leader of opposition in parliament 12.Conveyance facilities to judges of supreme court and high court 13.Free conveyance provided by employer to employees for going to or coming from place of employment. 14.Any amount contributed by employer towards pension or deferred annuity scheme. 15.Employers contribution to staff group insurance scheme 16.Computers, laptops given to an employee for official use 17.Transfer of a moveable asset more than 10 years old without consideration 18.Accident insurance premium paid by employer for his own benefits 19Interest free loan or loan at concessional rate of interest taken by employee from employer if amount of loan does not exceed Rs 20,000 or loan is taken for medical treatment 20.value of any share or debentures given free of cost or at concessional rate to employees under stock option scheme approved by the central Govt. 21.Free ticket given by railways & air transport employer to their employees.

Perquisites taxable in all cases 1.Rent free house. 2.Concessional rent house 3.Obligation of employment by employer (a). Amounts paid by employer. Club bill. Gas and electricity bill. Education bill of children. Income tax of employee. Professional tax of employee. Salary of servants employed by employee. Car or other conveyance owned By employee, used for private purposes and expenses are met by employer. Any other bill for personal expenses issued in the name of employee paid by employer. 4.Any other fringe benefits given by employer to employee. (a) Free meals if provided during working hours ( (c) Club facility actual expenditure is taxable (d)Credit card & add on card actual fee is taxable. (e)Interest free loans or loan at concessional rate of interest if more than Rs.20, 000 if not for medical treatment difference between prescribed rate & rate charged is taxable. (f) Use of moveable assets except computers laptops. (g) Transfer of movable assets. (h) Expense on tours & travels 5.Any amount of life insurance premium paid by employer during the previous years.

Taxable specified employees only 1.Car owned by employer but used by employee both for personal and official purposes. 2.Gas & electricity facility. 3.Education facility for children. 4.Free transport allowed by employer engaged in transport business 5.Service of domestic servant provided by employer 6.Any other bill for personal expenses of employee paid by employer.

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

STUDY NOTES

Profits in lieu of Salary (S. 17(3)), which is taxable as salary, It includes a. Any compensation from employer or former employer on termination or modification of the terms of employment. b. Any receipt from employer/former employer or from provident/other fund (other than gratuity, commuted pension, retrenchment compensation, house rent allowance, provident fund or such other funds) to extent not consisting of contributions by assessee/interest assessee/intere on such contributions. c. Any sum received under a key man insurance policy including the sum allocated by way of bonus on such policy. d. Any sum received before his joining any employment or after cessation of his employment.

Deductions
Entertainment Allowance(Gov t.emp) Employment tax

IMPORTANTPOINTS
1. Receipts from a person other than employer are taxable under other sources. These are University Remuneration Examiner ship fee if received by a college lecturer Family pension received by members of family of deceased employee Salary received by M.P, M.LA., M.L.C Salary received by a partner from his firm 2. Salary and pension received by employees of UNO is fully exempted 3. Any amount received after cessation of employment is also taxable under this head. head 4. Salary accrues where a service is rendered, rendered but for Govt employees posted abroad salary is deemed, accrues in India. 5. In case salary is foregone under legal obligation it is exempted but if foregone voluntarily, it is taxable 6. Any salary received in lieu of f notice is also fully taxable under this head. 7. In this case salary is received after deduction of following items, these are added back to get full / gross salary: Own contribution to provident fund Tax deducted at source Repayment of loan etc LIC premium, if deducted from salary Group insurance scheme Rent of house provided by employer 8. Nothing is taxable if loans in aggregate do not exceed Rs 20000 and loan is provided for a treatment of specified disease likes neurological diseases, Cancer, AIDS, Chronic renal failure, Hemophilia are the specified diseases. 9. Leave encashment received by Govt. employee and non-Govt. non Govt. employee during the service period is 100% taxable 10. Un-commuted commuted pensions i.e. the periodical pension: It is fully taxable in the hands of o all employees, whether government or non- government 11. Commuted pension: Exempted in the case of Government employees or employees of local authorities or statutory corporation. 12. If an employee has paid P. Tax of more than one yr in a particular P.Y. then ,entire entire P. Tax so paid is allowed as deduction.

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

STUDY NOTES

RULES IN DETAIL:1. HOUSE RENT ALLOWANCE

The Employees of Metropolis of Delhi, Mumbai, Chennai, Kolkata The least of following is exempt: 1. HRA received (actual amt received) 2. Rent paid - 10 % of salary. 3. 50 % or of salary.

The Employees of other cities

The least of following is exempt: 1) Same 2) Same 3) 40 % or 2/5 of salary.

2. CHILDREN EDUCATION ALLOWANCE

Rs. 100 per month per child up to max. of two children.

3. CHILDREN HOSTEL ALLOWANCE

Rs. 300 per month per child up to max. of two children. PERQUISITES

4. RENT FREE ACCOMODATION

GOVT. As per govt. rules (licenses fees) less Rent recovered from employee OTHER IN HOTEL 24% of salary or actual charges whichever is less ** Nothing taxable if accommodation is provided not more than 15 days and on transfer of employee from one place to another

Owned by employer
As per 2001 census Population >25 lakhs Population >10 <25lakh Population up to 10 lakhs 15%** 10%** 7.5%**

Not owned by employer

Actual rent or 15% of salary whichever is lower

**% on amount of salary (less) Rent actually paid by employee FURNISHED HOUSE If the furniture (TV, washing machine) is provided then 10% p.a of cost of furniture OR actual hire charges if taken on rent shall be added with unfurnished house. ** Maintenance charge or repair of building incurred by employer shall be ignored. Salary means: basic salary+(DA)+bonus(current yr)+ leave salary(current yr)+commission + taxable portion of all allowance + monetary payment from employer other than PF(not include perqs)

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

STUDY NOTES

5. VALUATION OF MOTOR CARS

Owned or hired by employer and used Exclusively for official purpose1(a) Nil. Taxable if specified document is maintained Exclusively for pvt., purpose1(b) 1(b) Running & Maintenance exp actual + remuneration of Chauffeur + actual Wear & tear@ 10% p.a of cost or hire charges if car taken on hire charges

Both official and Pvt. Purpose Running and maintenance borne by Employer1(c )(i) employee1(c)(ii)

Up to 1.6 ltrs Rs 1800p.m + for Up to 1.6 ltrs Rs 600p.m + chauffeur Rs 900 p.m (-) amount for chauffeur Rs 900 p.m (-) ( recovered from employee shall amount recovered from employee shall be taxable be taxable Exceeding 1.6 ltrs Rs 2400p.m + Exceeding 1.6 ltrs Rs for drivers Rs 900 p.m (-) 900p.m + for drivers Rs 900 amount recovered from p.m (-) ( amount recovered employee shall be taxable from employee shall be taxable

Expenses borne by both employer and employee Owned by employee and used Exclusively for official purpose2(i) Nil. Taxable if specified document is maintained Exclusively for pvt. purpose Actual expenditure incurred by employer (-) ) amount recovered from employee

Both Official and Pvt. . purpose2(ii) purpose Running and maintenance borne by Employer employee Actual expenditure for official and personal (-) Rs 1800 p.m + Rs 900 p.m for driver where the cubic capacity does not exceed 1.6 ltrs

No tax
Actual expenditure for official and personal (-) Rs 2400 p.m + Rs 900 p.m for driver where the cubic capacity exceeds 1.6 ltrs

Expenses borne by employer

If expenses borne by employee then no tax is chargeable Any other automotive owned by employee, used partially for work and expenses reimbursed by employer: actual expenses reimbursed (-) ) Rs 900p.m. Note: Using cars from pool of cars owned or hired by Employer : The employee is permitted to use any or all cars for both official and personal use : For one car Valued as per 1(c )(i) For more than one car Valued as per 1(b) as if fully used for personal purpose

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

STUDY NOTES

6. PERQUISITE IN RESPECT OF MEDICAL FACILITIES:

Medical Facilities in India
Hospital (including clinic, dispensary or nursing home) Nature of Medical Facilities made available to employees their family members Any Expenditure Is it chargeable to tax

1. Maintain by employer

Incurred by employer Incurred or reimbursed by employer

2. Maintain by- Central / State Govt. - Local Authority - Any other person but approved by the Govt. for the treatment of its employees 3. Approved by the Chief Commissioner having regard to the prescribed guidelines 4. Health insurance policy (I.e. group medical insurance premium for employees or medical insurance premium for employees & family members) 5. Maintained by any other person (for example a private clinic)

Any

Not Chargeable to tax (No Monetary Ceiling) Not Chargeable to tax (No Monetary Ceiling)

For treatment of prescribed diseases given in rule 3A (2) None

Incurred or reimbursed by employer Medical insurance premium paid or reimbursed by the employer Incurred or reimbursed by employer

Not Chargeable to tax (No Monetary Ceiling) Not Chargeable to tax (No Monetary Ceiling)

Any

Not Chargeable to tax up to 15000 in aggregate per A.Y.

Medical facilities outside India

Perquisite not chargeable to tax 1. Medical treatment of employee or any member of family of such employee outside India 2. Cost on travel of the employee/any member of his family & one attendant who accompanies the patient in connection with treatment outside India 3. Cost of stay abroad of the employee or any member of the family for medical treatment & cost of stay of one attendant who accompanies the patient in connection with such treatment. Condition to be satisfied Expenditure shall be excluded from perquisite only to the extent permitted by the RBI Expenditure shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including g therein the expenditure on traveling, doesn't exceed 200000 Expenditure shall be excluded from the perquisite only to the extent permitted by the RBI

7. VALUATION OF EDUCATIONAL FACILITIES

Facility provided to Children Value of perquisite Provided in the school owned by Provided in any other school the employer Cost of such education in similar Cost of such education (an school (an exemption of Rs. 1000 exemption of Rs. 1000 p.m. p.m. per child is available) per child is available) Cost of such education in similar Cost of such education school incurred Taxable in the hand of Specified employee Specified employee

Other house hold member

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

STUDY NOTES

8. FREE MEALS DURING OFFICE HOURS

Actual cost to the employer in excess of Rs.50 per meal Less: amount recovered from the employee 9. VALUATION OF PROVISION OF DOMESTIC SERVANTS Servant appointed by Employee Employee Employer Employer Servants salary paid by Employee Employer Employer Employee Value of perquisite Nil Actual cost incurred by the employer on the servant Actual cost incurred by the employer on the servant Nil Taxable in the hand of Not applicable All employees Specified employees Not applicable

10.VALUATION OF SUPPLY OF GAS, ELECTRICITY OR WATER SUPPLIED BY EMPLOYER

Facility in the name of Value of perquisite Provided from own source Employee Employer Manufacturing cost to the employer Manufacturing cost to the employer Provided from outside Amount paid to the supplier Amount paid to the supplier All employees Specified employees Taxable in the hand of

11.PERQUISITE IN RESPECT OF USE OF MOVABLE ASSETS:

Any other assets Owned by employer Taken on hire by employer Step1. Find out cost to the employer 10% p.a. of actual cost Amt. of rent paid or payable Step 2 Less: Amt. recovered from Nil Recovery from the Recovery from the the employee employee employee Taxable value (Step 1 - Step 2) Nil Balancing amount Balancing amount a. Electronic gadgets include computer, digital diaries and printers, but exclude washing machines, microwave ovens, hot plates, mixers, ovens, etc. b. Transfer of Assets, which are 10 years old, shall not attract tax liability. Mode of valuation Computer/ Laptop or car Nil

12.PERQUISITE IN RESPECT OF MOVABLE ASSETS SOLD BY EMPLOYER:

It is taxable in the hands of employees whether specified or not. The amount so calculated shall be reduced by the amount, if any, paid or recovered from the employee being the consideration for such transfer. Rate of normal l wear & tear is as follows: 1) Electronic items/computers 50% by reducing balance method 2) Motor Car 20% by reducing balance method 3) Any other 10% of the cost.
SUBRAMANIAM C. H.O.D COMMERCE DEPT.

INCOME TAX

10

STUDY NOTES

13.PERQUISITE IN RESPECT OF INTEREST FREE LOAN:

Step 1. Step 2. Step 3. Step 4. Step 5. Find out "Maximum o/s monthly balance" R.O.I. charged by SBI as on the 1st day of the relevant previous year. Step 1 X Step 2. Step 3 Less: Interest actually recovered from employee Step 3 - Step 4. Balance amt. is taxable.

Note: Rate of interest has been taking as per SBI lending rate chart SBI LENDING RATES For 2010-11 11 Assessment Year are as follows:follows: Categories of Loan Housing Loan Particulars Up to 5 Years. Above 5 Years but up to 10 years Above 10 Years but up to 15 years Above 15 Years but up to 20 years Up to 3 years (Rs. 7.5 lakhs and above) Up to 3 years (below Rs. 7.5 lakhs) Above 3 Years but up to 5 years Above 5 Years but up to 7 years Loan amount up to Rs. 4 lakhs Loan > Rs. 4 lakhs<Rs7.5 lakhs As on April 1, 2009 for the A.Y. 2010-11 2010 10.25% 10.75% 10.75% 10.75% 11.5% 11.75% 11.75% 12% 16.25% 11.75% 13.25% 16.50%

Car loan, for new car

Two Wheeler Loan Education Loan Personal Loan

14.DEATH CUM RETIREMENT GRATUITY 10(10)

Gratuity is the amt, which is paid for his past service after his death or retirement.

Govt. Employee -Fully Exempt

Non-Govt employees

Covered under payment of gratuity act 1972

Not covered under payment of gratuity act 1972

The least of following is exempt: a. 15/26 x last salary drawn x No of completed year of service and part thereof in excess of 6 months is considered. b. 3,50,000 / 1000000 c. Actual amt received. Meaning of Salary = BP +DP/ DA(If/Not) DA(If/No

The e least of following is exempt: a. 15/30 x avg salary of last 10 months salary x No of completed year of service and part thereof in Excess of 6 months is not considered b. 3,50,000 / 1000000 c. Actual amt received. Salary = BP + DP / DA (if) + comm.

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

11

STUDY NOTES

15.COMPUTATION OF PENSION (IN LUMP SUM) SEC 10 (10 A)

Government Employees. Other employees

Fully exempt

Receives Gratuity Exempted The computed value of 1/3rd of the normal pension

Not Receives Gratuity The commuted value of of The normal pension

16.LEAVE SALARY 10 (10AA)

Leave salary is given to the employer at the time of retirement retirement if he had kept some Leave on his credit.

Govt. employees
Fully exempt

Non- Govt. employees

Least of the followings: i. Actual amount of Leave encashment received ii. Average salary of the individual for the past 10 months 10 months iii. Maximum Limit iv. Leave at credit at the rate of 30 days p.a. for every Completed year of service as calculated in Step 3(ii)

17.VRS COMPENSATION
Particulars Amount received as VRS Compensation Less: Exemption u/s 10(10C): Least of the followings: (i) Actual amount received (ii) Maximum Limit (iii) The highest of the following: Last drawn salary 3No. of fully completed years of service Last drawn salaryBalance of no. of months of service left. Taxable Value Rs Rs xxx

xxx 5,00,000 xxx xxx xxx

18.RETRENCHMENT COMPENSATION
Particulars Amount received as Retrenchment Compensation Less: Exemption u/s 10(10B): Least of the followings: (i) Actual amount receive (ii) Amount determined under the Industrial Disputes Act,1947 (iii) Maximum Limit Rs Rs xxx

xxx xxx 5,00,000 xxx xxx

H.O.D COMMERCE DEPT.

Taxable Value
SUBRAMANIAM C.

INCOME TAX

12

STUDY NOTES

19.ENTERTAINMENT ALLOWANCE
Government Employees. i. ii. iii. Amount received 1/5 of basic salary Rs. 5000 W.E.LESS Other employees Fully Taxable Meaning of salary = Only Basic Salary

20.PROFESSIONAL TAX [SEC.16(III)]

i. ii. iii. iv. Professional tax or tax on employment paid by an employee, levied under a State Act shall be allowed as deduction Such deduction is available only on actual payment If an employer pays professional tax on behalf of his employee, then it will first be included in the Salary as a perquisite and then, allowed as a deduction.

21.MEANING OF SALARY IN DIFFERENT CASES

Rent free house or concession in rent House rent allowance contribution to R.P.F Gratuity (Covered) (Not Covered) Entertainment allowance Determination of salary of Rs.50000 for specified employees Leave salary Basic Pay + DP/DA (if) + Bonus + Commission + Tax. Allowances + any other payments in cash. Perquisites are not taken BP + DP/ DA (if) + comm on sales BP + DP/ DA (if) + comm on sales BP +DP/ DA(If/Not) BP +DP/ DA(If)+Comm Only basic pay Income exceeds Rs.50, 000 after deduction u/s 16 (without considering perquisites , in cash then it will be taken) BP + DP/ DA (if) + comm of salary

Perquisite in respect of Provident Fund: Particulars Employer contribution Deduction u/s 80C on employee's contribution Interest credited to PF Lump sum pymt. At the time of retirement or termination of service Statutory PF Exempt Available Exempt Exempt Recognized PF Exempt upto 12% of salary, excess of 12% is taxable. Available Exempt upto 9.5%, excess of that rate is taxable. Exempt in some cases (Note 1), otherwise PF will be treated as an Unrecognized fund from the beginning (Note 2) Unrecognized PF Exempt Not available Exempt Pymt. Recd. in respect of employee's own contribution is exempt from tax, interest on employee's contribution is taxable under the head "IFOS". Balance is taxable under "Salaries".

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX

13

STUDY NOTES

PERQUISITE IN RESPECT OF LEAVE TRAVEL CONCESSION (LTC): Different situations Amount of exemption 1. Journey is performed by Air Amt. of ecenomy class air fare of the national carrier by the shortest route or the amt.spent, whichever is less. 2. Journey is performed by Rail 3. Places of origin of journey & destination are connected by rail & journey is performed by any other mode of transport. Amt. of air conditioned first class rail fare by the shortest route or amount spent, whichever less. Amt. of air conditioned nditioned first class rail fare by the shortest route or the amount spent, whichever is less.

4. Places of origin of journey & destination are not connected by rail A. Where a recognised public transport First class or deluxe class fare by the shortest route or the system exists amount spent, whichever is less. B. Where no recognised public transport Air conditioned first class rail fare by the shortest route (as systems exist. if the journey had been performed by rail) or the amount actually spent, whichever is less.

IMPACT ON TAXABILITY OF VARIOUS ITEMS

ITEMS 1 2 Basic salary, bonus, commission, interim relief, Arrears, advance salary Dearness allowance, entertainment allowance, city compensatory allowance and other taxable allowance House rent Allowance Medical allowance Transport allowance to commuting between residence to office Education allowance Uniform allowance Hostel allowance. Entertainment allowance Free Education in employers school Own children Other relatives 11 12 13 14 15 Payment of fee, education expenses by employer to outside Scholarship. Rent free accommodation Concessional rent Free medical facilities or reimbursement of medical bills ( Govt hospital or approved hospital) Reimbursement of medical bills of private hospital or nursing home Treatment outside India Conveyance allowance SPECIFIED EMPLOYEE Taxable Taxable Exempt up to Certain limit Taxable Exempt up to 800 p.m Exempt up to Certain limit Tax free Exempt up to Certain limit Taxable Excess of 1000 p.m per child taxable Full amount Taxable Tax free Taxable as per rules Taxable as per rules Tax free NON- SPECIFIED EMPLOYEE Taxable Taxable Exempt up to Certain limit Taxable Exempt up to 800 p.m Exempt up to Certain limit Tax free Exempt up to Certain limit Taxable Tax free

3 4 5 6 7 8 9 10

Tax free Tax free Tax free Taxable as per rules Taxable as per rules Tax free

Exempt up to 15000 Tax free Exempt up to the

Exempt up to 15000 Tax free Exempt up to the

16 17

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.

INCOME TAX To perform the duty Transfer

14 amount expended Tax free Taxable Tax free Tax free See Table Below Taxable Tax free Tax free Tax free Tax free Taxable Tax free Taxable Tax free Taxable Taxable Tax free Taxable Tax free Tax free Tax free Exempt up to the amount expended Tax free Taxable Taxable Taxable Tax free Tax free Tax free Taxable Tax free Taxable Tax free Taxable Taxable Taxable Taxable Taxable Exempt up to 200 p.m

STUDY NOTES amount expended Tax free Taxable Tax free Tax free See Table Below Taxable Tax free Tax free Tax free Tax free Taxable Tax free Taxable Tax free Tax free Taxable Tax free Taxable Tax free Tax free Tax free Exempt up to the amount expended Tax free Tax free Taxable Taxable Tax free Tax free Tax free Taxable Tax free Taxable Tax free Tax free Taxable Taxable Taxable Taxable Exempt up to 200 p.m

18 19 20

21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53

For personal purpose Free lunch Refreshment Interest free loan or concessional loan more than Rs 20000 (Interest charged by the employer will be deducted) Interest free loan or concessional loan less than Rs 20000 Telephone facility in the name of employee Free tea & snacks or refreshment Free meal facility during the duty Life insurance premium and other obligation paid By the employer Group insurance, medical insurance, accident insurance premium paid by the employer Personal club bills paid by the employer Shares issued at discount Gas, water and electricity bills paid by the employer (connections in the name of employer) Gas, water and electricity bills paid by the employer (connections in the name of employee) Free use of computer Transfer of movable assets Training refresher, official tour expenses etc. Training & Refresher Holiday home facility, personal tour Uniform allowance Free conveyance facility to transport employees Servants provided by employer. Servant appointed by employee but paid by employer. Servant allowance. Gifts. Club facility Use of computer. Gift / Prize given in appreciation of performance Payment of cell phone bill Foreign allowance non Govt. employee Foreign allowance Govt. employee Motor car Income tax paid by employer Remuneration for extra work Advance salary Arrears of salary Tribal area allowance

SUBRAMANIAM C.

H.O.D COMMERCE DEPT.