GENERAL RULES FOR THE FINANCIAL YEAR 2011-2012 UNDER THE INCOME TAX ACT, 1961 PAN in all

the correspondences To meet with the compliance and to ease the Deductor in collecting PAN, section 206AA makes it compulsory to quote PAN on all correspondences between Deductor and Deductee. The sources confirm that, PAN has to be quoted in bills, vouchers, Salary Slips, Letters (other than statutory which does not come under Income Tax), etc which is either issued by Deductee to Deductor or vice versa. Please update your PAN and Ensure is taken care in Pay slip, Income Tax Statement, Form 16, etc., House Rent Allowance -Tax Benefit An employee will be eligible to claim tax exemption for House Rent Allowance under Section 10(13A) of the Income Tax Act, 1961, provided: (1) The house rent allowance is a part of the employees salary, and, (2) The employee has actually paid rent. The employee is entitled to claim tax exemption least of the following: a. House rent allowance received b. Actual rent paid less 10% of basic salary c. 40 %( in case of non-metro cities) or 50% (in case of metros) of basic salary i.e. Bangalore 40% / Mumbai and Chennai 50% Example: X, is a resident of Bangalore and his monthly salary is: Basic = Rs.12, 000/HRA = Rs. 5,000/- Rent Paid = Rs.5, 000/Calculation of Exemption: 40% of Basic Rs. 4,800/- (12,000*0.4) Rent paid less 10% of Basic Rs. 3,800/- (5,000-0.1*12,000) Actual HRA Rs. 5,000/Rs.3, 800 being least of the above amounts will be exempt from tax Hence taxable HRA is Rs. 1,200(5000-3800)

Note : The employee should not be owning any residential accommodation in the nearby locality
where the employment is rendered

Conveyance

As per the Income Tax Act, 1961 a tax exemption is allowed on conveyance allowance to the extent of Rs.800/- per month, provided the employee does not use the companys vehicle for commuting to and from work.

Medical reimbursement An Employee can claim exemption for medical expenses under the Income Tax Act, 1961 upto a maximum amount of Rs.15,000/-per annum subject to production of original bills. Expenses incurred for self, spouse, children, parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual are to be considered. Expenses for parents-inlaw are not eligible. Bill for spectacles/ contact lens need to be supported by Doctors prescription. Expenses on frames will not be permitted. Cosmetic/Provisional use items will not be considered. All bills should be stapled firmly. Loose bills and bills without claim forms will not be considered for exemption. Interest on self occupied residential property Interest paid up to Rs.1,50,000/- is deductible from salary income, in case of Self Occupied House Property. Conditions to be satisfied for availing tax benefit: If Loan is taken for construction / purchase of house property before 1st April 1999 exemption can be claimed upto Rs.30,000/- p.a. Loans taken after 1st April 1999 are eligible for a tax exemption up to Rs. 1,50,000/- per annum. The House construction should be complete & occupied earlier or during the F.Y 2011-12.i.e before the submission of the documents for claiming the benefit. o Where a person is availing the benefit of HRA, the deduction of Rs 150,000 per annum can be claimed only when the house property is not actually occupied by the owner owing to his employment being carried on at any other place provided the property is not actually let out by the person during the whole or any part of the year. Form of verification & provisional certificate from bank has to be submitted for getting this tax benefit. In absence of Form of verification we will not be able to provide the exemptions. Signed Form of verification is a must. To avail the home loan benefit, employee needs to submit the bank certificate with break up of Interest and Principal. Loan statement will not be considered for exemptions. The Interest on a loan taken for purchase of plot / site /commercial site is not eligible for tax exemption. o In case of joint ownership, where the share is defined, interest claimed should not exceed the proportionate amount of share in the ownership of the property. After completion of house construction or purchase of house, an employee cannot avail of exemptions for both HRA and interest loss on self occupied house property unless the self occupied house property is in a different location from the place of work Interest on Letout Property Submit Rental Income computation duly signed by the employee (below attached example of computation) The interest Paid on Let out property is to be calculated as below,

Sample/Indicative Calculation

INCOME OR LOSS ON HOUSE PROPERTY Amt Rs. Per Annum 1.0 Rent Received 0. Less: Property tax if any Balance Rent 0. Less: Standard Deductation @ 30% of rent received Interest paid on Housing Loan 26 0. 20 6 0.4 Income from House Property (Net amount) 0 0.4 15 5 0.8 5 0 0.1

Deductions under Chapter VI A of the Income Tax Act, 1961

Financial Year 2011-12 Assessment Year 2012-13 Maximum limit investment (Rs. per annum) for

Section Particulars

Proof to be submitted by employees

80D

15,000 (Self, Spouse, Children) + 15000 Copy of premium receipt Premium paid on Mediclaim policy covering (father, mother) issued by the Insurance Co. employee, spouse, dependent parent, and dependant children. (The amount can be claimed Or The payment to be made by only when paid by A/c payee cheque) 20,000 (if senior way of cheque. citizen is covered) Expenditure incurred on maintenance/ treatment 50,000 Or of handicapped dependant amount deposited with LIC/UTI scheme of insurance company/UTI must be approved by CBDT. If the dependant suffering from a severe disability 1,00,000 for severe disability (Disability over 80%) The relevant Rule and requisite Certificate form as attached:
Incom Tax Rule e 11A.pdf

80DD

Incom Tax Form e 10 IA.pdf

Certificate for Disabilities.pdf

80DDB

Expenditure incurred on treatment of employee or his relative (spouse, children, parents, brother &sister) for treatment of any of the following 40,000 or 60,000 ( For specified diseases Senior Citizen) Cancer, AIDS, Chronic Renal Hemophilia Thalassaemia Neurological diseases i.e. dementia, Parkinson Disease Failure Chorea,

The relevant Rule and requisite Certificate form as attached:

Incom Tax Rule e 11DD.pdf

Incom Tax Form e 10 I.pdf

80E

Repayment of interest on Loan taken for full time higher studies for self & Dependant. The deduction Actual interest is available for a maximum of 8 years.

Copy of Certificate of payment from bank / Institution

The relevant Rule and requisite form as attached: Income of blind or physically handicapped persons (Employee who suffers 40% or more disability) is 50,000 entitled. In case he suffers from a permanent physical (100,000 for severe disability (including blindness) or is subject to disability of 80% and mental retardation. above)
Incom Tax Rule e 11A.pdf

80U

Incom Tax Form e 10 IA.pdf

Certificate for Disabilities.pdf

80CCF

Deduction in respect of subscription to long- 20,000 which is in Copy of the addition to Rs.100,000 certificate, term infrastructure bonds limit under Sec 80C Statement

bond / demat

Deductions under Sec.80 C of the Income Tax Act, 1961 An employee would be entitled to claim exemption under Section 80C subject to a maximum amount of Rs.1,00,000/- per annum Maximum Proof to qualifying limit submitted (Rs. Per annum) be

Particulars

Public provident fund (PPF) amount invested is eligible for rebate under this section. 1,00,000/-

Copy of challans and passbook.

Insurance Premium rebate is available on the life insurance premium paid by an employee, on his life, his/her spouse / life of 1,00,000/any child (including adult children married / unmarried). Maximum Benefit restricted to 20% of the sum assured. Contribution to Pension Fund plan of LIC / HDFC Insurance / ICICI 1,00,000/Prudential etc for receiving pension.

Premium receipt.

paid

Copy of receipt Copy of Certificate issued by the Housing Finance Co. giving the break-up of principal & interest payments. Employee to furnish relevant details in Form of verification to employer Copy of Pass Book.

Repayment of principal towards housing loan repayment for the purposes of purchase or construction of a residential house 1,00,000/property or stamp duty, registration fee and other expenses for the
purpose of transfer of such house property to the assessee

Investment in Five year Time Deposit in Post Office Time Deposit 1,00,000/Rules, 1981. Fixed Deposit of nationalized banks (approved for rebate under this 100,000/section - 5 years scheme)

Copy of FD receipt

Particulars

Max qualifying limit Proof to be submitted (Rs. per annum) Copy of certificate issued by post office

National savings certificate Investments in NSC VIII issue are also eligible 1,00,000/for rebate

Equity Linked Saving Schemes (Mutual Fund Units) benefit of rebate shall be available even if 1,00,000/contribution is in the name of spouse or child, to a mutual fund recognized under section 10(23D). Post Office Savings Amount deposited in CTD of post office savings 1,00,000/bank scheme is eligible for exemption Unit Linked Insurance Plan 1,00,000/-

Copy of statement issued by the mutual fund company

Copy of receipted pay-in-slip

Copy of receipted pay-in-slip

Tuition Fees

1,00,000/- (For two Copy of fees paid receipt children)

Note: The basic condition for availing exemption under Section 80C of the Income Tax Act, 1961, is that the employee should incur/deposit/invest the said amounts during the current financial year made out of the taxable income.

Tax Slab List: - (for Male) Net income range Upto Rs 180,000 Rs 180,001 5,00,000 Rs 5,00,001 8,00,000 Income tax rates Rs Rs Nil 10% 20% Income Tax Nil 10% of (total income minus Rs. 1,80,000) Rs. 32,000 + 20% of( total income minus Rs. 5,00,000) Rs. 92,000 + 30% of (total income minus Rs. 8,00,000) Surcha rge Nil Nil Nil Education Cess Nil 2% of income tax 2% of income tax 2% of income tax Secondary and higher education cess Nil 1 % of income tax 1 % of income tax

Above Rs 8,00,001

30%

Nil

1 % of income tax

Tax Slab List: - (Resident Women (who is below 65 years at any time during the previous year)) Net income range Income Income Surcharge Education Secondary and

tax rates Upto Rs 190,000 Rs 190,001 500,000 Rs Nil 10%

Tax Nil 10% of (total income minus Rs. 1,90,000) Rs. 31,000 + 20% of (total income minus Rs. 5,00,000) Rs. 91,000 + 30% of (total income minus Rs. 8,00,000) Nil Nil

Cess Nil 2% of income tax

higher education cess Nil 1 % of income tax

Rs 500,001 8,00,000

Rs

20%

Nil

2% of income tax

1 % of income tax

Above Rs 8,00,001

30%

Nil

2% of income tax

1% of income tax

Surcharge & Education Cess No surcharge is levied on a taxable income. Education Cess & Secondary and Higher Education Cess 3% on net tax payable

Filing of tax returns Form 16 will depict the complete earnings & tax deducted & dates of payment of taxes to Government. Employees need to file income tax returns if they have taxable incomes. A Permanent Account Number (PAN) is compulsory for obtaining a Form 16 (TDS certificate) from the company. Name and PAN Number in Form-16 will be as appearing in the Payslips. Any Corrections should be brought to HR notice immediately. Once the Form-16 issued it cannot be changed or corrected.