Agenda

Some Key definitions- Income Tax Law

Heads Of Income
Current Salary Structure & Taxation
Exemptions & Deduction
Rates of Tax
Tax Saving Options.
Tax Declarations and Form 16
Return of Income
Q&A
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Some Key definitions- Income

Tax Law

1. Assessment refers to the period of twelve months commencing

on the 1st day of April every year. Income earned during the
previous year is charged to tax in the assessment year.
2. Previous Year refers to the Financial Year immediately preceding
the Assessment Year.
3. Heads of Income
Salary

Income from employment.

Income from House Property

Income from renting of property.

Profits & Gains from Business or profession

Income from business or professional

income.

Capital Gains- Long Term & Short Term

Income from sale of assets-shares,

property etc

Income from Others Sources

Interest Income

Heads of Income -Salaries

Salary:-section 17(1)
Wages including Bonus/Incentives
Gratuity.
Profits In lieu of Salary.
Advance Salary.
Leave encashment.
Perquisites:-section 17(3)
Company Provided Accommodation
Company Provided Car
Interest Free or concessional Loan.
Gift or Gift Voucher
Any other benefit provided by the Employer.

Heads of Income -Other

Income
Income from House Property
1. In case of self occupied house property the income from the same
is considered to be NIL. Benefit restricted to one self occupied
property only.
2. Also the assessee is allowed to claim deduction towards interest
on housing loan upto Rs 150,000 per anum.
3. Interest payable for the period during which the house is under
construction is allowed as deduction in 5 equal installments
starting from the year in which the construction is completed.
Income from Other Sources
1. Interest income is taxable without any deductions.
2. Interest credited by the bank on savings account balances is
totally taxable.
Other Income Capital Gains
1. Long Term Capital gains arising on sale of listed shares and equity
oriented mutual funds are not taxable.
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Current Salary Structure and

Taxation
Component

Amount

Taxability

Basic Salary

Totally Taxed.

House Rent Allowance

(HRA)

Lowest of the following is allowed as a

deduction in arriving at taxable HRA
1.Excess of rent paid over 10% of
basic salary;
2.40% of salary.
3. HRA Received

Conveyance Allowance

Rs 9,600 P.A

Fuel & Driver

Exempted from tax.

Will be liable to tax in accordance with
new guidelines- awaited .

Medical Reimbursement

Rs 15,000 P.A

Exempted from tax. Subject to

submission of medical bills.

Leave Travel Allowance

(part of flexi benefits)

As per Pay grade

Exempt from tax twice in a block of 4

years. Exemption allowed on the basis
of the copy of the train ticket/Air Ticket
with Boarding pass in original.

Special Allowance

Totally Taxed.
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Component

Exemptions and
Deductions
Amount
Nature

Provident Fund
Contribution- Employer and
Employee

24% of Basic Salary

Statutory Deduction.
Employee Contribution
allowed as a deduction in
computing Income Tax.
Company contribution is
not taxed

Income Tax

Computed as per Income Statutory Deduction- TDS

Tax Act.
certificate issued in May
for all tax deductions from
April March.

Professional Tax

Rs 200 p.m

Allowed as deduction in
computing Income Tax.

Transport deduction

Rs 800 p.m

Allowed as a deduction in
computing Income Tax

Other Deductions

Recoveries-eg.- towards
loans if availed and
parental insurance

Deduction from post tax

income.
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Rates of Tax and

Deductions
Income Tax Rates Individuals 2009-10
Tax Rates
Men Up to Rs 160,000

NIL

Women Up to Rs 190,000

NIL

Rs 160,001/190,001 to Rs 300,000

10%

Rs 300,001 to Rs 500,000

20%

Rs 500,001 and >

30%

Education cess is payable on tax calculated above

@
In 3%.
arriving at the taxable income certain deductions are allowed being;
1. Deduction for HRA.
2. Deduction for Medical reimbursements upto Rs 15,000/- per annum.
3. Deduction for Conveyance allowance upto Rs 9,600/- per annum.
4. Deduction for Leave Travel Allowance.
5. Deduction for Housing Loan interest paid upto Rs 150,000/- per
annum.
6. Deduction for eligible investments U/s 80C & 80CCD of the Income 7
Tax Act- not exceeding Rs 100,000.

1.

Tax Savings Options- U/s 80C &

80CCD
Life Insurance Premium- paid for self , spouse and dependent
children

2. Public Provident Fund maximum of Rs 70,000 p.a

3. National Savings Certificate VIII Issue
4. Cumulative Time Deposits with Post Office.
5. Investments in notified Equity Linked Savings Schemes of Mutual
Funds,
6. Repayment of Housing Loan Principal upto Rs 20,000.
7. Infrastructure Bonds.
8. Term Deposits with banks for a period exceeding 5 years.
9. Children's tuition fees
10.Notified pension schemes
11.Notified Unit Linked Insurance Plan of LIC , any other Insurance
Company or Unit Trust of India.
12.Amount not exceeding 10% of salary towards National Pension

Tax Savings Options-Section

80D/DD, 80E & 80U
1. Medical Insurance Premium upto Rs 15,000/- for self, spouse and
dependent children. Additional Deduction, If parents are senior
citizens the amount allowable for parents is Rs 20,000/- U/s 80D.
The Total deduction allowable is Rs. 35,000/-.
2. Amount incurred on medical treatment of
dependents
with
disability as defined under the Income Tax Act Rs 50,000/- and Rs
75,000/- in case of severe disability - U/s 80DD. Disability has to be
certified by medical authority as defined under the Income Tax Act.
3. Interest on Education Loans for higher education for self , spouse or
dependent children.-U/s 80E
4. Deduction for an individual with disability as defined under the
Income Tax Act Rs 50,000/- and Rs 75,000/- in case of severe
disability U/s 80U.Disability has to be certified by medical authority
as defined under the Income Tax Act.

Process for making declarations

and issue of Form 16
1. Employees are required to provide their PAN number in the month of
joining. If PAN is not provided , the employee will not get tax credit for tax
deducted at source by the company.
2. Declaration towards eligible investments or other eligible payments and
deductions is to be made on the Finance at the beginning of the Financial
Year i.e in April or in the month of joining.
3. For declaring income under any other head Form 12B duly filled up has to
be filed along with the proof of investments.
4. All amounts claimed towards eligible investments and deductions have to
be supported by documents which have to be submitted in December
February of the financial year.
5. Any claim which is not so supported by documentation will be rejected.
6. Deductions for donations to be claimed by the employee in the return of
income only and declarations for the same cannot be considered by the
company for determining tax deduction at source.
7. Form 16 certifying deduction of tax at source during the previous financial
year will be issued in May of the following financial year.
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Return of Income
1. Every person who income exceeds the maximum not chargeable to tax is
required file a return of income by 31st July of the assessment year.
2. Return of income is required to be filed even if there is no tax payable.
3. Filing of the return of income is a personal liability of the employee and the
company does not provide any assistance in this regard.
4. In case of employees who have other sources of income in addition to Salaries,
they should seek appropriate professional advice to determine their tax liability.
5. Returns can be filed under the e-filing mode on the website of the Income Tax
Department at -https://incometaxindiaefiling.gov.in/portal/index.jsp.
6. In case of e- filing the tax payer has to fill-up the verification part and verify the
same. A duly verified ITR-V form should be mailed to Income Tax
Department CPC, Post Bag No - 1, Electronic City Post Office,
Bangalore - 560100, Karnataka, BY ORDINARY POST ONLY within 30
days after the date of transmitting the data electronically.

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