BHARAT HEAVY ELECTRICALS LIMITED

TIRUCHIRAPALLI - 620 014.

FINANCE AND ACCOUNTS DEPARTMENT

ESTABLISHMENT SECTION

No.BP/AC/Estt/2016-2017 Dt. 07/09/ 2016

CIRCULAR

SUB: COMPUTATION OF SALARY INCOME – TDS – F/Y: 2016-2017-REG.

(Relevant for Assessment Year 2017-18)

1. Deduction of Income tax from Salary (U/s 192):

Income tax is deductible at source by employer, once the employee’s

taxable income exceeds Rs. 2,50,000/- during the f/y 2016-17.

Individual tax slab structure for f/y: 2016-17 as follows:

INDIVIDUAL INCOME TAX RATES

RATE OF TAX IN % TAXABLE INCOME

NIL

Up to Rs. 2,50,000- Below 60 years

(applicable to all male & female employees)

Up to Rs. 3,00,000- Above 60 years

(applicable to retirees of f/y 2016-2017)

Up to Rs. 5,00,000- Above 80 years

(applicable to super senior citizens)

10%+3% EC Rs. 2,50,001 to Rs. 5,00,000

20%+3% EC Rs. 5,00,001 to Rs. 10,00,000

30%+3% EC Above Rs. 10,00,000/-

Note: 3% EC includes 1%-Edn Cess+2% Secondary and Higher Edn Cess

Note:

a) Rebate u/s 87A: Resident individual with Total Income not exceeding Rs. 5 lakhs shall get a rebate of Rs. 5,000 or 100% of tax payable, whichever is lower. b) Senior citizens: Individual who is of the age of Sixty years or more but

less than Eighty years at any time during the previous year.

2. House Rent Allowance U/S 10(13A):

Under Section 10(13A), an employee who is in receipt of House Rent Allowance

can claim exemption, if he does not live in his own house, and pays rent in excess

of 10% of his Salary for his residential accommodation.

PARTICULARS Rs. Rs.

1. Computation of Salary for HRA Exemption: Basic Pay DA Salary for HRA exemption

xxx xxx xxx

2 Taxable HRA : Amount received during the f/y towards HRA

Less: Exemption u/s 10(13A) is the least of the following:

a) Actual amount of HRA received

b) 50%(metros)/40%(Trichy, Thirumayam) of salary(1)

c) Rent paid Less 10% of Salary for the relevant period

Taxable Amount of HRA

xxx xxx xxx

xxx

xxx xxx

If rent paid exceeds Rs. 1,00,000/- p.a. or Rs. 8,333 p.m., PAN of house owner to

be furnished to the company ( BHEL ).

For claiming exemption of House Rent Allowance, employees are requested to use the format available in Employee Corner of BHEL Trichy Intranet.

3. LTC / LTA Allowance U/S 10(5):

The exemption is admissible to an employee for going anywhere in India along

with his family, in respect of two journeys performed in a block of four calendar

years commencing from 01.01.2014 and up to 31.12.2017.

The amount exempted in respect of the value of travel concession received by or

due to the individual from his employer for himself and his family, in connection

with his proceeding –

(a) On leave to any place in India.

Family for the above purpose means - Spouse, Children up to a maximum of two

(multiple births after one child is accepted), parents, brothers and sisters who

are wholly and mainly dependent upon the employee.

The exemption is limited to the actual expenses incurred on the journey and

without performing any journey no exemption can be claimed.

The exemption is strictly limited to expenses on air fare, rail fare, and bus fare

only. Lodging, boarding charges, taxi fare, porter expenses, etc., will not qualify

for exemption.

The employee should be on leave in the organization at the time of performing

the journey and employees who do not take any leave and wish to avail this

facility is not eligible for exemption.

No IT exemption is available for foreign travel on LTC.

4. Other allowances u/s 10(14) read with Rule 2BB:

Particulars Rs. Rs.

Children Education Allowance: Cash allowance given to an employee, for meeting the cost of education of his children. Allowance received Less: Exempt u/s 10(14) = Rs. 100 p.m. per child restricted to two children.

xxx xxx

xxx

Children Hostel Expenditure Allowance: Cash allowance given to an employee, for meeting the hostel expenditure of his children. Children Hostel Expenditure Allowance received Less: Exempt u/s 10(14) =Rs. 300 p.m. per child restricted to two children.

xxx xxx

xxx

Note: To get the exemption of children education allowance, hostel charges allowance, LTA/LTC, Conveyance allowance, employees should have opted the above mentioned reimbursements in Cafeteria (46% perks).

5. Housing Perks u/s 17(2)

Housing Perks for Township Residents will be 7.5% on Taxable Salary as reduced

by the Rent recovered from the employee.

6. Deduction u/s 24(b) in respect of House property:

i Note: The property should be in the name of the employee to claim the Interest and principal amount (Sec 22). If the property is in joint name the following may be followed:

Housing Loan Interest: Whenever there is a co-applicant in Housing Loan, individual is requested

to submit recent property tax receipt (for the proof of ownership) for verification.

I. In case of Property in the name of Employee:

Loan received from agencies as Co-applicant, i.e.

Loan in the name of Employee and any other person

i) Property tax receipt (ownership proof) ii) Self-declaration letter

II. Property in Joint name:

i) Joint name with spouse (unemployed): Self-declaration in the loan provisional statement that the spouse does not claims any IT benefit for the same.

II) Joint name with spouse (employed): Declaration from the spouse’s employer that the spouse does not claims any IT benefit for the provisional loan status certificate claimed.

III. Property in joint name with persons other than spouse: Wherever there is a property in joint name, documentary proof is required to be submitted for verification and confirmation of the ownership to the extent of proportionate sharing in the property.

i) Property tax receipt (ownership proof) ii) Self-declaration letter

a) Self-occupied property:

Deduction is allowed by way of interest on borrowed capital for the purpose of

purchase, construction, repairs, renewal or reconstruction of house property.

i. Rs.30,000/- for capital borrowed before 01/04/1999

ii. Rs.2,00,000/- for capital borrowed on or after 01/04/1999 and the

acquisition or construction of house property is completed within 5

years from the end of the financial year in which capital was

borrowed.

iii. If capital is borrowed for repairs, renewal or reconstruction then

maximum amount deduction on account of interest is Rs.30,000/-.

Deduction of interest can be claimed only after completion of construction.

b) Let-out property / Deemed let out property:

i. Net Rental Value = Annual Rental Value - Municipal tax

ii. Net Income/Loss = Net Rental Value- (Minus) 30% of Net Rental Value (for the purpose of repairs and maintenance) - (Minus) Interest paid on borrowed capital.

Whenever the certificate issued by the Lending agencies for housing loan

for Principal and interest payable during the year, the signed copies of the lending

agencies are required for verification. Copies are not acceptable as instructed by

income tax department. Name, address and PAN of the lender must be

specified at the time of declaring the Income/ Loss from House property.

7. DEDUCTIONS UNDER CHP-VI-A

Section Nature of payment

Amount of deduction

80C Prescribed Investments

Rs. 1,50,000/- including Sec 80CCC/80CCD Eligible investments: i. Contributions made to a PF, VPF

ii. Life Insurance Premium for self,

spouse & children subject to maximum of 20% of Sum assured for policies taken on or before 31.03.2012, 10% of sum assured for policies taken on or after 01.04.2012, and 15% for persons covered u/s 80U/80DDB for policies taken on or after 01.04.2013.

iii. Payment in respect of non-commutable deferred annuity.

iv. National Savings Certificate – VIII

and IX Issue for self only.

v. Contribution towards an approved Super Annuation Fund for self only.

vi. Contribution to Statutory or

recognised PF.

vii. Subscription to Notified Central Govt securities or Notified Deposit

Schemes-Sukanya Samriddhi Account has been notified vide Notfn.

No:9/2015.(Child includes girl child for

whom assesse is the Legal guardian, if

the scheme so specifies.)Min-Rs. 1000

to Max-Rs.150000.

viii. 15 year Public Provident Fund A/c

(PPF) with Banks/Post Office for self, spouse & any child(Min Rs.500 to Max-Rs. 150000).

ix. Unit Linked insurance Plan (ULIP) for self, spouse & children and continuous for min period of 5 years.

x. Housing loan repayment

a) Any principal payment towards the cost of purchase / construction of a residential property (including repayment of loan) for self.

b) Deposit with NHB

c) Subscription to any scheme of a PSU providing long term finance for purchase/construction of residential houses in India.

d) Contribution to Housing boards set up for planning, developing and improvement of cities/towns.

xi. Payment for notified annuity plan of

LIC (Jeevan Dhara / Jeevan Akshay) or any other insurer.

xii. Contribution to notified pension fund

set up by Mutual Funds or U.T.I. for self.

xiii. Any sum paid as tuition fees whether

at the time of admission or otherwise to any University / College / Educational institution in India for full time education of any two child of the individual other than donation or development fees.

xiv. Subscription to any notified bonds of NABARD.

xv. Deposit under Senior citizens Savings Scheme.

xvi. Any amount of Time deposit / fixed deposit of not less than 5 years with a Post office/scheduled bank within overall ceiling limit.

80CCC LIC/other Insurance Pension Plan

The aggregate amount of deduction under sections 80C, 80CCC and sub section (1) of Section 80CCD shall not exceed Rs.1,50,000/-.

80CCD(1B) Contribution to approved Pension Plan(NPS)

Amount paid or 10% of Salary, whichever is lower subject to max of Rs. 50000/-; this is in addition to Rs. 150000 limit(including 80C, 80CCC)

80CCG Investment in Notified Investment Schemes

50% of amount invested or Rs. 25,000 whichever is lower for 3 Consecutive assessment years beginning with the assessment year relevant to the previous year in which the listed equity shares or listed units of equity oriented fund are first acquired. Annual Gross total income does not exceed Rs.12,00,000.

80D Mediclaim Policy

Medical insurance premium (premium paid other than cash):

i. Rs.25,000 for self, spouse and dependent children.

ii. Additional deduction of Rs.25,000 for parents of the taxpayer whether dependent or not.

iii. Additional Rs.5,000 in case of senior citizen (i.e. resident and 60 years or more at any time during the previous year)

Note: Expenditure on preventive health check-up of the assesse or his family is included above. The said payment can also be made in cash and is included in the total deduction of Rs. 25,000, subject to maximum of Rs. 5,000.

80DD Expenditure on Handicapped Dependants

Medical treatment including nursing, training etc. of handicapped dependents or for payment or deposit made for the maintenance of such dependant is qualified for deduction. The amount of deduction are allowed up to Rs.75,000/- (for persons having disability of 40% or more but less than 80%) & Rs.1,25,000/-(for deficiency of 80% or more).

80DDB Expenditure on Specified Diseases-Rule 11DD

Expenditure for Max(Rs.)

(a) Persons other than (b)&(c)

40,000

(b) Senior Citizen 60,000

(c) W.e.f A/y 2016-17 Super senior citizen

80,000

80E Higher Education Loan Repayment

This section allows the Assesse for deduction of interest paid for the loan taken by the individual for the purpose of the higher education specified under the section for self, spouse/child. The interest has to be paid out of the income chargeable to tax and the documentary proof shall be produced for verification. Period of deduction is 8 years from the date of repayment of loan or completion of the loan whichever is earlier.

80U Handicapped resident individuals

This section is applicable for Self. The amount of deduction are allowed up to Rs.75,000/- (for persons having disability of 40% or more but less than 80%) & Rs.1,25,000/-(for deficiency of 80% or more) in case of blind, mentally retarded and physically handicapped employee.

Section 80EE: Deduction in respect of interest on loan taken for

residential house property (A.Y.2017-18)

(i) The assessee does not own any residential house property on the date of sanction of loan.

(ii) Loan is taken for acquisition of residential house property.

(iii) The loan has been sanctioned by the bank ,during the period beginning on the 1st day of April, 2016 and ending on the 31st day of March, 2017;

(iv) The amount of loan sanctioned for acquisition of the residential house property does not exceed thirty-five lakh rupees (Rs.35 Lakh)

(v) The value of residential house property does not exceed fifty lakh rupees (Rs.50 Lakh)

(vi) Amount of deduction shall not exceed Rs.50,000/-(fifty thousand rupees) and shall be allowed in computing the total income of the individual for the assessment year beginning on the 1st day of April, 2017 and subsequent assessment years.

(vii) Double deduction not possible: If deduction U/s.80 EE claimed in such cases deduction under house property loss not allowed.

8. Declaration of Investment, Deposits & Verification of

documentary proof:

i. Employees are requested to feed all eligible personal savings (except

for House Rent Receipt) in the declaration Format available in Employees

Corner and will be verified by the following area wise staff from 1st to 18th

of every month between 13.30 Hrs. to 16.00 Hrs. For Thirumayam & SSTP

employees the following staff will be verified the declarations and for the

other employees verification shall be done at Bldg.24/II floor/Finance / ESTT.

Sl no Area Name Designation

1 THIRUMAYAM Alok Kumar Sahu Senior Accounts Officer/Finance

2 SSTP Santhosh Jai Kishen Assistant Officer/Finance

3 HPBP 1. T.Gowri

2. Adepu naresh

3. J.Sakunthala Devi

4. R.Uma

5. S.Pandeeswari

Addl. Officer-I/Finance

Assistant officer/Finance

Assistant officer/Finance

Assistant officer/Finance

Senior Accounts officer

ii. One Finance staff will be available for verification of documents in HR

2&4 Bldg. on every Wednesday between 1st and 18th of every month from

13.30 hrs. to 16.00 hrs.

iii. The exemption u/s 80DD (Handicapped-Dependent) & 80U

(Handicapped Self) are allowed only based on a request letter justifying the

amount claimed and supported by a certificate issued by the MEDICAL BOARD

and the same should be routed through Controlling officer for acceptance.

iv. While declaring private savings under Section 80C& 80CCC, employees

are requested to feed only to the extent of balance of Rs.1,50,000/- after

deducting savings through salary (like PF, VPF & Insurance Premium).

9. Request:

i. As per the Income Tax Act 1961 the employer have to file E-TDS return to

the Income Tax Department on Quarterly basis for the monthly income

tax recovery made from each employee and the remittance thereon. In

these circumstances it is hereby advised that each one of the employee

may please monitor their monthly income tax recovery visa-vis the

eligible savings furnished to them periodically through their E-payslips.

ii. All employees are requested to verify the correctness of PAN number

displayed in the payslip, if any issues immediately contact the

establishment section.

iii. Employees having more than one PAN card are advised to retain one PAN card and contact IT department, for cancellation of other PAN cards.

iv. The newly recruited Engineer/Executive Trainees, Supervisory

Trainees, Artisan Grade IV employees, Temporary employees and employees

transferred from other Units/sites are requested to furnish their PAN No.

to Accounts/Establishment along with a copy of PAN card to update the

same in the IT Master. Not furnishing of PAN will result in tax deduction at

higher of the prescribed rate or 20% on all transactions liable to TDS.

v. In case of transfer- in employees, please submit your private savings

(other than salary deductions) once again in the Trichy unit irrespective of

whether already submitted in the other unit also.

vi. Private savings declaration of the employee will be accepted only from

those who have submitted PAN CARD copy to Accounts Establishment

section.

vii. All employees are requested to plan and declare their savings including

Housing Loan well in advance , so that actual monthly tax due can be

determined and deducted accordingly.

viii. The last date for verification of Personal Savings will be 15th March

2017.

All are requested to co-operate.

GOMATHI SOMASEKAR

AGM/FINANCE

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