training material tax 220210 itps

8/11/2019 Training Material Tax 220210 ITPS

1/35

23/02/2010 1

Remuneration taxability & compliances under Income tax act

Presented

by

Niranjan Swain, LLB,ACS,FICWA.


2/35

23/02/2010 2

Breaking News --------

Taxation system in India wins the contest

of 8th wonder of the world next to Taj


3/35

23/02/2010 3

.

.

Indian Tax System

CST

CentralExcise Duty

Customs Duty

Service Tax

Income Tax

Wealth Tax

Tonnage Tax

CST /VAT/

Sales Tax

State Excise /Luxury Tax

Entry Tax/Octroi

Stamp / Elect. DutyLF/RDT/R&D Cess

State TaxCentre-DTCentre-Ind. Tax


4/35

23/02/2010 4

Inc

omeTaxAc

t/

Ru

les

Working

methodology

Har

monizingwi

th

Govtofficial

Sup

portfromTax

exp

erts&

con

sultants

Clarityon

Provision


5/35

23/02/2010 5

Jai Bharat !

Religion

Caste

Colour

Language

Culture

Taxation

Integration of minds is still possible ---


6/35

23/02/2010 6

Some Important Terms

Tax planning.

Tax Avoidance.

Tax Evasion.


7/35

23/02/2010 7

Objectives

Employees point of view

Remuneration received byemployees

is taxable in their hand at

concessional rate

minimization of tax liability

maximization of take home

salary.


8/35

23/02/2010 8

Different Sources of Income in the hands of

Employees.

Income from

Salary House Property

Short Term Capital Gain

Long Term Capital Gain Other Sources


9/35

23/02/2010 9

What Constitute Remuneration

Salary

Allowances

Perquisites

Monetary

Non Monetary


10/35

23/02/2010 10

What Constitute Salary and Allowances

Basic Pay,

Grade Pay, Dearness Allowance, House Rent Allowance Thermal Allowance

Generation Incentive Safety Incentive Education Allowance /

Reimbursement Hostel Allowance Advance/Arrear Salary,


11/35

23/02/2010 11

What Constitute Salary and Allowances

Salary in lieu of notice, Remuneration for extra

work Gratuity

Leave encashment [exemptup to a certain limit under

section 10(10A)] Monthly Medical allowance

Messenger Reimbursement

ConveyanceReimbursement

Contribution to PF


12/35

23/02/2010 12

Perquisites

Accommodation at

Concessional Rate. Water supply Electricity

Free education Interest free / concessionalloan / Advances

Use of movable assets

Sale of movable assets atnominal price


13/35

23/02/2010 13

Perquisites

Canteen Facilities

Club Facilities Medical Reimbursements News Paper

Reimbursement

Membership FeeReimbursement

Uniforms Motor Cars


14/35

23/02/2010 14

Taxability in the hands of Employees.

Grade Pay

Salary in lieu of notice

Generation Incentive

Thermal Allowance

Safety Incentive

Dearness allowanceTaxable

Basic Pay

PositionDifferent items


15/35

23/02/2010 15


TaxableMessenger Reimbursement

Exempted to the extent spentConveyance Reimbursement

TaxableMonthly Medical Allowances

TaxableSalary in lieu of notice

TaxableExtra Work

Taxable on receipt basis if not takenearlier

Advance Salary / Arrear Salary

Exempted to the extent Rs.3,00,000/-Leave Encashment

Exempted to the extent of Rs.3,50,000/-Gratuity

TaxableBonus

Tax TreatmentDifferent items


16/35

23/02/2010 16


Non specified Hospital- Taxable in excess of

Rs.15,000Specified Hospital - Exempted

Medical Expenses

Exempted to the extent spentTour expenses

Use of Laptop Computers exemtedOther cases 10% of original costUse of Assets

ExemptedSupply of Uniforms

Rs.300/- per month maximum 2 childrenHostel Expenditure

Rs.100/- per month maximum 2 childrenTution fees

Tax TreatmentItems


17/35

23/02/2010 17

Tax Incident in the hands of Employees.

Taxable = difference between SBI rate less interest

charged by OPGC (Loan upto Rs.20,000/- is exempted)

SBI Rate=Car Loan 12%

Two Wheeler Loan 16.25%

Housing Loan 10.5%Education loan 11.75%,13.25% / 12.5%

Computer Loan 16.5%

Loan for medical treatment Rule 3A - exempted

Interest free/concessionalloans

Maintenance expenditure in excess of Rs1000/- PM per

child

Free Education

Taxable at the cost to employer - recoveryElectricityTaxable at the cost to employer - recoveryWater Supply



18/35

23/02/2010 18

Tax Incident in the hands of Employees.

7.5% of salary during which accommodation

Occupied less recovered from employee.

House Accommodation

Non specified Hospital- Taxable in excess

of Rs.15,000Specified Hospital - Exempted

Medical Expenses

Exempted to the extent spentTour expenses

Use of Laptop Computers exemtedOther cases 10% of original cost

Use of Assets



19/35

23/02/2010 19

Obligation of Tax Payer

Allotment of PAN

Payment of Advance Tax / Monthly deduction Submission of correct data to DDO

Quote PAN in returns, certificates &

correspondences of certain transaction u/s 139A. Cooperate with assessment / reassessment.

Avoid best Judgment Assessment.

Avoid penalties / precautions.


20/35

23/02/2010 20

Obligations of DDO

DDO is required to deduct the tax at source from

salary. Tax to be deducted on the basis of estimated Income.

It is optional to declare other Incomes than salary for

deduction at source. Contribution U/S 80G will not be allowed except

some specified Scheme.

DDO should satisfy genuineness before allowingany exemption or deduction.


21/35

23/02/2010 21

General points for discussion

Please submit the genuine documents / certificates

while claiming exemption & deduction. False deduction and submission along with return is

liable to penalties / prosecution .

Avoid huge cash transactions.

Do not claim dues from employer in cash ifexceeding Rs.20,000/-as the same is covered u/s 40(A) for disallowance.


22/35

23/02/2010 22

Advance Tax

100%100%March 15th

60%75%Dec-15th

30%45%Sept-15th

015%June-15th

non Corporate

Assessee

Corporate

Assessee

Tax payableDue date of payment


23/35

23/02/2010 23

Computation of Income

XXXTaxable Income from Salary

XXXXProfessional Tax

XEntertainment Allowances

Less Standard Deduction

XXXGross Salary

XPerquisites ( Annexure -1)

XAllowances ( Annexure-1)

XGross Salary ( Annexure-1)

Income From Salary :A

Amt.

in Rs.

Amt.

in Rs.

Amt.

in Rs.Particulars


24/35

23/02/2010 24

Computation of HP.

Positive orNegativeAlways negativeTaxable Income

Max.Rs.30,000on repair etc.

No Limit.

Max. Rs.30,000/-- onrepair etc.Rs.1,50,000/- for

construction

Interest on Borrowed

Capital

30% NAVNILStandard Deduction

Less: Deduction U/S-24

XXXNILNAVXXNILLess: Municipal Tax

XXXXNILGross Annual Value

Let OutSelf OccupiedParticular


25/35

23/02/2010 25


XXXTaxable Income from House Property

XXb) Interest on borrowed Capital

Xa) Standard Deduction

Less - Deduction U/s-24

XXXNet Annual Value

XLess- Municipal Tax.

XXXGross Annual Value .

Income from House Property:B


26/35

23/02/2010 26


XXXTaxable Income from Capital Gain

xxExpenses

x

Cost of Improvement /

Index Cost of Imp.

xCost of acquisition / Index of CA

Less:

XXXxxxConsideration

Income from Capital GainC.


27/35

23/02/2010 27


xxxxxxTotal

xxxb) Payment of L.I. Premium etc.

XXXa) Employee Cont. to EPF

Deduction U/S 80C & 80CCC etc

Less: Deduction Under Ch -VI AC

XXXGross Total Income( A+B+C+D )B

XXXxxLess Expenses

XXXxxxOthersxxxInterest on Investment Deposit

Income from Other SourcesD


28/35

23/02/2010 28


XXXXXLess Relief U/S 89(1)

XXXXTotal Payable

XXXAdd Interest 1 month @ 1%

XXXXBalance Tax to be Payable

XXXLess: Tax Deducted at Source.

XXXXTotal Tax to be Payable

XAdd Education CessXXXTax On Total Income.

XXXXXXTotal Taxable Income (E - F )D


29/35

23/02/2010 29

Deduction Under Chapter VIA

U/S-80C

U/S-80CCC-Contribution topension fund

U/S-80D-Medical InsurancePremium

U/S-80DD-Maintenance ofPhysical handicappeddependant

U/S-80DDB-Medical treatmentof dependant

U/S-80G- Donation

U/S-80GG-Rent paid

U/S-80-Person with Disability


30/35

23/02/2010 30

Deductions fro Gross Total Income

Two Children1,00,000Tution Fee80C

1,00,000Contribution toSuperannuation fund80C

Lock in period1,00,000Contribution to PPF80C

In excess of 12%

is taxable1,00,000Contribution to E PF80C

Policy shouldcontinue for 3 years1,00,000LIC Premium80C

RemarksMaximum

Particulars of Investment /

SchemeSection


31/35

23/02/2010 31


Ownershipshould be 5 years1,00,000

Exp. on Acquisition of Houseincluding Registration fee.80C

Ownershipshould be 5 Yrs.1,00,000

Principal Repayment of BHL /HBA80C

Lock in period1,00,000Notified MF80C

SpecifiedScheme1,00,000ULIP80C

Lock in period1,00,000National Savings Scheme80C

Lock in period1,00,000NSC including AccruedInterest80C

RemarksMaximumParticulars of Investment/

SchemeSection


32/35

23/02/2010 32


Receipt ofannuity is taxable10,000Deposit under any annuity plan8CCC

Minimum 5 Yrs.Scheme formedby Central Govt.1,00,000Term deposit80C

Lock in period1,00,000Approved debentures/ equityin specific Public Company80C

RemarksMaximumParticulars of Investment/

SchemeSection


33/35

23/02/2010 33


For self & dependant.

Not to be allowed byDDO. Reimbursesmt.

will be deducted

40,000 /

60,000

Incurred expenditure ontreatment of Specified

Disease80DDB

Specific disabilitycertification from

specific authority.

50,000 /75,000 /

1,00,000

Deposit with scheme of

insurer or incurredexpenditure including

Nurshing & Rehabilitation80DD

Rs.15,000/- for Senior

Citizen.10,000Medical Insurance premia80D

RemarksMaximum

Particulars of Investment /

SchemeSection


34/35

23/02/2010 34

IMOSSIBLE IS NOTHING

The more faith you have

The more you believe

The more goals you set

The more you will achieve

So reach for the stars

Pick a mountain to climbDare to think big

And give yourself a time

And remember no matter

How futile things seemWith faith, there is dream

No impossible dream

- A. J. Davidson


35/35

23/02/2010 35

Thank You for your Co-operation

A presentation

by

Niranjan Swain

training material tax 220210 itps

Documents