DUE DATE FOR FILLING INCOME TAX RETURN FOR FY 2014-15 i.e. AY 2015-16 is 31st August 2015

CBDT has extended the due date for filing income tax return for FY 2014-15 i.e. AY 2015-2016 from 31st July 2015 to 31st August 2015. Due date is for all the assessee whose accounts are not required to be audited under this Act or under any other law for the time being in force. Again Same has been extended to 7th Sept for tax payers required to efile the return

Section 139: Income Tax Return 

(1) Every person,—

(a)  being a company or a firm; or

(b)  being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax,

shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed :

In this sub-section, “due date” means,—

(a) where the assessee other than an assessee referred to in clause (aa) is—

 (i)  a company; or

(ii)  a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force; or

 (iii) a working partner of a firm whose accounts are required to be audited under this Act or under any other law for the time being in force,

the 30th day of September of the assessment year;

(aa) in the case of an assessee who is required to furnish a report referred to in section 92E, the 30th day of November of the assessment year;

(b) in the case of a person other than a company, referred to in the first proviso to this sub-section, the 31st day of October of the assessment year;

(c) in the case of any other assessee, the 31st day of July of the assessment year.

F.No.225/154/201511TA.II
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
North Block, !TAM Division

New Delhi, the 10m June, 2015.

Order under section 119 of the Income-tax Act 1961

Subject:- Extension of due date of filing return of income for Assessment Year 2015-16 — regarding.
The Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income-tax Act, 1961, hereby extends the ‘due-date’ for filing Returns of Income, in terms of clause (c) of Explanation 2 to sub-section (1) of section 139 of the Income-tax Act, 1961, for Assessment Year 2015-16 from 31 July, 2015 to 31 August, 2015 in respect of income tax assessees concerned.

(Richa Rastogi)
Under secretary to the Government of India Copy to:-
1. PS to F.M. / OSD to FM / PS to MOS(R) / OSD to MOS(R).
2. PS to Secretary (Revenue).
3. Chairperson (DT), All Members, Central Board of Direct Taxes
4. All PCCsIT / PDGsIT
5. All Joint Secretaries / CsIT, CBDT
6. Directors / Deputy Secretaries / Under Secretaries of Central Board of
Direct Taxes.
7. DIT (RSP&PR) / Systems, New Delhi, for appropriate publicity by
putting it on departmental website.
8. The C&AG of India (30 copies).
9. The JS & Legal Advisor, Ministry of Law & Justice, New Delhi
10. The DG, NADT, Nagpur
11. The Institute of Chartered Accountants of India, IP Estate, New Delhi-
110003
12. All Chambers of Commerce
13. CIT(OSD) Official Spokesperson of CBDT
1/4….,14( Addl. CIT, Data Base Cell for putting it on irsofficersonline.govin

 

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Income Tax Rates for FY 2014-15 i.e. I.T. Rates for AY 2015-16 For Individuals

Income Tax Rates for financial year(F.Y.) 2014-15 i.e. I.T. Rates for Assessment Year( A.Y.) 2015-16  as per the Finance (No. 2) Act, 2014 for Individuals (Male & Female Including Senior Citizens and Super Senior Citizens)

Rate of Income Tax A.Y.2015-16 (Due Date of Filling Income Tax Return is 31st July 2015) for Individual age below 60 yrs

S.No.Total Income LimitsRate of Tax for Individual Below 60 yrs includes Female
1Total Income below Rs. 2,50,000/-Nil
2Total Income between Rs. 2,50,000 -Rs. 5,00,000/-10 per cent of the amount by which the total income exceeds Rs. 2,50,000/
3Total Income between Rs. 500,000 -Rs. 10,00,000/-Rs. 25,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4Total Income above Rs. 10,00,000/-Rs. 1,25,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/

Rate of Income Tax A.Y.2015-16 for senior citizens age above 60 Yrs but below 80 Yrs

S.No.Total Income LimitsIndividual Above 60 Yrs but Less than 80 Yrs of age
1Total Income below Rs. 3,00,000/-Nil
2Total Income between Rs. 3,00,000 -Rs. 5,00,000/-10 per cent of the amount by which the total income exceeds Rs. 3,00,000/
3Total Income between Rs. 500,000 -Rs. 10,00,000/-Rs. 20,000/- plus 20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
4Total Income above Rs. 10,00,000/-Rs. 1,20,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/-

Rate of Income Tax A.Y.2015-16 for super senior citizens age above 80 Yrs

S.NoTotal Income LimitsIndividual Above 80Yrs of age
1Total Income below Rs. 5,00,000/-Nil
2Total Income between Rs. 5,00,000 -Rs. 10,00,000/-20 per cent of the amount by which the total income exceeds Rs. 5,00,000/-
3Total Income above Rs. 10,00,000/-Rs. 1,00,000/- plus 30 per cent of the amount by which the total income exceeds Rs. 10,00,000/
  • Surcharge@10% is applicable only if total income is above Rs 1Crs during FY 2014-15.
  • Education Cess of 2% & Secondary and Higher Education Cess of 1% is payable on Income Tax .

For Calculating Taxable Salary: How to Calculate Your Income from salary for Income Tax

Complete Income Tax Guide for Salaried Individual for Financial Year 2013-14 by Income Tax Department

Income Tax Department has issued the Circular No.08/2013 [F.No.275/192/2013-It(B)], Dated 10-10-2013 Giving Complete Details Of Tax Slab Rates, Different Deductions, Method Of Tax Calculation, Salary From More Than One Employer, Relief When Salary Paid In Arrear Or Advance, Computation Of Income Under The Head “ Income From House Property, Persons Responsible For Deducting Tax And Their Duties, Mandatory Quoting Of Pan And Tan, Compulsory Requirement To Furnish Pan By Employee (Section 206AA), Statement Of Deduction Of Tax Under Section 200(3) [Quarterly Statement Of TDS], Matters Pertaining To The TDS Made In Case Of Non Resident, Computation Of Income Under The Head “Salaries, Income Chargeable Under The Head “Salaries (5.1), Definition Of “Salary”, “Perquisite” And “Profit In Lieu Of Salary” (Section 17), Rebate Of Rs. 2000 For Individuals Having Total Income upto Rs. 5 Lakh [Section 87a], TDS On Payment Of Accumulated Balance Under Recognized Provident Fund And Contribution From Approved Superannuation Fund, The Drawing And Disbursing Officers (DDOS) To Satisfy Themselves About The Genuineness Of Claim, Calculation Of Income-Tax To Be Deducted, Example For Income Tax Calculations

Download Comlplete Income Tax Guide for Salaried Individual

HRA exemption allowable on Rent Paid to wife

Requirement of the section 10(13A) is that any allowance (by whatever name called) granted to an assessee by his employer to meet expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee, to such extent as may be prescribed.

However, the exemption is not available in case the residential accommodation occupied by the assessee is owned by him or the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him.

Admittedly, the AO has given a finding of fact that the assessee and his wife are living together as a family. Therefore, it can be inferred that the house owned by wife of the assessee is occupied by the assessee also and in remand report it has been submitted that the assessee has submitted the rent receipt(s) of Rs.15,000/- dated 3.7.2008 and Rs.1,65,000/- dated 31.3.2009 and stated that the payments have duly been paid through bank transfer entry. A verification of the said entry shows the transfer on the given dates but the receipts date and amount of Rs.1,65,000/- not reflecting as transfer.

Therefore, in our considered opinion, the assessee has fulfilled twin requirements of the provision, i.e. occupation of the house and the payment of rent. Under these circumstances, the assessee is entitled for exemption u/s.10(13A) of the Act. Since we have observed that the ld.CIT(A)’s chose not to make enhancement and disallow the relief u/s.24 of the Act, therefore we cannot comment upon this aspect of the matter. In this view of the matter, we delete the addition and direct the AO to allow exemption u/s.10(13A) of the Act to the assessee. This ground is also allowed as indicated above.

INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD

BEFORE SHRI A.MOHAN ALANKAMONY,ACCOUNTANT MEMBER And

SHRI KUL BHARAT, JUDICIAL MEMBER

I.T.A. No.715/Ahd/2013 –  Assessment Year : 2009-10)

Bajrang Prasad Ramdharani Vs. Asst.CIT

Date of Hearing : 28/6/2013

Date of Pronouncement : 12/07/2013

O R D E R

PER SHRI KUL BHARAT, JUDICIAL MEMBER :

This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-XXI-Ahmedabad (‘CIT(A)’ for short) dated 27.12.2012 for Assessment Year 2009-10.

2. Facts in brief are that the case of assessee was picked up for scrutiny assessment and the assessment was framed u/s.143(3) Income Tax Act, 1961 (hereinafter referred to as “the Act”). The Assessing Officer (AO) has made various additions on account of short- tem capital gain, disallowance of interest claimed u/s.24, disallowance of exemption u/s.10(13A) and addition u/s.68 of the Act. The assessee feeling aggrieved by this order, filed an appeal before the ld.CIT(A) who after considering the submissions of the assessee, partly allowed the appeal.

3. While allowing the appeal, ld.CIT(A) confirmed the addition of Rs.42,371/- in respect of the disallowance of interest and the disallowance u/s.10(13A) of Rs.1,11,168/-. Against these two confirmation of additions, the assessee is further in appeal before this Tribunal.

4. The first ground relates to the disallowance of Rs.42,371/- being disallowance of interest while computing the capital gain from sale of house-property. The Ld.counsel for the assessee submitted that the ld.CIT(A) erred in confirming the addition. Ld.counsel for the assessee submitted that admittedly this amount pertained to previous year and the interest being related to the pre-construction period on borrowed capital. She submitted that the interest on borrowed capital of pre-construction period is allowable u/s.24(b) of the Act. She further submitted that since the property was sold, therefore this pre-construction interest period should form part of the cost of acquisition of property. She submitted that alternatively this interest amount is allowable u/s.24(b) of the Act. In support of her contention about pre-construction period, interest ought to have been allowed as a cost of acquisition of property and relied on the decision of Hon’ble High Court of Madras rendered in the case of CIT vs. K.Raja Gopala Rao reported at [2001] 252 ITR 459 (Mad.) and also the decision of Hon’ble High Court of Karnataka rendered in the case of CIT vs. Sri Hariram Hotels (P.) Ltd. reported at [2010] 325 ITR 136 (Kar.).

4.1. On the contrary, ld.Sr.DR supported the orders of the authorities below and submitted that this amount cannot form part of the cost of acquisition as the assessee himself has claimed it as an interest of pre- construction period.

5. We have heard the rival submissions, perused the material available on record and the judgements relied upon by the Ld.counsel for the assessee. We find that the AO disallowed this claim of the assessee without assigning any reason and the ld.CIT(A) has simply confirmed the amount without assigning reason as to how this amount is not admissible. The contention of the counsel is that the assessee has paid interest on borrowed capital for construction of house to City Bank of Rs.52,964/- which was related to pre-construction period. The assessee has claimed this interest as part of cost of construction and accordingly claimed in the return of income. It is further submitted that the interest expense related to pre-construction period either can be added to cost of construction or can be claimed 1/5th every year. The assessee has claimed the interest as part of cost of construction and assessee could avail the deduction only once and, therefore, the unabsorbed interest of Rs.42,371/- shall become part of the cost of the property. It is also submitted that this cost towards unabsorbed interest should be considered as cost of acquisition of property and allowed to be deducted at the time of sale of the property. Alternatively, it is submitted by the Ld.counsel for the assessee that even if adverse view is taken deduction u/s.24 of the Act is allowable. So far the contention of the assessee is concerned that this amount is required to be treated as cost of acquisition of granting deduction qua the interest on borrowed capital related to pre-construction period is allowable u/s.24(b) of the Act. However, this claim of the assessee would be allowable u/s.24(b) of the Act, therefore, in our considered opinion, the assessee is entitled for deduction u/s.24(b) of the Act. The AO is directed accordingly and the addition is hereby deleted. This ground of appeal is allowed.

6. Now coming to the second ground which relates to the disallowance of exemption u/s.10(13A) of the Act of Rs.1,11,168/- for house rent allowance. Ld.counsel for the assessee submitted that the assessee claimed deduction u/s.10(13A) of the Act amounting to Rs.1,11,168/- in respect of house rent allowance and the authorities below grossly erred in not allowing the exemption. She further submitted that a bare reading of the provision would make it ample clear that the assessee is entitled for exemption u/s.10(13A) of the Act. She submitted that in support of the expenditure of house rent, requisite details and evidences were filed before the ld.CIT(A) who had called for a remand report from the AO. She submitted that the reasoning given by the AO and the ld.CIT(A) are different in disallowing the exemption.

6.1. On the contrary, Sr.DR for the Revenue supported the orders of the authorities below. Sr.DR pointed out that the AO in the remand report has submitted that the assessee has claimed the house owned by him as self-occupied and therefore, the authorities below were justified in disallowing the claim of the assessee.

7. We have heard the rival submissions, perused the material available on record and the orders of the authorities below. We find that the AO disallowed the claim of the assessee on the ground that the assessee has not given details of payment and evidences and also on the basis that the assessee and his wife are living together, hence the claim of payment of rent is just to avoid payment of taxes and to reduce the tax liability. Ld.CIT(A) confirmed the addition on the ground that the rent is paid by the assessee as a tenant to his wife who is a landlord and he found that the landlord and tenant are living together in the same house- property and the very fact that the landlord and tenant are staying together which indicates that the whole arrangement is of the nature of colourable device as pointed out by the AO. He observed that since it is evidently a colourable device, even though the amount purportedly paid as a rent will not qualify for exemption u/s.10(13A). The AO and CIT(A) have disallowed the claim of the assessee on the ground that assessee and his wife are living together but not on the ground that in return of income a house owned by him is declared as a self-occupied, however, we find a mention in the remand report (annexed at page-61), where the AO has commented that it is not ascertainable whether the assessee stayed with his wife’s house or at his own house which he claimed self occupied and claimed the relief u/s.24 of the Act. Under these circumstances, we have to only examine whether the assessee is entitled for exemption u/s.10(13A) or not. For the sake of clarity, section 10(13A) is reproduced hereinbelow:-

Section 10(13A):-

(13A) any special allowance specifically granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee, to such extent as may be prescribed having regard to the area or place in which such accommodation is situate and other relevant considerations.

Explanation.-For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply in a case where-

(a) the residential accommodation occupied by the assessee is owned by him; or

(b) the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him;

7.1. From the reading of the above section, it is clear that the requirement of the section is that any allowance (by whatever name called) granted to an assessee by his employer to meet expenditure actually incurred on payment of rent in respect of residential accommodation occupied by the assessee, to such extent as may be prescribed. However, the exemption is not available in case the residential accommodation occupied by the assessee is owned by him or the assessee has not actually incurred expenditure on payment of rent (by whatever name called) in respect of the residential accommodation occupied by him. Admittedly, the AO has given a finding of fact that the assessee and his wife are living together as a family. Therefore, it can be inferred that the house owned by wife of the assessee is occupied by the assessee also and in remand report it has been submitted that the assessee has submitted the rent receipt(s) of Rs.15,000/- dated 3.7.2008 and Rs.1,65,000/- dated 31.3.2009 and stated that the payments have duly been paid through bank transfer entry. A verification of the said entry shows the transfer on the given dates but the receipts date and amount of Rs.1,65,000/- not reflecting as transfer. Therefore, in our considered opinion, the assessee has fulfilled twin requirements of the provision, i.e. occupation of the house and the payment of rent. Under these circumstances, the assessee is entitled for exemption u/s.10(13A) of the Act. Since we have observed that the ld.CIT(A)’s chose not to make enhancement and disallow the relief u/s.24 of the Act, therefore we cannot comment upon this aspect of the matter. In this view of the matter, we delete the addition and direct the AO to allow exemption u/s.10(13A) of the Act to the assessee. This ground is also allowed as indicated above.

8. In the result, appeal of the assessee is allowed. Order pronounced in Open Court on the date mentioned hereinabove

Ahmedabad; Dated 12/ 07 /2013

Calculate Deduction on Leave Travel Allowance under Section 10(5) of Income Tax Act

How to Calculate Deduction on Leave Travel Allowance(LTA) under Section 10(5) of Income Tax Act, 1961. LTA Deduction/exemption under income tax is available to individual employee for travelling in India with his family. LTA Exemption or Deduction amount will be limited to  travel costs i.e. cost of ticket, entire cost of the holiday is not covered under LTA Exemption, so one must keep the ticket safe and submit it to employer in order to claim LTA deduction under Income Tax.

  1. Leave Travel Allowance (LTA) is granted by the employers to the employees as part of the remuneration to provide for travel expenses incurred during the year.
  2. Leave travel allowance is the amount or value of any travel concession or assistance received by the Assessee or employee or amount due to him because of any of the reasons given below:
  3. From his employer for himself and his family in connection with his proceeding on leave to any place in India;
  4. From his employer or former employer for himself and his family in connection with his proceeding on leave to any place in India after retirement from service or after termination of his service.
  5. The value of LTA is exempt under section 10(5) of Income tax Act 1961
  6. Family of individual for the purpose of LTA exemption amount includes:
    1. The spouse and children of the individual;
    2. The parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on him
  7. For the purpose of exemption of LTA one must have travelled within the country, however international travelling is not valid for exemption
  8. Under LTA exemption only travel costs are covered i.e. cost of ticket, entire cost of the holiday is not covered; so one must keep the ticket safe and show it in order to claim LTA. 
  9. For children born after October 1, 1998, the exemption is restricted to only two children (unless, one birth has resulted in multiple children like twins and triplets).
  10. If members of family travel without Assessee no LTA can be claimed.
  11. As per the Rules, for the purpose of LTC block of 4 calendar years is available and Assessee can claim the LTA benefit only twice during the block of 4 years means The exemption can be availed only in respect of two journeys
  12. One must take the shortest route to their destination to be eligible for LTA. If journey is performed in a circular form touching different places, the LTA exemption will be limited for the journey from the place of origin to the farthest point reached, by the shortest route.
  13. As per rule 2B , exemption under section 10(5) is subject to the following conditions prescribed by the govt.:  

Read How to Plan Income Tax Deduction under section 80C, 80CCG, 80D, 80DD, 80E,80G, 80GG to 80U

 

Different Situations

Amount Of Exemption If Journey Is Performed On Or After 1-10-1997

 

  • For journeys performed by Air

  • Where journey is performed by rail
  • Air economy fare of the national carrier (Indian Airlines or Air India) by the shortest route to the place of destination or amount spent, whichever is less
  • Air-conditioned first class rail fare by the shortest route

 

  • Where place of origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air
  • Air-conditioned first class rail fare by the shortest route to the place of destination.

 

  • Where place of origin of journey and destination or part thereof are not connected by rail
  • (i) Where a recognised public transport system exists, the first class or deluxe class fare on such transport by the shortest route to the place of destination.

 

 

 

 

(ii) Where no recognised public transport system exists, the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey has been performed by rail.

 Download Income Tax Return (ITR) 1: Income Tax Return for AY 2013-14 for Salaried Person

Reference: Section 10(5) of the Income Tax Act

(5) in the case of an individual, the value of any travel  concession or assistance received by, or due to, him,—

(a)  from his employer for himself and his family, in connection with his proceeding on leave to any place in India ;

(b) from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,

subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government :

Provided that the amount exempt under this clause shall in no case exceed the amount of expenses actually incurred for the purpose of such travel.

Explanation.—For the purposes of this clause, “family”, in relation to an individual, means—

  (i) the spouse and children of the individual ; and

 (ii) the parents, brothers and sisters of the individual or any of them, wholly or mainly dependent on the individual;

Rule 2B prescribes the conditions as well as quantum of exemption, which are as follows:

Conditions to be satisfied – Conditions to be satisfied are as under:

  • The exemption is admissible on the value of any travel concession or assistance received by or due to an assessee from his employer or former employer, as the case may be, for himself and his family, in connection with his proceeding (i) on leave to any place in India, or (ii) to any place in India after the retirement from service, or (iii) to any place in India after the termination of his service.
  • The exemption is admissible in respect of actual expenditure incurred for journeys performed, not only by the assessee but also by his family.
  • For this purpose, ‘family’ means (i) the spouse and children of the assessee, and (ii) the parents, brothers and sisters of the assessee provided that they are wholly or mainly dependent on the assessee. With effect from 1-10-1997, the Central Civil Service Leave Travel Concession Rules have been amended in this respect.
  • The exemption can be availed only in respect of two journeys performed in a block of four calendar years. For this purpose, the first four-year block commenced with the calendar year 1986. Thus, the four-year blocks will be 1986-89, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09 and so on.
  • If an assessee has not availed travel concession or assistance during any of the specified four-year block periods on one of the two permitted occasions, or on both occasions, exemption can be claimed provided he avails the concession or assistance in the calendar year immediately following that block. This is popularly known as the ‘carry-over’ concession. In such cases, the exemption so availed will not be counted for purposes of regulating the future exemptions allowable for the succeeding block of four years.

Quantum of exemption.—The basic rule is that the quantum of exemption will be limited to the actual expenses incurred on the journey. This pre-supposes that, without performing any journey and incurring expenses thereon, no exemption can be claimed.

In addition to the above general limitation, the quantum of exemption will also be subject to the following maximum limits, depending upon the mode of transport used or available:

 

JOURNEYS PERFORMED ON OR AFTER 1-10-1997

 

  • For journeys performed by Air
  • Air economy fare of the national carrier (Indian Airlines or Air India) by the shortest route to the place of destination.

 

  • Where place of origin of journey and destination are connected by rail and the journey is performed by any mode of transport other than by air
  • Air-conditioned first class rail fare by the shortest route to the place of destination.

 

  • Where place of origin of journey and destination or part thereof are not connected by rail
  • (i) Where a recognised public transport system exists, the first class or deluxe class fare on such transport by the shortest route to the place of destination.

 

 

 

 

(ii) Where no recognised public transport system exists, the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey has been performed by rail.

Restricted concession for children.—Under sub-rule (4) of rule 2B, inserted with effect from 1-10-1997, exemption on travel concession will not be admissible to more than two surviving children of an individual born after 1-10-1998. This restriction will not however apply in respect of children born before 1-10-1998, and also in cases where an individual, after getting one child, begets multiple children (twins/triplets/quadruplets, etc.) on the second occasion. The implications of this restriction will be as follows :

  • In respect of journeys performed on or before 1-10-1998 exemption will be admissible in respect of all the surviving children of the individual.
  • In respect of journeys performed after 1-10-1998
    • the exemption will be admissible to all surviving children born before 1-10-1998;
    • in addition, the exemption will be admissible to only two surviving children born on or after 1-10-1998. In reckoning this limit of two children, children born out of multiple births after the first child will be treated as ‘one child’ only.

It may be noted that section 2(15B) of the Act defines a ‘child’ as includes ‘a step-child and an adopted child of the individual’. Hence the aforesaid restrictions will operate in respect of step-children and adopted children also provided they are born on or after 1-10-1998.Bottom of Form


Valuation of Rent Free Accommodation

How to do the Valuation of Rent Free Accommodation for private and government employees and When RFA is not taxable or exempted from Income Tax? In the course of the employment employer can provide the accommodation to its employee so that they can fulfill their duties more diligently without getting worried about the residential problem. Income Tax Section 17 and Rule 3 of Income Tax Rules, 1962 deals with the valuation of different perquisites.

From Income tax perspective this facility is considered as perquisite and taxable under the head salary. But generally it raises the question what should be the value of that free accommodation, to solve this query income tax has given different conditions and formula through which we can calculate taxable value of rent free house.

Government employee (state /central Government):

License fee determined by govt.xxxxx
Add: 10% of cost of house appliances owned by employerxxxxx

Or

Higher charges of house appliances hired by employer

xxxxx
Less: any amount recovered from employeexxxxx
Value of perquisitexxxxx

Non-Government employee:

  • Accommodation owned by employer:
Population

% Salary

Upto 10 lakh

7.5% of salary

Or
Above 10 lakhs upto 25 lakhs

10% of salary

Or
Above 25 lakhs

15% of salary

Add: if furnished house
10% of cost of furniture owned    xxxxx
Or
Higher charges of furniture hired by employerxxxxx
Value of perquisitexxxxx

 

  • Accommodation hired by employer: 
    15% of salary or actual hire charges
    Whichever is lower
    xxxxx
    Add: if furnished house
    10% of cost of furniture owned by employerxxxxx

    Or

    Higher charges of furniture hired by employerxxxxx
    Less: any amount recovered from employeexxxxx
    Value of perquisitexxxxx
  • Accommodation given in hostel: 24% of salary or actual hire charges (Whichever is lower) 
  1. This is applicable only if accommodation is provided for 15 days and upto 15 days it will be tax free and after that it is taxable
  2. Salary for the purpose of calculating it value of rent free accommodation will be calculated as per the below formula.

    Salary means: Basic pay + Dearness Allowance (if) + commission + taxable allowance + leave encashment + any other monetary payment

Exemption for RFA in remote area

Exception for accommodation in mining site, onshore oil exploration site, etc.
An exception is provided for any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site which:
1) is of a temporary nature and having plinth area not exceeding 800 square feet, is located not less than eight kilometers away from the local limits of any municipality or a cantonment board; or

2) is located in a remote area. Remote area means an area that is located at least 40 kilometers away from a town having a population not exceeding 20,000 based on latest published all-India census

Reference: Rule 3 of Income Tax Rules,1962

Rule Valuation of perquisites.

3. For the purpose of computing the income chargeable under the head “Salaries”, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:—

(1) The value of residential accommodation provided by the employer during the previous year shall be determined on the basis provided in the Table below (See page 1.36) :

TABLE I

Sl. No.CircumstancesWhere accommodation is unfurnishedWhere accommodation is furnished
(1)(2)(3)(4)
(1)Where the accommodation is provided by the Central Government or any State Government to the employees either holding office or post in connection with the affairs of the Union or of such State.License fee determined by the Central Government or any State Government in respect of accommodation in accordance with the rules framed by such Government as reduced by the rent actually paid by the employee.The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.
(2) Where the accommodation is provided by any other employer and—
(a) where the accommodation is owned by the employer, or(i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census;(ii) 10% of salary in cities having population exceeding 10 lakhs but not exceeding 25 lakhs as per 2001 census;

(iii) 7.5% of salary in other areas,

in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee.

The value of perquisites as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.
(b) where the accommodation is taken on lease or rent by the employer.Actual amount of lease rental paid or payable by the employer or 15% of salary whichever is lower as reduced by the rent, if any, actually paid by the employee.The value of perquisite as determined under column (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year.
(3)Where the accommodation is provided by the employer specified in serial number (1) or (2) in a hotel (except where the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another).Not applicable.24% of salary paid or payable for the previous year or the actual charges paid or payable to such hotel, which is lower, for the period during which such accommodation is provided as reduced by the rent, if any, actually paid or payable by the employee:

Provided that nothing contained in this sub-rule shall apply to any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site—

 (i)  which, being of a temporary nature and having plinth area not exceeding 800 square feet, is located not less than eight kilometres away from the local limits of any municipality or a cantonment board; or

(ii)  which is located in a remote area:

Provided further that where on account of his transfer from one place to another, the employee is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value with reference to the Table above for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table.

Explanation.—For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,—

 (i)  the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and

(ii)  the value of perquisite of such an accommodation shall be the amount calculated in accordance with Sl. No. (2)(a) of Table I, as if the accommodation is owned by the employer.

Valuation in Respect of Motor Car

Valuation of motor car facility given by employer or Taxability  of Car Expenses bear by either employee or employer or How to divide car expenses when car is used for personnel or private purpose under income tax  and exemption limits for car driver?

Motor car is the movable asset which is one the most basic perquisite given by the company to middle and top level management employees, so that they fulfill their duties more efficiently and timely.

From income tax perspective if car is utilized by the employee only for the official purpose then it will be tax free and no perquisite will be added to the employee salary while calculating salary income but in case if car is used by the employee for the personnel purpose then whatever net expenses beard by the employer will be added to the employee salary as perquisite for calculating gross salary.

If car is partly used for private and partly for official purpose then certain deduction is given under the income tax act. Important point is even if it used for few minutes for personnel purpose then these conditions will applicable there is no specific tenure for which car is too used for private or personnel purpose.

Car is owned by employee
  1. Expenses are bear by employee

    Not a perquisite

  2. Expenses are bear by employer
    1. Car is utilized wholly for officially purpose

      Not a perquisite

    2. Car is utilized wholly for private purpose

      Cost of expenses bear by employer

      Less: any amount received from employee

      ___________________________________

      If positive= perquisite

      ___________________________________

    3. Car is utilized partly for private &partly for official purpose
      1. Car is less then equal to 1600CC

        Cost of the employer

        Less:Rs.1800 P.M + Rs.900P.M.for car driver

        Less: any amount received from employee

        ____________________________________

        If positive = perquisite

        ____________________________________

      2. Car is more then to 1600CC

        Cost of the employer

        Less:Rs.2400 P.M + Rs.900P.M. car driver

        Less: any amount received from employee

        __________________________________

        If positive = It will be treated as Perquisite

 

Car is owned by employer

1.Expenses are bear by employer

  1. Car is utilized wholly for officially purpose

    Not a perquisite

  2. Car is utilized wholly for private purpose

    Cost of expenses bear by employer

    Less: any amount received from employee

    _______________________________

    If positive= It will treated as Perquisite

    _______________________________

  3. Car is utilized partly for official & partly for private purpose
    1. Car is less then equal to 1600CC

      Rs.1800 P.M

      Rs.900P.M. if car driver provided

      __________________________________________________

      Perquisite =Rs 1800/- without Driver and Rs 2700/- with driver.

      __________________________________________________

    2. Car is more then to 1600CC

      Cost of the employer

      Rs.2400 P.M

      Rs.900P.M. if car driver

      ___________________________________________________

      Perquisite =Rs 2400/- without Driver and Rs 3300/- with Driver.

      ___________________________________________________

2.Expenses are bear by employee

  1. Car is utilized wholly for officially purpose

    Not a perquisite

  2. Car is utilized wholly for private purpose

    Cost of expenses bear by employer

    (higher charges if car is taken or normal wear and tear @10% of the actual cost of the car if car is owned by employer

Plus: salary of chauffeur)

_______________________________

If positive= It will treated as Perquisite

_______________________________

  1. Car is utilized partly for private & partly for Official purpose
    1. Car is less then equal to 1600

      Rs.600 P.M

      Rs.900P.M. if car driver provided

    __________________________________________________

    Perquisite =Rs 600/- without Driver and Rs 1500/- with Driver.

    __________________________________________________

    1. Car is more then to 1600CC

      Rs.900 P.M

      Rs.900P.M. if car driver provided

    _________________________________________________

    Perquisite =Rs 900/- without Driver and Rs 1800/- with Driver.

Reference: Income Tax Rule 3: Valuation of Motor Car

2)(A) The value of perquisite by way of use of motor car to an employee by an employer shall be determined in accordance with the following Table, namely:—

TABLE II

VALUE OF PERQUISITE PER CALENDAR MONTH

Sl. No. CircumstancesWhere cubic capacity of engine does not exceed 1.6 litresWhere cubic capacity of engine exceeds 1.6 litres
(1)(2)(3)(4)
(1) Where the motor car is owned or hired by the employer and—
(a) is used wholly and exclusively in the performance of his official duties;No value:
Provided 
that the documents specified in clause (B) of this sub-rule are maintained by the employer.
No value:
Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
(b) is used exclusively for the private or personal purposes of the employee or any member of his household and the running and maintenance expenses are met or reimbursed by the employer;Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged from the employee for such use.Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged from the employee for such use.
(c) is used partly in the performance of duties and partly for private or personal purposes of his own or any member of his household and—
(i) the expenses on maintenance and running are met or reimbursed by the employer;Rs. 1,800 (plus Rs. 900, if chauffeur is also provided to run the motor car)Rs. 2,400 (plus Rs. 900, if chauffeur is also provided to run the motor car)
(ii) the expenses on running and maintenance for private or personal use are fully met by the assessee.Rs. 600 (plus Rs. 900, if chauffeur is also provided by the employer to run the motor car)Rs. 900 (plus Rs. 900, if chauffeur is also provided to run the motor car)
(2)Where the employee owns a motor car but the actual running and maintenance charges (including remuneration of the chauffeur, if any) are met or reimbursed to him by the employer and—
(i) such reimbursement is for the use of the vehicle wholly and exclusively for official purposes;No value:Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.No value:
Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.
(ii) such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee or any member of his household.Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above.Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount specified in Sl. No. (1)(c)(i) above.
(3)Where the employee owns any other automotive conveyance but the actual running and maintenance charges are met or reimbursed to him by the employer and
(i) such reimbursement is for the use of the vehicle wholly and exclusively for official purposes;No value :Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.Not applicable :
(ii) such reimbursement is for the use of vehicle partly for official purposes and partly for personal or private purposes of the employee.Subject to the provisions of clause (B) of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amount of Rs. 900.

Provided that where one or more motor-cars are owned or hired by the employer and the employee or any member of his household are allowed the use of such motor-car or all of any of such motor-cars (otherwise than wholly and exclusively in the performance of his duties), the value of perquisite shall be the amount calculated in respect of one car in accordance with Sl. No. (1)(c)(i) of Table II as if the employee had been provided one motor-car for use partly in the performance of his duties and partly for his private or personal purposes and the amount calculated in respect of the other car or cars in accordance with Sl. No. (1)(b) of Table II as if he had been provided with such car exclusively for his private or personal purposes.

(B) Where the employer or the employee claims that the motor-car is used wholly and exclusively in the performance of official duty or that the actual expenses on the running and maintenance of the motor-car owned by the employee for official purposes is more than the amounts deductible in Sl. No. 2(ii) or 3(ii) of Table II, he may claim a higher amount attributable to such official use and the value of perquisite in such a case shall be the actual amount of charges met or reimbursed by the employer as reduced by such higher amount attributable to official use of the vehicle provided that the following conditions are fulfilled :—

(a)  the employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage, and the amount of expenditure incurred thereon;

(b)  the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.

Explanation.—For the purposes of this sub-rule, the normal wear and tear of a motor-car shall be taken at 10 per cent per annum of the actual cost of the motor-car or cars.

TDS Rate on Salary Income and TDS Calculation on Salary under section 192

How to Calculate the TDS Amount on Salary Income i.e Tax Deduction on Salary or What will be the TDS Rate on Salary Income.There is no fixed Tax Deduction Rate (TDS Rate) for Salary Income, TDS has be calculated based on the Income Tax rate applicable to that person. For each year Income Tax Slab Rates are different .i.e Income Tax for Year 2012-13 & 2013-14 (A.Y. 2013-2014 & A.Y. 2014-15) Salary Income upto Rs. 2 Lakh is not taxable and For Year 2011-12 (A.Y. 2012-13) Income upto Rs. 180000 was not taxable.

NATURE OF PAYMENT

Any payment chargeable under the head “salary”. Thus, where a firm pays salary to its partner, section 192 is not applicable because such payment is taxable in the hands of partner under the head “Income from BPV”.

Steps to calculate TDS on Salary Income:

Steps

Computation

Remark

Step 1

Estimate income taxable under the head “Salary” as per provisions for salary

Simultaneous employment:

Where, the employee is employed simultaneously by more than one employee as responsible for TDS and provide the details of salary Income from other employees, TDS out of such salary and other necessary particulars to such selected employer in form No. 12B

Previous employment:

Where the employee was in employment under same previous employer in the same year, he may furnish details of salary Income, TDS out of such income and other necessary particulars to his present employee in Form No. 12 B

Step 2

Consider other incomes, if reported by the employee

If the employee submits details of other incomes and TDS out of such income and TDS out of such income in Form No. 12C and employer shall consider such other income and TDS while calculating TDS u/s 192.

However, following points should be kept in mind –

  • The employer cannot consider negative incomes (i.e. Losses)except under the head “House Property”
  • The employer cannot consider other income and TDS , if the effect of such consideration is to reduce the tax otherwise deductable u/s 192.

Step 3

Allow deduction under chapter VI-A

The deduction under 80G can be allowed only in respect of certain donations.

Step 4

Calculate Tax at the rates applicable to an individual. Include education cess and SH education cess as applicable

Step 5

Allow relief u/s 89

If the employer is Govt. company, cooperative society, university, local authority, institution, association or body, it can consider relief u/s 89 provided the employee submits necessary details in Form No. 10E

Step 6

The net tax liability shall be deducted

The TDS shall be deducted at the average rate of Tax.

DEDUCTION AT WHAT TIME?

Tax shall be deducted at the time of making payment of salary.

IMPORTANT NOTES

  1. Adjustment of excess / deficiency:

    The employer can increase or reduce the amount of TDS so as to adjust previous excess / short-deduction during the same year.

  2. Tax payment on non-monetary perquisites:

    The employer can make, at his option, payment of tax on non-monetary perquisites of employees. In such a case, no TDS shall be required to that extent. It is further provided that the tax payable by the employer in relation to non-monetary perquisites shall be calculated as follows –



 

Different Types of Provident Fund and Tax Benefit Related to Investment in Provident Fund

There are different types of provident fund (PF) which are used by individual for investment and saving purpose and each is having different tax treatment.

But Broadly Provident fund can be categories into four categories

  1. Statutory Provident Fund(SPF)
  2. Recognized Provident Fund (RPF)
  3. Unrecognized Provident Fund(URPF)
  4. Public provident fund(PPF)

Explanation

  1. SPF is specially prepared for investment in provident fund account managed by the government for govt. employees.
  2. Recognized provident fund is a scheme to which PF Act1952 applies. According to this Act, a person who appoints 20 or more employees then he is liable to register himself under the PF act.
    1. The concern may join the govt. scheme set up by the PF Commissioner.
    2. Can be managed by employer himself by creating the trust for the provident fund and get the approval of CIT. This type of structure is generally created by the very large organizations.
  3. URPF is a scheme started by the employer & is not approved by the CIT.
  4. Under PPF any member from public whether is in employment or not may contribute to this fund. The minimum contribution is Rs. 500 p.a. & maximum 70000Rs. p.a., amount is repayable after 15 years with interest@8% p.a. From the income tax perspective best is statutory provident fund means PF which is compulsory in nature of govt. employees and Employer contribution is tax free and employee can claim tax deduction under section 80C of the income tax subject to maximum limit of Rs 100,000/-

 

Statutory provident fund
Employers contributionTax free-exempt
Employee contributionDeduction u/s 80C
Interest on contributionTax free
Effect at time of the receiptNo effect

 

Recognize provident fund
Employers contributionExempt upto 12%

In excess of 12% taxable in the year of contribution

Employee contributionDeduction u/s 80C
Interest on contributionExempt upto 9.5%

In excess of 9.5% taxable as salary in the year of accrued

Effect at time of the receiptIf conditions are satisfied then RPF amount is fully exempt (see note)

 

Unrecognized provident fund
Employers contributionTax free in the year of contribution
Employee contributionDeduction u/s 80C Not available
Interest on contributionTax free in the year of contribution
Effect at time of the receipt

  1. Employers contribution
  2. Employee contribution
  3. Interest on employers contribution
  4. Interest on employee contribution
 

Fully taxable

No effect

Taxable as salary

Taxable as income from other sources

Note-

At the time of retirement RPF is fully exempt if anyone of the following conditions is satisfied:

  1. Service is provided for the period of 5 years or more
  2. If service period is less than 5 years but reasons were out of control, e.g.-ill health, business discontinued by the employer, etc.
  3. Service period is less than 5 years he has joined another employer & balance in RPF account is transferred in RPF account of new employer- in this case consider service period of previous employer also for the purpose of 5 years while checking conditions of RPF.

    If at the time of retirement any of the 3 conditions are not satisfied then 2 treatments

    1. Employers contribution which was exempt in earlier years now taxable in the previous year of retirement (I.e.12% of salary which was exempt now cancelled)
    2. Interest on employers & employees contribution which was exempt in earlier years (9.5%) now taxable.

Income Tax on Medical allowance, Medical Reimbursement, Medical Treatment, Medical Facility

Income Tax Treatment for perquisites and allowance given to employees under different heads like Medical allowance, Medical Reimbursement, Medical Treatment Allowance or Medical Treatment in employer hospital etc. Income Tax provide different tax treatment Medical allowance, Medical Reimbursement and Medical Treatment hospital. As Medical Allowance is fully taxable and Medical Reimbursement is exempted upto Rs 15000/- subject to employee giving medical expenses bills and Memo. So individual claim deduction of Rs 15000/-

For the purpose of Income Tax Act, any payment made by employer to employee will be taxed under Income Tax head” Income From Salary” and with the increase in the cost of medical facilities employers are providing different medical facilities either directly or indirectly through different corporate tie ups.

Treatment in India
Medical allowanceFully taxable
Medical treatment in own hospital of employer (for employee and his family members)Tax free
Mediclaim insurance policy/ reimbursement of premium for employee & family membersTax free
Reimbursement of medical expenditure for employee or his family
  • Treatment in private clinic
Exempt up to 15000
  • Treatment in govt. hospital or govt. recognize hospital
Fully exempt
  • Treatment of specified diseases in specified hospital prescribed by CCIT tax free
Fully exempt

Some large corporate houses are maintaining hospitals for its employees and their families. One of the good example is of Cement and Mining companies which generally provide medical facilities to employees living in company accommodation or colonies which are near to factories but are quite far from cities from the income tax perspective it will be not be taxed.

Treatment outside India
Staying expenditure of patient or one attendantPrescribed by RBS is Exempt
Treatment expenditure of patientPrescribed by RBS is Exempt
Travelling expenditure of patient or one attendant
  • gross total income of employee is upto 200000
Exempt
  • excess of 200000
Fully taxable

Note:

  1. Family means:
    1. Spouse and children of employee.
    2. Parents, brother and sister wholly dependent on employee.
  2. The perquisite is taxable to both specified and non- specified if bills are issued in the name of employee and payment is made by employer
  3. Employee should with return of income a certificate from the hospital