TDS PROVISIONS &

SALARY DEDUCTIONS

Tax Slab – Individual / HUFAsst Year 2018-19

Sr. No Total Taxable Salary (Rs.) Income Rates

1 Zero to 2,50,000 0%

2 2,50,001 to 5,00,000 5%

3 5,00,001 to 10,00,000 20%

4 Above 10,00,000 30%

Surcharge @ 10% if income between Rs.50 lakhs & Rs.1 croreSurcharge @ 15% if income exceeds Rs.1 croreEducation Cess @ 2% and S.H.E Cess @ 1%

REBATE / RELIEF

REBATE U/S 87A• Where total income (before tax) is less than or

equal to Rs.3,50,000 –• Then, Rebate u/s 87A – 100% of tax payable or

Rs.2,500, whichever is lesser.Relief u/s 57(ii):

• Family pension is assessable as Income fromother sources - Relief u/s 57(iia) – 1/3rd orRs.15,000, whichever is lesser, is allowable asdeduction from such family pension.

Reporting of Income under Other Heads

• Section 192(2B) enables a taxpayer tofurnish particulars of income under anyhead other than ‘Salaries’.

• Loss from House Property alone can beaccepted by DDO, subject to fulfilment ofprescribed conditions.

Loss from House PropertyDeductions Allowable under Section 24 of Income Tax Act

in respect of interest on house property :Housing Property bought or constructed on or after 01.04.99(completed within 3 years from availment of loan (5 years w.e.f.F.Y.2016-17) and self occupied will be eligible for deduction ofinterest paid on housing loan with the maximum limit Rs.2,00,000/-.In other cases deduction in respect of interest paid up toRs.30,000 will be allowed.Sec.71: Restriction on Set off of loss from House PropertySub-sec.(3A) has been inserted to sec.71 to provide that set off ofloss (net) under the head ‘Income from House Property’ againstany other head of income shall be restricted to Rs.2 lakh.As per sec.71B, unabsorbed loss shall be carried forward and setoff against income from house property in subsequent years(max. 8 asst years).

Loss from House Property - IllustrationIncome from Salary Rs.12,00,000Income from House Property (2 properties):Loss from self occupied property 1 (1,50,000)

Rent from let out property 2 1,20,000Less: Municipal tax 6,000

------------1,14,000

Less: 30% towards maintenance 34,200-----------

Net Rental Income 79,800Less: Interest on loan 1,75,000

-----------Net Loss from House property 2 (95,200)

-------------Total Loss from House property (2,45,200) (-) 2,00,000

-----------------Total taxable Income Rs.10,00,000

Loss from House PropertyOTHER CONDITIONS…

•Pre-construction interest – in five instalmentsWhere the property has been acquired or constructed with borrowedcapital, the interest, if any, payable on such capital borrowed for theperiod prior to the previous year in which the property has beenacquired or constructed, as reduced by any part thereof allowed asdeduction under any other provision of this Act, shall be deductedunder this clause in equal instalments for the said previous year and foreach of the four immediately succeeding previous years.

Certificate from lender compulsory for allowing deductionNo deduction shall be made under the second proviso unless theassessee furnishes a certificate, from the person to whom any interest ispayable on the capital borrowed, specifying the amount of interestpayable by the assessee for the purpose of such acquisition orconstruction of the property

Deductions for

salaried class

• Deductions admissible against salaried persons:❖Professional tax u/s 16

❖Deductions under section 10

❖Deductions under Chapter VI-A – Section 80-C

to 80-U

❖Relief u/s 89(1)

❖Loss from House property (Interest on borrowed capital)

Deductions under section 10

➢Amount of LTC or LTA actually incurred.[Section 10(5)]

➢Any allowances or perquisites paid or allowedas such outside India by the Government to acitizen of India for rendering service outsideIndia. [Section 10(7)]

➢Gratuity received by employees [Sec.10(10)]

➢Commuted value of pension [Sec.10(10A)]

➢Encashment of leave at the time of retirement[Sec.10(10AA)]

Exemption under Section 10 (13A) in respect of HRA

Calculation Method:

Least of the following amount is to be treated as exempt from Income Tax.

a) Actual House Rent Allowance Received, or

b) Rent paid in excess of 10% of Pay in Pay band and Grade Pay or

c) 50% of Pay in Pay band and Grade Pay if the employee is inChennai/Mumbai/Kolkatta/Delhi and 40% of Pay in Pay Band and GradePay for the employees is in other places.

If the employees resides in his/her own house or in a house for which he/shedoes not pay any rent, no HRA exemption is available.

[DDO to insist on rent receipts if HRA received exceeds Rs.3,000]

Deductions under section 10

➢ Transport Allowance [Section 10 (14)]:The transport allowance granted to an employee to meet

his expenditure for the purpose of commuting between theplace of his residence and the place of duty is exempt to theextent of Rs. 1,600/- per month.

In case of employees being blind or deaf and dumb ororthopaedically handicapped with disability of lowerextremities exemption allowable is Rs. 3200 per month➢Children Education allowance:Rs. 100/- per month per child up to a maximum of 2 children.➢Hostel Subsidy: Rs. 300/- per month per child upto amaximum of two children.

➢Scholarships granted to meet the cost of education.[Section10(16)]

Deductions under section 10

Other Allowances exempted under Section 10 of IT Actare: [Refer sec.10(14) read with rule 2BB]✓Any special allowance or benefit, such as TravellingAllowance, Tour TA Allowance, Uniform Allowance etcwhich are incurred for the performance of the duties of anoffice or employment.✓Special Compensatory Allowance✓Climate Allowance✓Academic, research or training Allowance✓High Altitude Allowance, Island duty Allowance, TribalAllowance, allowances applicable to North East, Hilly areasof U.P., H.P. and J & K, border area allowance,Compensatory Field Area Allowance, Counter InsurgencyAllowance, High Active Field Area Allowance, etc.

Deductions under NPS

➢ Exemption under section 10(12A)Under this section, payment from National Pension

System (NPS) trust to an employee on closure of hisaccount or opting out shall be exempt upto 40% of totalamount payable to him.

➢ Exemption for partial withdrawal from NPS – Sec.10(12B)

With effect from Asst year 2018-19, exemption topartial withdrawal not exceeding 25% of the contributionmade by an employee in accordance with the terms andconditions specified under Pension Fund Regulatory andDevelopment Authority Act, 2013 and regulations madethereunder.

Deductions under section 80

Section 80C: Life Insurance Premium for self or spouse orany children, Contribution to GPF, RPF, PPF, NSC, PostOffice Savings Bank Scheme, Sukanya Samriddhi Account,Principle repayment of housing loan, Tuition fees for thepurpose of full time education of any two children etc.

Sec.80CCC: Contribution to pension funds of LIC or otherinsurer – upto Rs.1.5 lakh.

Sec.80CCD(1): Contribution to National Pension Scheme(NPS) of Government – upto 10% of salary (Pay + DA).

The total deduction under section 80C [alongwith section80CCC and 80CCD(1)] is limited to Rs. 1.50 lakh only.

Deductions under section 80

Additional Savings eligible for Tax Exemption up to Rs. 50,000/- under Section 80 CCD (1B)

Contribution in New Pension Scheme has been given more taxconcession in the budget 2015.

As per Section 80CCD(1B), an additional deduction of up to Rs.50,000 over and above the Section 80C, 80CCC and 80CCD savingscap of Rs. 1.5 lakh, is allowed if such amount is contributed by theemployee.

So, overall tax savings of Rs. 2 lakh can be availed under Section80C, 80CCC and 80CCD(1).

80CCD(2): Employer’s contribution to NPS – upto 10% of salary(Pay + DA) – Allowed separately - Not covered in the ceiling ofRs.2 lakhs.

(Under sec.17(viii) of the Income tax Act, salary includesemployer’s contribution to a Pension Scheme referred insec.80CCD, i.e. Employer’s contribution to be added to Income).

Deductions under section 80Section 80D: Deduction in respect of Medical Insurance:

•Deduction is available upto Rs. 30,000/- for parents whoare senior citizens (either father or mother) and uptoRs.25,000/- in other cases for insurance of self, spouse anddependent children - To be paid other than ‘cash’ mode.

Dependency: Upto 18 years; beyond 18 not covered ifemployed; upto 25 years for unemployed male child; tillmarriage for unemployed female child.

•Amount of up to Rs.5000/- spent on preventive healthcheck-up can be considered - Cash payment allowable.

Checklist for 80D

The DDO must ensure that the medical insurancereferred to above shall be in accordance with ascheme made in this behalf by-

(a) the General Insurance Corporation of India formedunder section 9 of the General Insurance Business(Nationalization) Act, 1972 and approved by theCentral Government in this behalf; or

(b) any other insurer and approved by the InsuranceRegulatory and Development Authority establishedunder sub-section (1) of section 3 of the InsuranceRegulatory and Development Authority Act, 1999.

Deductions under section 80Section 80DD: Deduction for medical treatment of

physically challenged dependents:

In the case of salaried employee who is taking careof physically challenged Dependent Relative, anamount with the maximum limit of Rs.75000/- spenttowards medical treatment or rehabilitation can bededucted from the income (In the case of severedisability maximum deduction would be Rs.1,25,000).

Certificate in Form 10IA from the approved medicalauthorities regarding the extent of disability willhave to be produced (Rule 11D)

Deductions under section 80Section 80U: Deduction in respect of Person

suffering from Physical Disability

Deduction of Rs. 75,000/- in respect of taxpayer suffering from a physical disability. In thecase of severe disability, deduction of Rs.125,000/- will be allowed.

Certificate in Form 10IA from the approvedmedical authorities regarding the extent ofdisability will have to be produced (Rule 11D)

Checklist for 80DD & 80U• DDOs should note that 80DD deduction is in case of the dependent of

the employee whereas 80U deduction is in case of the employeehimself. However under both the Sections the employee shall furnishto the DDO following:

1. A copy of the certificate issued by the medical authority as definedin Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules.The DDO has to allow deduction only after seeing that the Certificatefurnished is from the Medical Authority defined in this Rule and thesame is in the form as mentioned therein.

2. Further in cases where the condition of disability is temporary andrequires reassessment of its extent after a period stipulated in theaforesaid certificate, no deduction under this section shall be allowedfor any subsequent period unless a new certificate is obtained fromthe medical authority as in 1 above and furnished before the DDO.

Deductions under section 80Section 80DDB: Deduction in respect of specified disease

•Deduction in respect of specified disease (Rule 11DD) for self or dependent relatives isallowed lower of Rs.40,000 or actual amount paid. This deduction amount increases toRs.60,000 in case of senior citizen and Rs.80,000 in case of super senior citizen (w.e.f.1.4.2016)Dependents: Spouse, children, parents, brothers and sisters dependent wholly or mainly onsuch individual.

➢Required to obtain Prescription from a neurologist, oncologist, urologist, haematologist,immunologist or such other specialist having doctorate of medicine in the respective field,recognized by Medical council of India. The condition that specialist should be a Govtdoctor, dispensed w.e.f. 1.4.2016.

➢ Requirement to file Form 10I alongwith Return dispensed vide CBDT’s notificationS.O.2791(E) dated 12.10.2015

The prescription referred to in sub-rule (2) shall contain the name and age of the patient,name of the disease or ailment along with the name, address, registration number and thequalification of the specialist issuing the prescription:

[Where the patient is receiving the treatment in a Government hospital, such prescriptionshall also contain the name and address of the Government hospital]

➢Deduction under this section shall be reduced by the amount received from insurer orreimbursed by an employer for the medical treatment.

Deductions under section 80Rule 11DD (1) For the purposes of section 80DDB, the following shall be theeligible diseases or ailments :

(i) Neurological Diseases where the disability level has been certified to be of 40% andabove,—(a) Dementia ;(b) Dystonia Musculorum Deformans ;(c) Motor Neuron Disease ;(d) Ataxia ;(e) Chorea ;(f) Hemiballismus ;(g) Aphasia ;(h) Parkinsons Disease ;

(ii) Malignant Cancers ;

(iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv) Chronic Renal failure ;

(v) Hematological disorders :(a) Hemophilia ;(b) Thalassaemia.

Deductions under section 80Section 80E: Deduction in respect of Interest on Loan for

Higher StudiesDeduction in respect of interest on loan taken for pursuinghigher education.

Allowable for Initial asst year + 7 years.

The deduction is also available for the purpose of highereducation of a relative.

➢Higher Education: Any recognised course of studypursued after passing Senior Secondary Examination

➢Initial Asst year: Asst year relevant to fin year in whichthe assessee starts paying interest on the loan

➢Relative : Spouse, children or the student for whom theindividual is the legal guardian.

Deductions under section 80Section 80G: Deduction for Donations

Notified donations under Sec. 80G will be eligible for deduction ( 100% or 50%as per the notification condition), subject to 10% of gross total income.Cash payment only upto Rs.10,000. Vide Budget 2017, restricted to Rs.2,000.…From CBDT’s Circular No.8 of 2010 dated 13.12.2010(Referring to Circular No. 2/2005, dated 12-1-2005)Generally no deduction should be allowed by the D.D.O. from the salaryincome in respect of any donations made for charitable purposes. The taxrelief on such donations as admissible under section 80G of the Act, will haveto be claimed by the taxpayer in the return of income.However in cases where employees make donations to the Prime Minister’sNational Relief Fund, the Chief Minister’s Relief Fund or the LieutenantGovernor’s Relief Fund through their respective employers, it is not possiblefor such funds to issue separate certificate to every such employee in respectof donations made to such funds as contributions made to these funds are inthe form of a consolidated cheque. An employee who makes donationstowards these funds is eligible to claim deduction under section 80G. It is,hereby, clarified that the claim in respect of such donations as indicated abovewill be admissible under section 80G on the basis of the certificate issued bythe Drawing and Disbursing Officer (DDO)/Employer in this behalf.

Deductions under section 80

Section 80 TTA: Deduction from gross total income in respect of

any Income by way of Interest on Savings account

Maximum of Rs. 10,000/-, inrespect of interest on deposits insavings account ( not time deposits)with a bank, co-operative society orpost office

FEE FOR DEFAULT IN FURNISHING RETURN OF INCOME – SECTION 234F

• With effect from 1st April 2018, section 234F has beeninserted to provide that where Return of income filed beyondthe due date(s) u/s 139(1) fee payable (irrespective of thecause for not furnishing return) as under:

Status of Return furnished Amount of Fee

Total Income does not exceed Rs.5,00,000

Total Income exceeds

Rs.5,00,000

If the return is furnished on or before31st December of the relevantassessment year

Rs.1,000 Rs.5,000

In any other case (i.e., Return isfurnished after 31st December orReturn is not furnished at all)

Rs.1,000 Rs.10,000

TDS OTHER THAN SALARYTDS FROM PAYMENT TO CONTRACTORS – SEC.194C

Deductor Indl. / HUF subject to tax audit under section 44AB*

All others, viz., Govt, local authority, company etc.

Payee Any person resident in India

Rate of TDS 1% + SC + EC for individuals and HUF

2% + SC + EC for Others

Exemption If payment does not exceed Rs.30000 and the aggregatedoes not exceed 100000 (75000 upto 31.5.16)

Payment to contrctors by individual/HUF for theirpersonal purposes.

Time for deduction

At the time of payment or credit whichever is earlier.

Time for deposit

On behalf of Govt. on the same day

Other cases within a week

TDS Certificate FORM 16A – 15 days from the due date of filing e-TDS Return for the relevant quarter.

TDS OTHER THAN SALARY

TDS from Rent – Sec. 194IDeductor Any person including Indl/HUF who are subject to tax

audit under section 44AB

Payee Any person resident in India

Rate of TDS 2% for machinery/plant/equipment

10% for land/building/furniture/fittings.

Exemption If payment does not exceed Rs.180000

If the payee is Government or local authority (Panchayat, Municipality, Cantonment Board etc.)

Time for deduction

At the time of payment or credit whichever is earlier

Time for deposit

On behalf of Govt. on the same day

7 days from the end of relevant month

TDS Certificate FORM 16A – 15 days from the due date of filing e-TDS Return for the relevant quarter.

TDS on fees for Professional/ Technical Services – Sec. 194J

Deductor Any person incl indl / HUF who are subject to tax audit under section 44AB

Payee Any person resident in India

Rate of TDS 10 % + SC + EC (5% UPTO 31.5.2007)

Exemption If payment does not exceed Rs.30000

Fees paid by individual/HUF for their personal purpose

Time for deduction

At the time of payment or credit whichever is earlier

Time for deposit

On behalf of Govt. on the same day

Other cases within a week

TDS Certificate FORM 16A – 15 days from the due date of filing e-TDS Return for the relevant quarter.