Income Tax Income Tax Slabs & Rates for Assessment Year

Transcription

1 Income Tax we have provided here a detailed guide for Income Tax Assessment Year applicable to Salaried Class Employees. Government has brought three important changes this year which are relevant to Salaried Class Employees in the finance bill Those are 1. Income Tax Rebate of Rs.2000 for individuals having total income up to Rs. 5 lakhs 2. Deduction of interest on housing loan up to Rs.2.5 lakhs in respect of housing loan up to Rs.25 lakhs obtained during the year , as against the deduction allowed up to Rs. 1.5 lakh in normal Total Cost of construction shall not exceed Rs. 40 lakhs in this case. (Click here fordetailed discussion on additional deduction 3. Deduction of Premium up to 15% of sum assured in respect of Life Insurance Policies covering the life of persons with disabilities defined in Section 80U and Section 80 DDB Income Tax Slabs & Rates for Assessment Year Paragraph A of Part-III of First Schedule to the Bill provides following rates of income-tax:- I. Individual resident aged below 60 years (i.e. born on or after 1st April 1954) or any NRI / HUF / AOP / BOI / AJP* Income Slabs Tax Rate i. Where the total income does not exceed Rs. 2,00,000/-. NIL ii. Where the total income exceeds Rs. 2,00,000/- but does not exceed Rs. 5,00,000/-. 10% of amount by which the total income exceeds Rs. 2,00,000/-. Less: Tax Credit - 10% of taxable income upto a maximum of Rs. 2000/-. iii. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-. Rs. 30,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000/-. iv. Where the total income exceeds Rs. 10,00,000/-. Rs. 130,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-. Surcharge: 10% of the Income Tax, where total taxable income is more than Rs. 1 crore. Education Cess: 3% of the total of Income Tax and Surcharge. * Abbreviations NRI - Non Resident Individual; HUF - Hindu Undivided Family; AOP - Association of Persons; BOI - Body of Individuals; AJP - Artificial Judicial Person II. Individual resident who is of the age of 60 years or more but below the age of 80 years at any time during the previous year (i.e. born on or after 1st April 1934 but before 1st April 1954) Income Slabs Tax Rate i. Where the total income does not exceed Rs. 2,50,000/-. NIL ii. Where the total income exceeds Rs. 2,50,000/- but does not exceed Rs. 5,00,000/- 10% of the amount by which the total income exceeds Rs. 2,50,000/-. iii. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- Rs. 25,000/- + 20% of the amount by which the total income exceeds Rs. 5,00,000/-. iv. Where the total income exceeds Rs. 10,00,000/- Rs. 125,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-. Surcharge: 10% of the Income Tax, where total taxable income is more than Rs. 1 crore. Education Cess: 3% of the total of Income Tax and Surcharge.

2 III. Individual resident who is of the age of 80 years or more at any time during the previous year (i.e. born before 1st April 1934) Income Slabs Tax Rate i. Where the total income does not exceed Rs. 5,00,000/-. NIL ii. Where the total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/- 20% of the amount by which the total income exceeds Rs. 5,00,000/-. iii. Where the total income exceeds Rs. 10,00,000/- Rs. 100,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-. Surcharge: 10% of the Income Tax, where total taxable income is more than Rs. 1 crore. Education Cess: 3% of the total of Income Tax and Surcharge. IV. Co-operative Society Income Slabs Tax Rate i. Where the total income does not exceed Rs. 10,000/-. 10% of the income. ii. Where the total income exceeds Rs. 10,000/- but does not exceed Rs. 20,000/-. Rs. 1,000/- + 20% of income in excess of Rs. 10,000/-. iii. Where the total income exceeds Rs. 20,000/- Rs /- + 30% of the amount by which the total income exceeds Rs. 20,000/-. Surcharge: 10% of the Income Tax, where total taxable income is more than Rs. 1 crore. Education Cess: 3% of the total of Income Tax and Surcharge. SALARY INCOME INCLUDES :- PAY, DP, Band pay, Grade pay, DA, OTA, BONUS, CCA, Honorarium, Children Education Allowance Received, Pension, Subsistence Allowance, Government s Contribution in New Pension Scheme, Transport Allowance above Rs.800/- per month. House Rent Allowance to the extent not exempted under Section 10 (13A) of Income Tax Act. Agricultural Income. 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. Actual House Rent Allowance Received, or Rent paid in excess of 10% of Pay in Pay band and Grade Pay or 50% of Pay in Pay band and Grade Pay if the employee is in Chennai/Mumbai/Kolkatta/Delhi and 40% of Pay in Pay Band and Grade Pay for the employees is in other places. If the employees resides in his/her own house or in a house for which he/she does not pay any rent, no HRA exemption is available. Income or Loss on House Property: Interest paid on Loan obtained for constructing house property can not be deducted as such. It should be treated as loss on house property and income if any such as rent recived from the house property should be treated as an income from House property.

3 Deduction for life insurance premium Deduction in respect of premium paid on life insurance policy issued on or after 1 April 2012 is proposed to be allowed provided premium payable for any of the years does not exceed 10% (presently 20%) of actual capital sum assured (Section 80C). Corresponding amendment brought in Section 10D Deduction for preventive health check-up Under Section 80D, a deduction of Rs 5,000 is allowed for expenditure incurred during the year by a tax payer on account of preventive health check-up of self, spouse, dependent children or parents The above deduction to be within the overall limits of Rs 15,000 / Rs 20,000 prescribed under the said Section of the Act. Deduction for interest on savings account Deduction upto Rs 10,000 proposed to be allowed in respect of interest on deposits (not being time deposit) in a savings account with a banking company, co-operative society engaged in banking business and post office (Section 80TTA). Deductions under Chapter VIA in relation to donation payment Deduction in respect donation (Section 80G and 80GGA) in excess of Rs 10,000 is proposed to be allowed only if such sum is paid by any mode other than cash. Apart from the above, there are no much changes in the Tax exemptions / Deductions allowed under Chapter VI A compared to last year. Applicable deductions under Chapter VI A for year (A.Year ) A. Eligible deductions u/s 80C as per section 80C deduction eligible u/s 80C NATURE OF INVESTMENT Life Insurance Premium Sum paid under contract for deferred annuity. Contribution made under Employee s Provident Fund, a Recognized Provident Fund or a superannuation fund Contribution to PPF Sum deposited in 10 year/15year account of Post Office Saving Bank, NSS, Unit linked Savings Certificate of Post office, ULIP of LIC, UTI or other approved Insurance companies REMARKS For individual, policy must be in self or spouse s or any child s name. For HUF, it may be on life of any member of HUF For individual, on life of self, spouse or any child. For individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family Contribution to notified deposit scheme/pension fund set up by the National Housing Scheme Certain payment made by way of instalment or part payment of loan taken for purchase/ construction of residential house property. Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the

4 Financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year. Contribution to notified annuity Plan of LIC(e.g. Jeevan Dhara) or Units of UTI/notified Mutual Fund. Subscription to units of a Mutual Fund notified u/s 10(23D) Subscription to deposit scheme of a public sector, company engaged in providing housing finance Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public Financial institutions Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children Bank fixed deposits Payment made as five year time deposit in an account under the Post Office Contribution to notified annuity Plan of LIC(e.g. Jeevan Dhara) or Units of UTI/notified Mutual Fund. Available in respect of any two children. Any payment towards any development fees or donation or payment of similar nature will not be eligible. The term of the deposit should not be less than five years Other Deductions which are coming under Rs. 1 lakh limit as per Section 80 CCE: Section Nature of Deduction Remarks 80 CCC Payment of premia for annuity plan of LIC or any other insurer Deduction is available upto a maximum if Rs. 1,00,000/- The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund. 80 CCD Deposit made by an employee in the pension account of employee to the extent Further, in any year where any amount is received from the pension account such amount shall

5 of 10% of his salary (New Pension Scheme (NPS) will come under this category be charged to tax as income of that previous year. The aggregate amount of deduction under sections 80C, 80CCC and sub section (1) of Section 80CCD shall not exceed Rs.1,00,000/-, except (Section 80CCE). However, contribution made by the Central Government or any other employer to a pension scheme under section 80CCD(2) shall be excluded from the limit of one lakh rupees provided under section 80CCE. Deductions which are not coming under Rs. 1 lakh limit (Each deduction will have limit mentioned against each) Section Nature of Deduction Remarks 80 CCD(2) 80 D 80 DD Deposit made by an employer in the pension account of employee to the extent of 10% of his salary (NPS employer contribution) Payment of medical insurance premium. Deduction is available upto Rs. 15,000/- for self/family and also upto to Rs. 15,000/- for insurance in respect of parent/parents of the assessee. W.e.f (i.e. for A.Y & F.Y onwards). The aforesaid will also include contribution made to the Central Government Health Scheme(not exceeding Rs /-) Deduction of Rs. 50,000/- in respect of a) expenditure incurred on medical t r e a t m e n t, ( i n c l u d i n g nursing), training and rehabilitation of a handicapped dependant relative. Further, if the dependent is a person with severe disability a deduction of Rs.1,00,000/- shall Section 80 CCE provides for the contribution made by the Central Government or any other employer to a pension scheme under section 80CCD(2) shall be excluded from the limit of one lakh rupees The premium should be paid in respect of health insurance of the assessee, his/her family members or his/her parents The handicapped dependant should be a dependant relative suffering a permanent disability (including blindness)or mentally retarded, as certified by a specified physician or psychiatrist. Note: A person with severe disability means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the persons with disabilities (equal opportunities protection of rights and full participation ) Act.

6 80 DDB 80 E 80 G 80 GG be available under this section. b) Payment or deposit to specified scheme for maintenance of dependant handicapped relative. Deduction of Rs. 40,000/- in respect of medical expenditure actually paid. Further, where the expenditure is incurred in respect of assessee or dependent who is a senior citizen a deduction of Rs. 60,000/- or the amount actually paid which ever is less will be available. Deduction in respect of payment in the previous year of interest on loan taken from a Financial institution or approved charitable institution for higher education of self or higher education of a relative. Higher education means any course of study pursued after senior secondary examination or its equivalent Donations to certain funds, charitable institutions etc. Deduction available is the least of (i) Rent paid less 10% of total Expenditure must be actually incurred by resident assessee on himself or dependant relative for medical treatment of specified decease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor. This provision has been introduced to provide relief to students taking loans for higher studies. The payment of the interest thereon will be allowed as deduction over a period of upto 8 years. Further, by Finance Act, 2008 deduction under this section shall be available not only in respect of loan for pursuing higher education by self but also by spouse or children of the assessee or a child where assessee is a legal guardian The various donations specified in Sec.80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G (see para 6.4) 1) Assessee or his spouse or minor child should not own residential accommodation at the place of employment. 2) He should not be in receipt

7 80 GG income (ii) Rs.2000/- per month (iii) 25% of total income Deduction of Rs. 50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation. Further, in case of individuals with severe disability a deduction of Rs.75,000/- permissible. W.e.f the amount of Rs. 75,000/- shall be enhanced to Rs. 1,00,000/- of house rent allowance. 3) He should not have a selfoccupied residential premises in any other place. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D Deduction u/s 80 G : In respect of Section 80G, no deduction should be allowed by the employer/ddo, from the salary income in respect of any donations made for charitable purposes. The tax relief on such donations as admissible u/s 80G will have to be claimed by the taxpayer in the return of income. However, DDOs, on due verification, may allow donations to the following bodies to the extent of 50% of the contribution: a. The Jawaharlal Nehru Memorial Fund, b. The Prime Minister s Drought Relief Fund, c. The National Children s Fund, d. The Indira Gandhi Memorial Trust, e. The Rajiv Gandhi Foundation, and to the following bodies to the extent of 100% of the contribution: (1) The National Defence Fund or the Prime Minister s National Relief Fund, (2) The Prime Minister s Armenia Earthquake Relief Fund, (3) The Africa(Public Contribution-India) Fund, (4) The National Foundation for Communal Harmony, (5) The Chief Minister s Earthquake Relief Fund, Maharashtra, (6) The National Blood Transfusion Council, (7) The State Blood Transfusion Council, (8) The Army Central Welfare Fund, (9) The Indian Naval Benevolent Fund, (10) The Air Force Central Welfare Fund, (11) The Andhra Pradesh Chief Minister s Cyclone Relief Fund, 1996, (12) The National Illness Assistance Fund, (13) The Chief Minister s Relief Fund or Lieutenant Governor s Relief Fund, in respect of any State or Union Territory, as the case may be, subject to certain conditions, (14) The University or educational institution of national eminence approved by the prescribed authority, (15) The National Sports Fund to be set up by the Central Government, (16) The National Cultural Fund set up by the Central Government, (17) The Fund for Technology Development and Application set up by the Central Government (18) The national trust for welfare of persons with autism, cerebral palsy mental retardation and multiple disabilities. Subscription of long term infrastructure bonds. A new section 80 CCF has been introduced vide Finance Act, This

8 provides that for F.Y (A.Y ) and onwards a further deduction upto Rs. 20,000/- shall be available, for subscription to long term infrastructure bonds, notified by the Central Government. RELIEF UNDER SECTION 89(1) Relief u/s 89(1) is available to an employee when he receives salary in advance or in arrear or when in one financial year, he receives salary of more than 12 months, or receives profit in lieu of salary covered u/s 17(3). Relief u/s 89(1) is also admissible on family pension, as the same has been allowed by Finance Act, 2002 (with retrospective effect from 1/4/96).