Syllabus:

1
Syllabus

• Basic terms concepts
• How to calculate income tax liability for an
  individual?
• Income exempted from tax(Sec10)
• Income from salary Income from house property
  (Detail Discussion)
• Deductions from gross total income
• Assessment, Return, Advance Payment ,Tax deducted
  at source
• Introduction to new concepts in Income Tax like
• FBT,STT .

2
Basic concepts under income tax Act Sec2

• Previous Year The year in which income is earned
  is called as previous year.
• Assessment year the income of the previous year
  is charged in the next year called as assessment
  year.
• Example X joins an Indian company on January
  23,2007.Prior to January 23,2007,he is not in
  employment, What is the previous year for the
  assessment year 2007-08 2008-09?

3
Assessee

• Assessee means a person by whom any Tax or any
  other sum of money(i.e Penalty or interest) is
  payable under the actsec2(7)

4
Who is liable to pay Tax?

• A person is liable to pay Tax.
• Sec2(31) of the act defines the person.
• The person includes
• An Individual
• A Hindu undivided family
• A company
• A Firm
• An association of persons or body of individuals
  whether incorporated or not
• A local Authority
• Every artificial juridical person

5
Example

• Determine the status of the following
• Pune university
• DCM Ltd
• Mumbai municipal corporation
• Taxman publications Ltd
• Laxmi commercial bank
• XYCO.,Firm of XY
• Joint family of X,Mrs. X their sons A B

6
Heads of Income

• There are 5 heads of Income
• Income from Salary
• Income from house property
• Income from profits gains of business
• Income from other sources
• Capital gains short term long term capital
  gain.

7
What constitutes salary

• There are 3 groups that constitute your salary
• Group 1 Basic salary, advance salary, arrears of
  salary, all types of bonus, service award
  ,pension
• Group 2Allowances group It includes dearness
  allowance, conveyance allowance, children
  education allowance, overtime allowance, leave
  travel allowance, city compensatory allowance
• Group 3 Perquisites It means facilities given
  by Employer to Employee Rent free
  accomodation,domestic servant facility,
  reimbursement of medical facility,Motar car
  facility, benefits derived by stock option scheme.

8
Exemption limit for certain items of salary
allowances

• Leave salary or Leave encashment(sec10(10AA)
• Leave salary is the salary i.e received at the
  time of retirement or termination of service is
  exempt to the extent of following For central or
  state government employees the entire amount is
  tax free, for other employees the least of
  following is exempted from tax
• Leave salary actually received
• Ten months average salary
• Amount specified by government i.e Rs.3,00,000
• Cash equivalent to earned leave not exceeding 30
  days for each year of completed service. In all
  cases salary means salary dearness allowance

9
Example of leave encashment

• Mr.X is an employee of Y ltd.receives 80,000 as
  leave salary at the time of his retirement on
  Feb,2006. average salary drawn during last 10
  months Rs.3,000. Duration of service is 24 years,
  leave taken in service is 9 months. Leave
  entitlement as per employers rule is one month
  for each completed year of service.
• Calculate Taxable leave salary for Mr.X?

10
Calculation for leave salary

• Cash equivalent of leave at the time of
  retirement300015 months(24-9)45,000
• 10 months average salary10300030000
• Amount notified by government3,00,000
• The least of above 3 i.e. Rs.30,000 will be
  deducted from actual leave salary received. It
  means taxable salary would be Rs.50,000(80,000-30,
  000)

11
Gratuity

• Gratuity received by the employee of central or
  state government local authority is exempt
  without any limit.
• Gratuity received under payment of gratuity act
  is exempt to the extent it does not exceed 15
  days wages for every year of completed service to
  a maximum of Rs.3,50,000
• When the employee is not covered by payment of
  gratuity act, It is average salary for each year
  of completed service subject to a maximum of
  Rs.3,50,000

12
Employee covered by payment of gratuity act

• Example An employee receives gratuity
  Rs.1,80,000 as gratuity on his retirement. Period
  of service is 36 years 4 months. The last drawn
  salary were Rs.7,800.The amount of gratuity
  exempt shall be minimum of (a), (b) (c)
• Gratuity actually received Rs.1,80,000
• Amount calculated on the basis of 15 days salary
  for completed year of service(780015/2636)1,62
  ,000
• Maximum amount of gratuity Rs.3,50,000
• Thus, Rs.1,62,000 shall be exempt Rs.18,000
  will be taxable.

13
Employee not covered under payment of gratuity
act

• An employee receives Rs.3,20,000 as gratuity on
  his retirement Period of salary is 40 years.
  Average salary in the immediately preceding 10
  months is Rs.12,600 per month. The amount of
  gratuity exempt will be as follows
• Actual amount received Rs.320,000
• ½ month average salary for 40 completed
  years(12,600/240)Rs.2,52,000
• Maximum monetary limit Rs.3,50,000
• Thus Rs.
• 2,52,000 is exempt Rs.68,000 is taxable.

14
Compensation received under VRS

• Under the approved VRS, the maximum exemption is
  Rs.5,00,000.

15
Deduction from salary

• Conveyance allowance is Rs.800 per month is
  exempted from tax.
• Pension can be commuted pension or it can be
  un-commuted pension. Un-commuted pension refers
  to pension received periodically to the employee.
  Commuted pension means lump sum amount received,
  it is tax free for government employees, for non
  government employees 1/3rd amount is tax free if
  the employee is in receipt of gratuity otherwise
  ½ of the amount is exempted from tax.

16
Allowances

• Allowances referred to the fixed quantity of
  money given regularly in addition to salary for
  meeting a particular requirement connected to
  services rendered by the employee. It is fixed,
  predetermined given irrespective of actual
  expenditure. It is based on due or receipt basis
  whichever is earlier.

17
Allowances which are fully taxable

• Dearness allowance
• City compensatory allowance
• Medical allowance
• Lunch/Tiffin allowance
• Overtime allowance
• Servant allowance
• Warden allowance
• Family allowance

18
Allowances exempted in case of certain persons

• Allowances to a citizen of India who is
  government employee rendering services outside
  India
• Allowances to HC SC judges
• Allowances received by employee of UNO from his
  employer

19
House Rent Allowance
House is in (D,K,M,C) House is any other city
Allowance actually got Allowance actually got
Rent pd in excess of 10 of salary Rent pd in excess of 10 of salary
50 of salary 40 of salary

• House Rent allowance This allowance is taxable
  if an Assessee lives in his house or in the house
  for which he does not pay any rent otherwise the
  exemption limits are as follows Least of 3 is
  exempted from Tax.

20
Example for calculating HRA

• Mr. Z staying in Chennai receives Rs.12500 as
  basic salary, Rs.1,500 as D.A. commission
  Rs.60,000 P.A.Total salary Rs.2,28,000. House
  rent paid by him Rs.2,500 p.m. H.R.A. per month
  is Rs.1800 per month. Calculate taxable H.R.A.
  Excess of rent paid over 10 of
  salary7200(30000-22800)
• 50 of salary i.e Rs.1,14,000,Actual HRA recd.
  Rs.21,600. Therefore exempted HRA will be least
  of 3 i.e Rs.7200 .

21
Perquisites which are taxable in the hands of all
employees

• Rent free accommodation at concessional rate
• If the accommodation is provided by the employer
  which is owned by the Employer,20of salary
  during which accommodation was occupied by the
  employee is the value of taxable perquisite
• If accommodation is taken on lease or rental the
  actual amount of rent paid by the employer or 20
  of salary whichever is less is the value of
  perquisite.
• For exampleMr. X is a regular employee in A ltd.
  With effect from December 1 ,2006 ,Mr. X provided
  unfurnished flat for which Employer is paying
  rent of Rs.7500 per month. Salary earned during
  this period by Mr. is Rs.55,520. Calculate
  taxable value of this perquisite? (Ans11,104)

22
Valuation for furnished accommodation

• If the accommodation is furnished perquisite
  value of such accommodation is to be increased by
  the value which is equal to 10per annum of the
  cost of furniture.
• Example In the same example if the furniture is
  also provided by the employer the cost of which
  is equal to Rs.36000. calculate the value of
  furnished accommodation.(ans12,304)

23
Perquisites

• If accommodation is provided in a Hotel, it is
  24 of salary or actual hotel charges whichever
  is less.
• For example Mr. X is a managing director of
  ABC(P) Ltd. Salary for the purpose of calculating
  taxable perquisite Rs.1,79,000. Rent paid for
  hotel accommodation is Rs.1,20,000. Calculate
  Taxable value of this perquisite
• The value is nil if the accommodation is provided
  only for 15 days on transfer of employees from
  one place to another.
• Accommodation provided at specified remote area
  or mining site or oil exploration, project
  execution site, dam site ,power generation site.

24
Perquisites

• Monetary obligation of employee discharged by the
  employer is taxable to the extent of actual
  amount spent by the employer.
• e.g. Gas, Electricity bill, children education
  exp.
• Life insurance paid by the Employer is Taxable to
  the extent of actual amount spent by the Employer.

25
Perquisites

• Interest free or concessional loans
• If the loan is given to the Employee only to the
  extent of rs.20,000 there is no tax liability.
• If loan is applied to specified diseases, the
  perquisite value is nil.
• In any other case for valuation purpose, interest
  rate applicable by SBI for that previous year on
  the maximum outstanding monthly balance
  interest recovered from customers.

26
Perquisites (illustrations)

• Determine the taxable value of perquisites in the
  following cases
• X is employed by A ltd. On June06,the company
  gives an interest free loan of Rs.14,00,000
  repayable in 5 yrs. The lending rate of SBI for
  similar loans8.5 per annum(ans99167)
• C ltd. gives the following interest free loans to
  Z an employee of the company-Rs.15,000 for a
  child's education Rs.5,000 for the purchase of
  refrigerator. No other loan is given to C ltd.
• Y is employed by B Ltd. On April 1,2006,he takes
  a personal loan of Rs.25,000 from B Ltd. B Ltd.
  recovers interest _at_ 7p.a. Lending rate of SBI
  for similar loans is 12.5.(ansRs.1438)

27
Perquisites

• Use of movable Assets
• Use of Laptop computer value is Nil
• In case of any other Asset 10per annum of the
  value or the actual rent paid by the Employer.

28
Taxable Perquisites for movable Property

• Calculate the value of taxable perquisites in the
  following cases
• Mr. X is given laptop by the employer company for
  office private purpose. cost of the laptop to
  the Employer is Rs.96,000.
• On Oct 15,2006 the company give its Music System
  to Y for domestic use. (Ownership is not
  transferred) Cost of the music system to the
  Employer is Rs.15,000.

29
Transfer of movable assets

• Movable assets belonging to Employer transferred
  to Employee valuation is as under
• Computer Electronic items Actual cost to the
  Employer-50 cost for each year of completed
  service on W.D.V. basis less any amount
  recovered from employee.
• Motor car Actual cost to the Employer-20 for
  each year of completed service on W.D.V basis
  less any amount recovered from employee.
• Any other Asset Actual cost to the
  Employer-10of cost for each year of completed
  service based on SLM less any amount recovered
  from Employer.

30
Perquisites which are Taxable in the hands of
specified Employees

• Who is specified Employee?
• Employee comes under the following category
• He is Director of the company
• He is having substantial interest in the working
  of the company. i.e 20 or more voting power
• His income from Salary from one or more Employer
  excluding all the benefits provided by way of
  monetary payment exceeds Rs.50,000

31
Taxable Perquisites Specified Employees

• Provisions by Employer of services of a
  sweeper,gardner,watchman or personal attendant.
  Value Actual cost to employer
• Supply of gas, electricity or water for household
  consumption Value is equal to
• (a) From own source valueMfg.cost per unit
• (b) In any other case value paid by employer

32
Taxable Perquisites

• Free or concessional education facility to any
  member of Employee
• Educational Institute owned maintained by
  Employer
• ValueCost of education in similar institute in
  nearby locality
• Value Nil up to 1000 p.m. per child of employee
  (not others)

33
Tax Free Perquisites( For all employees)

• Medical treatment to employee or his family
  member in a hospital maintained by the Employer.
• Reimbursement of Medical treatment of Employee or
  his family members up to Rs.15,000
• Health Insurance paid by employee under a scheme
  approved by GIC
• Any Food or beverages provided by Employer in
  office or factory or through paid vouchers which
  are not transferable.

34
Tax free perquisites for all employees

• Perquisites which are payable by govt to its
  employees for rendering services outside India.
• Rent free house /conveyance facility to H.C.
  S.C.Judges.
• Residence provided to officer of parliament,
  union Minister or Leader of opposition in
  Parliament
• Employers contribution to Pension policy,
  deferred annuity, staff group insurance plan
• Accident insurance policy premium paid by the
  Employer
• Recreation facility to all Employees.

35
Following perquisites are tax free but subject to
FBT

• Conference cost includes tour travel hotel exp.
  Relating to conference(30 0f 20 0f the value)
• Use of Health/sports club provided by
  Employer(30 0f 50 0f the value)
• Expenses on Telephones (incl. mobiles) by
  Employer(30 of 20 of the value)

36

• ANY OTHER INDIVIDUAL BELOW 65 YEARS AGE
• RATES OF INCOME-TAX
• A. Normal Rates of tax
• Where the total income does not exceed
  Rs.1,00,000/-.
• Nil
• 2. Where the total income exceeds Rs.1,00,000 but
  does not exceed Rs.1,50,000/-.
• 10 per cent, of the amount by which the total
  income exceeds is.1,00,000/-
• 3. Where the total income exceeds Rs.1,50,000/-
  but does not exceed Rs.2,50,000/-.
• Rs.5,000/- plus 20 per cent of the amount by
  which the total income exceeds Rs.1,50,000/-.
• 4. Where the total income exceeds Rs.2,50,000/-.
• Rs.25,000/- plus 30 per cent of the amount by
  which the total income exceeds Rs.2,50,000/-.

37
Resident Women below 65 years age

• B. Rates of tax for a woman, resident in India
  and below sixty-five years of age
• 1. Where the total income does not exceed
  Rs.1,35,000/-.
• Nil
• 2. Where the total income exceeds Rs.1,35,000 but
  does not exceed total income exceeds
  Rs.1,50,000/-.
• 10 per cent, of the amount by which the
  Rs.1,35,000/-
• 3. Where the total income exceeds Rs.1,50,000/-
  but does not exceed Rs.2,50,000/-.
• Rs.1,500/- plus 20 per cent of the amount by
  which the total income exceeds Rs.1,50,000/-.
• 4. Where the total income exceeds Rs.2,50,000/-.
• Rs.21,500/- plus 30 per cent of the amount by
  which the total income exceeds Rs.2,50,000/-.

38

• C. Rates of tax for an individual, resident in
  India and of the age of sixty-five years or more
  at any time (Senior citizen)
• during the financial year
• Where the total income does not exceed
  Rs.1,85,000/-.
• Nil
• 2. Where the total income exceeds Rs.1,85,000 but
  does not exceed Rs.2,50,000/-.
• 20 per cent, of the amount by which the total
  income exceeds Rs.1,85,000/-
• 3. Where the total income exceeds Rs.2,50,000/-.
• Rs.13,000/- plus 30 per cent of the amount by
  which the total income exceeds Rs.2,50,000/-.
• Surcharge on income tax
• The amount of income-tax computed in accordance
  with the preceding provisions of this paragraph
  shall be increased
• by a surcharge at the rate of ten percent of such
  income tax where the total income exceeds ten
  lakh rupees.
• additional surcharge ( Education Cess on Income
  Tax) at the rate of two percent of the income-tax
  and surcharge.

39
Deduction under CH.VI-A

• Deduction under CH.VI-A are not allowed for the
  following incomes
• Long Term Capital Gain
• Short term capital gain on securities for which
  STT is paid
• Winning from Lotteries
• Deduction is not allowed if GTI is nil.

40
Deduction under Sec80C

• Allowed to Individuals HUF
• Maximum deduction allowed is rs.1,00,000
• Tuition fees paid for children
• Subscription to any units of Mutual fund
  mentioned u/s10(23D)
• Repayment of housing loan (principal Amount)
• Subscription to Equity Debentures for
  infrastructure company.
• Notified deposit scheme of public sector company
  providing long term finance for housing
• Contribution to NSC,NSS,PPF

41
Deduction under Sec80C

• Payment to notified annuity plan of any insurance
  company
• Term deposit equal to 5 years or more in
  accordance with a scheme framed by the
  Government.
• Life insurance premium maximum 20 of policy
  which is for self /spouse/any child.
• For participation in unit linked insurance plan
• Employees contribution to statutory fund

42
Example

• X (age 42 years ) is a salaried employee (salary
  being Rs 40,000 per Month) during the previous
  year 2006-07, he makes the following investment
  deposits or payments
• Life insurance premium on life of his married
  daughter Rs 6,000 Sum assured Rs 20,000)
• Life insurance premium on his own life Rs 2,700
  (sum assured 60,000)
• Life insurance premium on the life of his
  dependent sister Rs 10,000
• Contribution towards recognized PF Rs 9,000
• Contribution towards PPF Rs 30,000
• Repayment of lone taken from LIC for purchase of
  residential house property Rs 30,000
• Contribution towards notified equity Linked
  saving scheme of UTI (i.e. MEP 2007 - Rs 14,000
• Find out the tax liability of X for the
  assessment year 2007-08 assuming that income from
  house property is 18,000/-

43
Find out the Tax Liability in the cases given
below for assessment year 2007-08
  X Y Z A
Age 42 31 25 55
Gross Total Income 260000 196000 310000 426000
Investment Contribution for deduction under 80C        
Public Provident Fund - 70000 50000 40000
Recognized Provident Fund - 40000 16000 6000
Notified Equity Linked Saving scheme MEP 07 - - 15000 15000
Notified bonds of Infrastructure company 100000 - 26000 2000
44
Sec80CCC Sec80CCD

• Sec80CCC 80 CCD are meant for pension policy.
• Section 80CCC for the contribution towards
  pension fund set up by the private organization.
• Section 80CCD is pension scheme to new Entrants
  to Government Service. As per the scheme it is
  mandatory for every person entering the service
  of Central Government on or after Jan.1,2004 to
  contribute 10 of salary every month towards
  their pension account
• The aggregate amount of deduction under section
  80C,80CCC80CCD cannot exceed Rs.1,00,000.

45
Sec 80D Medical Insurance in

• Insurance premium paid by the Taxpayer in
  accordance with the scheme framed in this behalf
  by central government. The scheme is known by the
  name of Mediclaim insurance policy. Amount
  deposited under a similar scheme of any other
  insurer who is approved by IRDA shall be eligible
  for deduction.
• This premium is paid by cheque.
• If all the conditions are satisfied ,deduction is
  equal to insurance premium actually paid or
  Rs.10,000 whichever is less.

46
Deduction under Sec80DD

• Deduction is available for the amount incurred or
  amount deposited under any scheme framed by LIC
  or any other insurer for the purpose of medical
  treatment of dependent.
• If it is minor disability deduction is available
  for the fixed amount which is equal to Rs.50,000
  for the severe disability the deduction
  available is equal to Rs.75,000.
• Sec80DDB is for medical treatment of specified
  disease maximum to the extent of rs.40,000.

47
Deduction under sec80E

• Deduction is available for an individual who has
  taken loan for the purpose of higher education
  for any full time graduation or post graduation
  course.
• Deduction is available for the interest amount
  paid on Loan.

48
Illustration for deduction under Sec80E
Particulars Loan 1 Loan 2 Loan 3
For whom education loan is taken X X Daug of X
Purpose of Loan
Amount of Loan 6L 3L 5L
Annual repayment of Loan during the period 1L 0.5L 1L
Annual payment of interest during the previous year 0.6 0.3 0.55
Find out the amount of deduction under sec80E for assessment year 2007-08 Find out the amount of deduction under sec80E for assessment year 2007-08

49
Donations U/S 80G

• It is for different types of Donation. This
  deduction is available when proof of Donation is
  attached with the return.
• The amount of donation should not exceed 10 of
  adjusted total income of the business except the
  donation which is eligible for 100 donation
  under this section.
• Adjusted income is after considering the
  deductions u/s 80C to 80U

50
Deduction under Sec80GG

• The tax payer is an individual not getting any
  HRA from the company or he is a self employed
  person.
• The deduction will be least of the following
• Rs.2,000 per month
• 25 of total income
• The excess of 10 of total income.

51
Deduction U/S 80U

• Person with physical disability
• For severe disability deduction is available for
  a fixed amount of Rs.75,000 or Rs.50,000.
• The assessee has to give a certificate by the
  Medical authority.
• If assessee is claiming deduction u/s 80U , the
  person on whom he is dependant should not claim
  any deduction under sec80DD

52
Income from House Property

• If the property is self occupied annual value of
  this property is NIL.
• If the property is purchases after 1.4.99, if
  the loan is taken for the purchase construction
  of house property , deduction is available for
  the interest amount to the extent of Rs.150,000 .
  For the principal amount individual will get
  deduction u/s80C
• In case of repairs of self occupied property
  deduction is available to the extent of Rs.30,000

53
If the house property is let out..

• Gross annual value of the property is the actual
  amount of rent received or the standard rent
  given under rent control act or fair rent
  whichever is high.
• From this gross value municipal taxes paid are
  deducted.
• From net annual value Repairs deduction is equal
  to the 30 of the value Interest on borrowed
  capital is allowed maximum to the extent of
  Rs.30,000 for let out property.

54
Short term Long term capital gain

• Short term capital gain on transfer of equity
  shares or units of an equity oriented mutual fund
  on or after 1.10.2004 i.e., the date on which
  security transaction tax has come into force
  shall be subject to a flat rate of 10 u/s 111A.
• Long term capital gain on transfer of equity
  shares of a company or units of equity oriented
  fund arising on or after 1.10.2004 subject to
  security transaction tax is fully exempted u/s
  10(38)

55
Example

• Mr. X is Assistant Manager in a leasing co. at
  Delhi has the following incomes, expenses
  investments during 2006-07. Calculate his taxable
  income tax payable
• (a) Gross Salary Rs.2,30,000 (b) Rent for
  commercial house property Rs.51,000,house tax
  paid during the period is Rs.4,000 (c) The
  assessee has self occupied property, Interest on
  this loan is Rs.31,000 availed in March,98.

56
Example.

• (e) Sale consideration for shares sold during the
  period is Rs.2,00,000(cost of acquisition in June
  2003Rs.84,740)(f) short term capital gain Rs.5000
  on which security transaction tax paid is
  0.125(g) Interest on debenturesRs.3,000
• (h) Bank Interest/post office monthly income
  Rs.12,000(i)Dividends from UTIRs.4,000(j)int on
  relief bond tax free)Rs.5,400(k)dividend on
  shares in companies rs.5,000 (l) Premium on life
  insurance policy, contribution to PF, Repayment
  of housing loan total Rs.1,00,000.

57
Compulsory filing of return under one by six
scheme

• Person residing in a specified area fulfilling
  one of the following six criteria's shall liable
  to pay income tax return
• Occupying an immovable property exceeding
  specified floor area.
• Owner or Lessee of a 4 wheeler motor vehicle
• Subscriber to a cellular phone
• Incurred expenditure for foreign tour for himself
  or any other person.
• Holding a credit card
• Holding membership of a club for membership fee
  is Rs.25,000
• Incurred expenditure Rs.50,000 or more towards
  electricity.

58
Time for filing of return(due dates)
1 Companies 31st October
2 Assessee other than company whose
accounts are required to be audited uner i
income tax act or any other law 31st October
3 A working partner of a firm whose accounts
are required to be audited 31st October
4 Assessee other than company covered under Assessee other than company covered under
one by six scheme 31st October
5 all other assessee 31 st July
59
Annual Information Return form 65
Sr no Nature value of transactions Persons responsible for furnishing A.I.R.
1 Cash Deposit of Rs.10,00,000 or more in a year in a saving account Bank
2 Payment of credit card holder of Rs.2,00,000 or more during in a year Bank, company, institution issuing such credit card
3 Receipt from any person of Rs.2,00,000 for acquiring units of a mutual fund Trustee, authorised person of mutual fund
60
Annual Information Return.
Receipt from any person Rs.5,00,000 for or more for acquiring shares Company, Institution issuing bonds acquiring bonds or debentures
Receipt from any person of 100000 or more for acquiring shares Company issuing shares through Public/ right issue
Purchase or sale of immovable property of Rs.30,00,000 or more Registrar / Sub Registrar
Receipts from any person of Rs 500000 or more in a year for acquiring RBI Bonds Authorized Person of RBI bonds
61
Advance Tax

• All assessee including salaried Employees if tax
  payable by the person (after deducting
  rebates,TDS,Deduction) exceeds Rs.5,000.

62
Advance Tax Installments due dates
Due date for payment of Advance Tax For non company For company assessee
By 15 th June Nil 15 of advance tax
By 15 th Sept 30 of advance tax 30 of advance tax
By 15th December 30 of advance tax 30 of advance tax
By 15 th March 40 of advance tax 25 of advance tax
63
Tax Deducted at Source

• Tax deducted at source means before getting any
  source of income tax is deducted on such
  payments.
• Following persons are liable to deduct tax at
  source
• Individuals (incl.sole proprietary concern) HUF
  carrying the business or profession whose
  turnover exceeds Rs.40 lacs or 10 lacs if it is
  income from Profession.

64
Payment on which tax is to be deducted at Source
Name of the payment How tax is deducted at source
Salary Sec192
Interest on securities If it exceeds Rs.2,500 TDS is 10.2
Interest on time deposits If it exceeds Rs.5,000 TDS is 10.2
Winning from lotteries 30.6 if it exceeds Rs.5000
Insurance Commi. 10.2
65
Tax deducted at source
Payment to advertising ag. 1.02
Payment to Contractor 2.04
Payment to sub contractor 1.02
Payment of repurchase of units under ELSS 20..4
Payment on withdrawal from NSS 20..4
Payment of rent to any person other than ind,huf 20..4