Income Tax guidelines–Financial Year 2014 - 15

Assessment Year 2015 - 16

Rates of Income-tax

Tax computation is done on the Income accrued in the financial year (April to March). Tax rates are subject to revision in the Annual Union Budget.

For any resident (who is below 60 years on the last day of the previous year, i.e., born on or before April 1,1954) Income Tax Slab (in Rs.) Tax Rate 0 to 2,50,000 No Tax 2,50,001 to 5,00,000 10% 5,00,001 to 10,00,000 20% Above 10,00,000 30% and For a resident Senior Citizen (who is 60 years or more at any time during the previous year but not more than 80 years on the last day of the previous year, i.e., born during 1 April, 1934 and 31 March, 1953)
Income Tax Slab (in Rs.)	Tax Rate
0 to 3,00,000	No Tax
3,00,001 to 5,00,000	10%
5,00,001 to 10,00,000	20%
Above 10,00,000	30%
For a resident Super Senior Citizen (who is 80 years or more at any time during the previous year i.e., born before 1 April, 1934)
0 to 5,00,000	No Tax
5,00,001 to 10,00,000	20%
Above 10,00,000	30%

 Education cess of 2% & 1% Higher Education Cess is levied on tax.

1)    Tax credit of Rs 2,000 for persons with Taxable income in the first Bracket of 10 % between Rs 2- 5 lac

2)    Surcharge of 10% if the taxable income is 1 crore or more. For example, if the tax on an income of Rs 1 crore is Rs 3125000 and a surcharge of 10 per cent is levied, the total tax liability on the taxpayer would be Rs 3437500 + Ecess of 3%.

Permanent Account Number (PAN)

PAN is mandatory for all persons who fall under tax bracket and filing IT return. In case PAN is not produced the tax will be deducted at the maximum rate of 30% on the salary plus applicable cess on the Tax.

Tax on Allowances

House Rent Allowance

Taxability: Subject to submission of Rental Agreement, Monthly Rent Receipts and PAN of the landlord in case the rent paid is more than Rs. 8,333 per month or Rs. 100,000 per year.

For Tax Calculation, least of the following is tax exempt

- Actual HRA Received

- Actual Rent paid over 10% of Basic salary

- 50% or  40% of Basic salary based on city of residence (Metro/Non Metro)

For claiming benefit under HRA, employee needs to submit original Rent Receipt of every quarter.

Please fill complete details on the rent receipts attached.

Photocopy of Rent receipts are not allowed.

Also please note rent agreement alone does not constitute proof of payment of rent.

Company Leased Accommodation

Taxability: 15% of taxable salary or actual rent of the house, whichever is less.

Medical (Domiciliary)

Reimbursement on actual medical expenses by the employer towards the amount spent by the employee in obtaining medical treatment for himself or any member of his family, not exceeding in the aggregate to Rs. 15000 in a year, is exempted from tax. 

Leave Travel Allowance (LTA)-Domestic

Amount Exempted

Journey performed by Air - Economy Air fare of National carrier by the shortest route or the amount spent whichever is less will be exempt

Journey performed by Rail – A.C. first class rail fare by shortest route or amount spent whichever is less will be exempt.

Place of origin and destination place of journey connected by rail but journey performed by other mode of transport - A.C. first class rail fare by shortest route or amount spent whichever is less.

Place of origin& destination not connected by rail (partly/fully) but connected by other recognised Public transport system - First class or deluxe class fare by shortest route or amount spent whichever is less.

Place of origin& destination not connected by rail (partly/fully) and not connected by other recognised Public transport system also – AC first class rail fare by shortest route (as the journey had been performed by rail) or the amount actually spent, whichever is less.

Other Points to be noted:

1.    LTA is exempted only if you have applied for leave from your company and have actually travelled. However, international travel is not valid. You must have travelled within the country.

2.    LTA covers travel for yourself and your family. Family, in this case, includes yourself, parents, siblings dependent on you, spouse (even if your spouse is working) and children.

3.    For children born after October 1, 1998, the exemption is restricted to only two surviving children (unless, of course, one birth has resulted in multiple children like twins and triplets).

4.    If your family travels without you, no LTA can be claimed. You have to make the trip, either by yourself or, if claiming for your family, you should travel with them.

5.    LTA is not related to when you started your employment. The government fixes blocks of years. These blocks are not financial years (April 1 to March 31); they are calendar years (January 1 to December 31).

6.    LTA is exempted for two claims in a block of four calendar years commencing from 1986. The current block is January 2010 to December 2013.

7.    Though you can claim two journeys in a block of four years, you can claim the LTA benefit just once in a year. You cannot claim both the journeys in one year. So, while a person can get an income tax exemption for two journeys in a block of four calendar years, he can make a trip only once a year. If you make two trips in a year, you lose one.

Carry-Over” concession- if an assessee has not availed travel concession or assistance during any of specified four year block periods on one of the two permitted occasions (or on both occasion), exemption can be claimed in the first year of the next block (but in respect of only one journey). This is know carry over concession”. In such case, the exemption so availed will not be counted for the purpose of claiming the future exemptions allowable in respect of 2 journeys in the subsequent block.

8.    You must take the shortest route to your destination to be eligible for LTA.

Let's say you are going from Delhi to Mumbai on a holiday. So the cost of your travel from Delhi to Mumbai and Mumbai to Delhi will be eligible for LTA.

If you decide to go to Mumbai via Agra, Jhansi and Itarsi, your LTA from Delhi to Agra will be covered. But Agra to Mumbai will not be covered.

Let's take another scenario. You traveled from Mumbai -- Kerala -- Delhi -- Mumbai.

If you take a direct connection, you will be eligible for LTA. Mumbai -- Kerala -- Delhi -- Mumbai: LTA covered

But if you throw in Hyderabad, then it goes out of gear.

Mumbai – Thiruvananthapuram : LTA covered

Thiruvananthapuram -  Hyderabad -  Delhi : LTA not covered

Delhi – Mumbai : LTA covered

9.    If your LTA is not utilised, it gets added to your salary and you will be taxed on it.

Conveyance Allowance

Non-taxable up to a maximum of Rs. 800 per month.

Retrials

Provident Fund

Employer’s contribution is exempt from tax up to 12 %. & Employees contribution 12% rebate can be availed under Sec 80C (Inclusive of Rs.1,50,000 Limit)

Investment / Items eligible for Deductions under 80 C 

(Maximum eligible amount is Rs. 1,50,000)

1. Reduction in limit of Life Insurance Premium – Sections 10(10D) and 80C. Presently, any sum received under a life insurance policy, including bonus, but excluding amount received underKeyman insurance policy, is exempt, provided the premium amount does not exceed 20 per cent of the actual capital sum assured in any year during the policy period. Now, this limit is reduced to 10 per cent in case of an insurance policy issued on or after 1st April, 2014. Similar amendment has been made under section 80C, whereby it is provided that deduction in respect of life insurance premium, etc. in case of insurance policies issued on or after 1st April, 2014 shall be available only to the extent of 10 per cent of the actual capital sum assured. ‘Actual capital sum assured’ is also defined to mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, and excluding the value of any premiums agreed to be returned and benefit of bonus or otherwise over and above the sum actually assured. This is done to ensure that life insurance products are not designed to circumvent the prescribed limit by varying the capital sum assured from year to year.

2. Deferred annuity contract payments of self, spouse and children. Receipt issued by the insurance company is required for giving the benefit. In case if the premium will be due in the month of Feb 2014 & Mar 2014, please submit the last year receipts with the declaration.

3. Contribution made by employees towards recognised PF + VPF. No. proof required for the same. This will be taken from the salary details.

4. Contribution made towards the Public Provident Fund. Photocopy of Stamped challan or PPF passbook is required to give the benefit of the same.

5. Subscription of any security specified by the Government. Photocopy of the same has been required. Receipts/Statement is required for giving the benefit of the same.

6. Sum paid as subscription to NSC VI and VII issues. Photocopies of the NSC are required for the same.

7. Interest accrued is treated as amount reinvested. However, the Interest income on NSC is taxable. Photocopy of all the certificates for which interest is being claimed required to be submitted.

8. Contribution towards Unit Linked Insurance Plan of UTI of self, spouse and children. Receipts/Statement is required for giving the benefit of the same.

9. Contribution to notified Equity Linked Saving Schemes of a Mutual Fund/ UTI (Lock in period is 3 years). Receipts/Statement is required for giving the benefit of the same.

10. Sum deposited in a 10-year/ 15-year account under the Post Office Savings Bank (CTD) Rules, 1959. Receipts/Statement is required for giving the benefit of the same.

11. Housing Principal, registration/Stamp duty .Provisional certificate from the financial Institution/Bank required. For stamp duty & Registration, Photocopy of sale deed and Stamp Duty paid receipt is required for the same.

12. Subscription of deposit scheme of National Housing Bank

13. Subscription of any deposit scheme of Public Sector Company engaged in providing housing finance for construction or purchase of houses.

14. Tuition fees for full time education of dependent children (Maximum 2 child) of the assessee (Any Recognised Institute)

15. Fixed Deposit: The Fixed Deposit made for 5 or more years are eligible for deduction under 80C. The copy of the Fixed Deposit Receipts with remarks stating “Rebate u/s 80C” need to be submitted.

16. Contribution to a Pension Fund. Receipts/Statement is required for giving the benefit of the same.

17. 5 years Term deposit with a scheduled bank. Photocopy of the receipt/certificate issued by the scheduled bank.

18. Post Office Time Deposit Account

19. Principle repayment of Housing Loan – Copy of the annual certificate from the bank needs to be submitted.

Medical Insurance u/s 80D

Premium Paid on Medical policy of self, spouse, children is exempt up to Rs.15,000 and an additional benefit of Rs.15,000 in case of dependent parents below 65 years and Rs 20,000 in case of dependent parents above 65 years (Senior Citizen).

Expenses incurred on Health check up for self, spouse, dependent children / parents are exempted with in the overall limit, not exceeding the aggregate limit of Rs. 5000

In case if the premium will be due in the month of Feb 2015 & March 2015, you need to submit the last year receipts with the declaration. Late payment Charges and service tax will not qualify for the benefit.

Deduction in age limit of Senior Citizen –Sections 80D and 80DDB With effect from A.Y. 2013-14, the qualifying age of senior citizen, being a resident individual, was reduced from 65 years to 60 years, only for the purposes of threshold exemption. Now, a similar amendment has been made under section 80D in respect of higher deduction of mediclaim of 20,000 where the premium is paid on health of senior citizen, and in section 80DDB in respect of higher deduction of ` 60,000 on amount spent on medical treatment of a 8 specified disease, etc. of a senior citizen, making the effective age of senior citizen uniform across all the provisions of the Income-tax Act, w.e.f. A.Y. 2014-15.

Medical treatment of handicapped dependent with disability u/s 80DD

Expenditure incurred on medical treatment and maintenance of spouse, children, parents, brothers and sisters of the individual is deductible up to a fixed amount of Rs. 50,000. For person with severe disability over specified 80 % the limit is Rs. 100,000.Please submit the photocopy of certificate issued by the competent medical authority in a Government Hospital with the form 10i and detail of amount spent on treatment or training.

Medical treatment of dependent u/s 80DDB 

Expenditure incurred on medical treatment (specified disease or ailment as prescribed by the board) of self, spouse, children, parents, brothers and sisters is deductible up to Rs. 40,000 and for senior citizen the limit is Rs. 60,000. Please submit the photocopy of certificate issued by the competent medical authority with form 10i

Person with Disability u/s 80U

An individual suffering from not less than 40% of disability can claim fixed deduction of Rs. 50,000 - Rs. 100,000 for persons with severe disability of over 80%. A certificate from specified medical authority has to be given to claim the benefit with form 10i

Interest on Education Loan u/s 80E

Interest on a loan taken by the assessee for self, spouse or children’s full time Graduate/ Post Graduate education is exempted. Benefit is available for a period of seven years after the first year of payment of Interest. Loan should be taken from any financial institution / approved charitable institutions. To claim the deduction u/s 80E, employee will be required to provide a certificate from the lender for payment of interest paid by him and a copy of course being pursued / completed.  From F.Y. 2005-06 only interest part will be eligible for deduction and no deduction is available for principal repayment.

Interest on Savings Account (Newly Introduced) - 80TTA

Section 80TTA is proposed to be introduced to provide deduction to an individual or a Hindu undivided family in respect of interest received on deposits (not being time deposits) in a savings account held with banks, cooperative banks and post office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower.

It is also proposed to provide that where the income referred to in this section is derived from any deposit in a savings account held by, or on behalf of, a firm, an association of persons or a body of individuals, no deduction shall be allowed under this section in respect of such income in computing the total income of any partner of the firm or any member of the association or any individual of the body.

E.g. Total Interest is Rs. 50000/- then
50000- 10000 = 40000 will be taxable

Proof Required: copy of bank statement for the FY 2014-15 where interest credited amount clearly mention on the statement

Note: The remaining amount will be considered as an income also under the head “Other Income” and also you can claim the same at the time of self-assessment.

The copy of the bank statement and the interest certificate from the bank need to be submitted

Exemptions under Section 80G

Payment above INR 10,000 – Sections 80G and 80GGA Presently, deduction in respect of donations to charitable trusts is available under section 80G in respect of any donation being a sum of money. Similarly, under section 80GGA deduction is available in respect of donation for scientific research, rural development, etc. Currently there is no restriction for mode of payment for eligibility of deduction, which can be paid in cash also. Now it is provided that any such payment exceeding ` 10,000 shall only be allowed as deduction if such sum is paid in any mode other than cash.

Tax benefit on Housing Loan

 Interest on housing loan paid for self-occupied property will be considered as deduction from taxable income subject to below mentioned limits.

Deduction Limits:

·         where the loan is taken on or after April 1, 1999-Rs 2,00,000/-

·         where loan is taken earlier - Rs 30,000/-

        

Benefit of interest on loan taken to construct /purchase of house can only be given in case where the possession/construction of the house property is completed. Employee has to submit the Form 12C along with Possession Proof and Loan Repayment Certificate. Further the employee who is claiming the benefit for HRA rebate for having the rented property in the same city, cannot be given both the benefits except where his/ herself property is located at a place other than the place where he is supposed to perform his/ her duty.

      

Also any interest paid in pre-construction or pre-acquisition period, will be allowed as deduction in five equal instalments and first such instalment is deductible in the year in which construction of the house is completed or possession of house is taken.

A new section 80EE inserted by the Finance Minister in the 2013 union Budget in order to promote affordable housing to the first time home loan buyers only by allowing an additional deduction of Rs 1 Lac under section 80EE

Highlights of Section 80EE are:

Additional deduction is available to only Individuals.

     2) if you have no existing house in your name and intended to be self occupied for the “First time house buyers” only

You have bought a new house, and House cost of the house is maximum of Rs 40 lacs

   4) Loan is approved and taken after 1-4-2013,

   5) Loan does not exceed  Rs 25 Lacs

Then, the  Extra interest deduction that you will get is Rs 1,00,000/- under section 80EE.If the whole amount of Rs 1 lac is not exhausted in the first   year then it can be carried forward to the 2nd year also but not more than that.

Let out Property (Loss or Income):

The total amount of interest on borrowed capital, paid during the year is exempted in case of the let out property.

House property should be in the name of the employee

Provide the Calculation of Income from a Let-Out property with Form 12C

If you have a multiple let out property then provide a single consolidated calculation of the let out properties in form 12C.

Provisional certificate pertaining to current financial year (Apr ’13 – Mar ’14) with breakup of interest and principle from the Housing Finance Company / Bank.

In case of Joint loan, declaration on a stamp paper specifying the % of benefit claimed by each individual

Form 12 C with Computation of Loss / Income as per rule is mandatory.

NPS (New Pension Scheme)

Please provide the photocopy of all the payment receipts issued by the bank with NPS Account Details (Tier I and Tier II)

NPS 80CCD (I) – Tier I – Part of 80C. However no deduction is available in respect of employee contribution which is excess of 10% of the salary of the employee.


NPS 80CCD (II) – Tier II – Over and above 80C.  However no deduction is available in respect of employer’s contribution which is excess of 10% of the salary of the employee.


Note: as per the section 80CCE the aggregate amount of deduction under sections
80C, 80CCC and Section 80CCD(I) shall not exceed Rs. 1,50,000/-. However the contribution
made by the Central Government or any other employee to a pension scheme u/s 80CCD (II ) shall be excluded from the limit of Rs.1,00,000/- provided under this Section.

RGESS (Rajiv Gandhi Equity Saving Scheme) – 80CCG

With an annual income of Rs 10 lac will get tax benefits for investing up to Rs 50,000 in the capital markets.

The maximum investment permissible under the Scheme is Rs 50,000 and the investor would get a 50 percent deduction of the amount invested from the taxable income for that year. To benefit the small investors, the investments are allowed to be made in installment in the year in which tax claims are made.

Note: Please refer the complete guidelines at the time of investment

Special Notes:

Newly inserted Section 80CCG provides deduction w.e.f. assessment year 2013-14 in respect of
investment made under notified equity saving scheme. The deduction under this section is
available if following conditions are satisfied:

(a) The assessee is a resident individual (may be ordinarily resident or not ordinarily resident)
(b) His gross total income does not exceed Rs. 10 lacs;
(c) He has acquired listed shares in accordance with a notified scheme;
(d) The assessee is a new retail investor as specified in the above notified scheme;
(e) The investment is locked-in for a period of 3 years from the date of acquisition in
accordance with the above scheme;
(f) The assessee satisfies any other condition as may be prescribed.

Amount of deduction -The amount of deduction is at 50% of amount invested in equity shares.
However, the amount of deduction under this provision cannot exceed Rs. 25,000. If any
deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any
deduction under this section for any subsequent year.

Withdrawal of deduction - If the assessee, after claiming the aforesaid deduction, fails to satisfy
the above conditions, the deduction originally allowed shall be deemed to be the income of the
assessee of the year in which default is committed.

A scheme named "Rajiv Gandhi Equity Savings Scheme (RGESS)" is being notified for the Purpose of this deduction.

Tax Rebate Rs. 2,000/- U/s 87A is also available in this Financial Year 2014-15

On October 15, 2014 by www.taxexcel.net

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1) Download the Automatic  Form 16 Part B [ One by One Preparation ] For AY-14-15 including the Chapter VI-A]This can prepare One by One Form 16 Part B more than 500 Form 16 employees Form 16 Part B with all the Income Tax Section have in this Excel Utility

2) Click here to Download the Automatic One by one Preparation Form 16 Part A&B And Part B For the AY 2014-15 including the Chapter VI-A ,which can prepare One by One Form 16 Part A&B for more than 500 employees Form 16 Part B with all the Income Tax Section have in this Excel Utility

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Deduction will be allowed under Chapter VI - A with Automatic Form 16 Part B for Assessment Year 2014-15

 Section 80GG: Deduction in respect of House Rent Paid Deduction available is the least of

1. Rent paid minus 10% of total income
2. Rs. 2000/- per month
3. 25% of total income, provided
• Assessee or his spouse or minor child should not own residential accommodation at the place of employment.
• He should not be in receipt of house rent allowance.
• He should not have self occupied residential premises in any other place.

Section 80E: Deduction in respect of Interest on Loan for Higher Studies

Deduction in respect of interest on loan taken for pursuing higher education. The deduction is also available for the purpose of higher education of a relative w.e.f. A.Y. 2008-09.

Section 80 TTA: Deduction from gross total income in respect of any Income by way of Interest on Savings account

Deduction from gross total income of an individual or HUF, upto a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 1st April 2012 (Assessment Year 2013-14).

Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)

The Rajiv Gandhi Equity Saving Scheme (RGESS) was launched after the 2012 Budget. Investors whose annual income is less than Rs. 10 lakhs can invest in this scheme (up to Rs. 50,000) and get a deduction of 50% of the investment.

So, if you invest Rs. 50,000 (maximum amount eligible for income tax rebate is Rs. 50,000), you can claim a tax deduction of Rs. 25,000 (50% of Rs. 50,000).

Section 80D: Deduction in respect of Medical Insurance

Deduction is available up to Rs. 20,000/- for senior citizens and upto Rs. 15,000/ in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 20,000/- if parents are senior Citizen and Rs. 15,000/- in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000/-. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.

Section 80DD: Deduction in respect of Rehabilitation of Handicapped Dependent Relative

Deduction of Rs. 50,000/- is available on:

1. expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative.
2. Payment or deposit to specified scheme for maintenance of dependent handicapped relative.

Further, if the dependant is a person with severe disability, a deduction of Rs. 100,000/- is also available under this section. The handicapped dependent should be a dependent relative suffering from 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.

Section 80DDB: Deduction in respect of Medical Expenditure on Self or Dependent Relative

A deduction to the extent of Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease 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.

Section 80G: Deduction for donations towards Social Causes

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. 80G deduction not applicable in case donation is done in form of cash for amount over Rs 10,000.

Donations with 100% deduction without any qualifying limit:

• Prime Minister’s National Relief Fund
• National Defence Fund
• Prime Minister’s Armenia Earthquake Relief Fund
• The Africa (Public Contribution - India) Fund
• The National Foundation for Communal Harmony
• Approved university or educational institution of national eminence
• The Chief Minister’s Earthquake Relief Fund, Maharashtra
• Donations made to Zila Saksharta Samitis.
• The National Blood Transfusion Council or a State Blood Transfusion Council.
• The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.

Donations with 50% deduction without any qualifying limit.

• Jawaharlal Nehru Memorial Fund
• Prime Minister’s Drought Relief Fund
• National Children’s Fund
• Indira Gandhi Memorial Trust
• The Rajiv Gandhi Foundation

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

1. Donations to the Government or a local authority for the purpose of promoting family planning.

2. Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

3. Donation to the Government or any local authority to be utilized by them for any charitable             purposes other than the purpose of promoting family planning.

Section 80U: Deduction in respect of Person suffering from Physical Disability

Deduction of Rs. 50,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 100,000/- shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D.

Section 80 EE: 

This Section has newly introduce in the Central Finance Budget 2013, in this section can get relief more One Lakh for House Building Loan Interest which will effect from 1/4/2013. It have not effect the previous Section 24B where can also get the relief as House Building Loan Interest Max Rs. 1,50,000/-.

On April 17, 2014 by www.taxexcel.net

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