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| Deductor's Sheet |
Download All in One TDS on Salary for Central Govt employees for F.Y.2015-16 [This Excel Utility can prepare at a time Tax Compute Sheet + Automatic HRA Exemption Calculation + Automatic Form 16 Part A&B and Form 16 Part B for F.Y.2015-16]
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| Central Govt Employee's Salary Structure |
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| Tax Computed Sheet |
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| Amended Format of Form 16 |
Salaried Employees are a relieved lot now after fulfilling all the formalities for Income Tax 2014-15. But, by that time six months in the new financial year 2015-16 is already over.
So, preparation of statement for salary income, deductions and saving
under various clauses of Income Tax Act in respect of Financial year 2015-16 is
already due for submission to the employer.
Tax Planning and submission of statement to
that effect to the employer would be mainly useful to avoid additional deduction of Income Tax by the
employer over and above income tax estimated by an individual on the basis of
his / her savings or deductions.
This article summarises Income Tax Structure for the year 2015-16
(Assessment Year 2016-17) and also the Tax
exemptions available to salaried class employees in the form of
Exempt Income, Deductions and Savings.
Tax exemptions in the form of Exempt Income, Deductions and Savings
1. Exempt Income under Chapter 10 of Income
Tax Act, such as House Rent allowance, Tranport Allowance, LTC etc.
2. Savings which are eligible for Tax
Exemption up to Rs. 1.5 lakh under Section 80C, Section 80CCC and Section
80CCD(1)
3. Additional
Savings eligible for Tax Exemption up to Rs. 50,000/- under
Section 80 CCD (1B) over and above Savings Cap of Rs. Rs. 1.5 lakh, if the
amount is invested in NPS (Govt run Contributory Pension System which is known
as National Pension System)
4. Deduction (up to 10% of salary) towards
Contribution made by Employer in any of Pension fund such as NPS, approved by
Central Government, under Section 80CCD(2), which will be over and above
savings value cap of Rs. 1.5 lakh under Section 80CCE plus additional savings
of Rs.50,000 under Section 80CCD(1B)
5. Eligible deductions from Income from
Section 80 D to 80 U towards amount spent on health insurance, medical
treatment for disabled dependents, interest on higher education loan etc.
6. Deduction of up to Rs. 2 lakh in respect
of loss (interest) incurred on self-occupied House Property (and unlimited
interest in respect of rented property) under Section 24 of Income Tax Act.
7. Relief Under Section 89(1)
1. Exempt Income and Allowances under Section 10 of Income Tax Act
Income given below are exempt income and
hence these need not included while calculating Total Income of a Salaried
Employee
- Agricultural Income [Section 10(1)]
- The sum received (including the bonus) under a life insurance policy (other than any sum received under sub-section (3) of section 80DDA or under a Keyman insurance policy).[Section (10)(10)(D)]
- Amount of LTC or LTA actually incurred. [Section 10(5)]
- Any allowances or perquisites paid or allowed as such outside India by the Government to a citizen of India for rendering service outside India. [Section 10(7)]
- Any special allowance or benefit, such as Travelling Allowance, Uniform Allowance etc which are incurred for the performance of the duties of an office or employment . [Section 10(13A)]
- The transport allowance granted to an employee to meet his expenditure for the purpose of commuting between the place of his residence and the place of duty is exempt to the extent of Rs. 1,600/- per month or Rs. 3200 per month (for a visually challenged person) [Section 10 (14)]
- Scholarships granted to meet the cost of education.[Section 10(16)]
- 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 a maximum of two children.
- Other Allowances exempted under Section 10 of IT Act are Tour TA, Tour Daily Allowance, Academic, research or training allowance, uniform Allowance, Special Compensatory Allowance, High Altitude Allowance, Climate Allowance, allowances applicable to North East, Hilly areas of U.P., H.P. and J & K, border area allowance, Compensatory Field Area Allowance, Counter Insurgency Allowance, High Active Field Area Allowance, island duty allowance, tribal allowance etc.
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.
[Download HRA Exemption Calculator in Excel]
2. Savings which are eligible for Tax Exemption Section 80C, Section 80CCC and Section 80CCD
Section 80C, CCC and CCD(1) allow deduction
from total income. The total deduction under this section (alongwith section
80CCC and 80CCD(1) is limited to Rs. 1.50 lakh only.
Section 80C: Max Rs. 1.5 Lakh
Section 80CCC:
Deduction in respect of Premium Paid for
Annuity Plan of LIC or Other Insurer. Payment of premium for annuity plan of
LIC or any other insurer Deduction is available upto a maximum of Rs.
150,000/-.
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.
Section 80CCD (1):
Deduction in respect of Contribution to
Pension Account (by Assessee). Deduction available for the amount paid or
deposited in a pension scheme notified or as may be notified by the Central
Government subject to a maximum of :
(a) 10% of salary in the previous year in
the case of an employee
(b) 10% of gross total income in any other
case.
Section 80CCD(1A):
The maximum deduction allowable under this
section is Rs. 1.00 lakh. in case of contribution to New Pension Scheme (NPS),
it is Rs. 1.50 lakh w.e.f. 01.04.2015
3. Additional Savings eligible for Tax Exemption up to Rs. 50,000/- under Section 80 CCD (1B)
Section 80CCD(1B):
Contribution in NPS has been given more tax
concession 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
savings cap of Rs. 1.5 lakh, is allowed if such amount is contributed by the
employee. So, overall tax savings of Rs. 2 lakh can be availed under Section
80C, 80CCC and 80CCD(1).
4. Deduction in respect of Contribution to Pension Account by Employer under Section 80CCD (2):
Deduction under Section 80CCD(2) is available
for the amount paid or deposited by the employer of the assessee in a pension
scheme notified or as may be notified by the Central Government subject to a
maximum of 10% of salary in the financial year. This deduction is allowed over
and above Savings value cap of Rs. 1.5 lakh under Section 80CCE (in the case of
investment in NPS, savings value cap eligible for deduction will be Rs. 2
lakh).
5. Eligible deductions from Income from Section 80 D to 80 U towards amount spent on health insurance, medical treatment etc.
Section 80D: Deduction in respect of
Medical Insurance:
Deduction is available upto Rs. 30,000/- for
parents who are senior citizens and upto Rs. 25,000/- in other cases for
insurance of self, spouse and dependent children. Amount of up to Rs.5000/-
spent on preventive health check-up. So a maxium of Rs. 60,000 can be deducted
which is spent towards Health Insurance premium.
Section 80DD: Deduction for medical
treatment of physically challenged dependents:
In the case of salaried employee who is
taking care of physically challanged Dependent Relative, an amount with the
maximum limit of Rs.75000/- spent towards medical treatment or rehabilitation
can be deducted from the income (In the case of severe disability maximum
deduction would be Rs. 1,25,000).
Section 80DDB: Deduction in respect
of specified disease:
Deduction in respect of specified disease
for self or dependent relatives is allowed lower of Rs.60,000 or actual amount
paid. This deduction amount increases to Rs.80,000 in case of senior citizen.
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.
Section 80G: Deduction for Donations
Notified donations under Sec. 80G will be
eligible for deduction ( 100% or 50% as per the notification condition)
Deduction available is the least of the given below:-
- Rent paid less 10% of total income
- Rs. 2000/- per month i.e. Maximum Deduction available is 24,000/-
- 25% of total income subject to
- Employee or his/her spouse or minor child should not own residential accommodation at the place of employment.
- No HRA is received.
- No self occupied residential premises in any other place.Section 80GGA: Deduction in respect of certain donations for scientific research or rural development
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/-, in respect of
interest on deposits in savings account ( not time deposits ) with a bank,
co-operative society or post office
Section 80U: Deduction in respect of
Person suffering from Physical Disability
Deduction of Rs. 75,000/- in respect of tax
payer suffering from a physical disability. In the case of severe disability,
deduction of Rs. 125,000/- will be allowed. Certificate from the approved
medical authorities regarding the extent of disability will have to be produced
(Rule 11D)
6. Deductions 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) and self
occupied will be eligible for deduction of interest paid on housing loan with
the maximum limit Rs. 2,00,000/-. In other cases deduction in respect of
interest paid up to Rs.30,000 will be allowed. If the said house property is
not self-occupied there is no limit in deduction in respect of interest paid on
housing loan subject to inclusion of rental income in respect of the house
property.
7. Relief Under Section 89(1) [Download Arrears Relief Calculator up to date]
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).
To sum-up, over and above the Basic Income
Tax Exemption limit of Rs. 2.5 lakh for the financial year 2015-16 available to
Salaried Employees, maximum additional income tax exemption for income up to
Rs.4,44,200 can be availed. Maximum Amount that can be saved / deducted to
avail this income tax exemption benefit are tabulated below. So, a salaried
employee who earns gross total income of Rs. 6,94,200/- and avails income tax
exemption benefit by way of savings and deductions detailed below, need not pay
any income tax.
Deductions under 80C
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Rs. 1,50,000
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Deductions under 80CCD
(1B) for contribution to NPS
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Rs. 50,000
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Interest on house property
loan
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Rs. 2,00,000
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Exemption with new
transportation allowance of Rs. 1,600 per month
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Rs. 19,200
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New deductible health
insurance premium
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Rs. 25,000
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Total deductions /
exemption
|
Rs. 4,44,200
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Basic Income which is
exempted from Income Tax
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Rs. 2,50,000
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Gross Total Income which
can be tax free
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Rs.6,94,200
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It is also pertinent to note here that
exemptions and deductions detailed above are common to a salaried employee.
In addition to this, by way of other
deductions provided by Section 80DD to Section 80U based on specific nature of
expenditure such as medical, higher studies related or physical status of
employee or his / her dependents, more income could be exempted from payment of
Income Tax.
