Bala Guru Dheeraj
Back Ground:
Every year Central Board of Direct Taxes issues circular on Income Tax deduction from salaries under section 192 of the Income Tax Act, 1961. For the Financial year 2016-17, CBDT issued circular relating to provisions of salary & TDS on salary for current year via circular no. 01/2017 dt. 02/01/2017. This article tries to focus on amendments in FY 2016-17 by comparing with the provisions of FY 2015-16.
Amendments in Current Year:
(a) Surcharge on Income Tax:
(i) In the case of every individual or HUF or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person having a total income exceeding 1 crore surcharge shall be charged at the rate of fifteen per cent of such income-tax.
The surcharge rate has been increased from 12% to 15%
(ii) Provided that in the case of persons mentioned above having total income exceeding 1 crore, the total amount payable as income-tax and surcharge on such income shall not exceed the total amount payable as income-tax on a total income of Rs. 1 crore rupees by more than the amount of income that exceeds Rs. 1 crore rupees
Example:
Calculation of Income Tax payable in case of an employee below the age of 60 years and having gross salary income of :
| Particulars | Rupees |
| Gross Salary Income (including allowances | 1,10,00,000 |
| Contribution of G.P.F. | 1,00,000 |
Computation of Total Income and Tax payable thereon
| Particulars | For AY 2017-18 | For AY 2016-17 |
| Gross Salary | 1,10,00,000 | 1,10,00,000 |
| Less: Deduction U/s 80C | 1,00,000 | 1,00,000 |
| Taxable Income | 1,09,00,000 | 1,09,00,000 |
| Tax thereon | 30,95,000 | 30,95,000 |
| Surcharge | 4,64,250 | 3,7 1,400 |
| Add: | ||
| (i) Education Cess @ 2%. | 61,900 | 61,900 |
| (ii) Secondary and Higher Education Cess @1% | 30,950 | 30,950 |
| Total tax payable | 36,52,100 | 35,59,250 |
As per the section 87A of Income tax act, rebate shall be available to the resident individual having total income not exceeding Rs. 5,00,000, to deduct from the gross income tax payable.
The limit of rebate has been increased from Rs.2,000 to Rs.5,000
| Particulars | For AY2017-18 | For AY2016-17 |
| Person | Resident Individual | Resident Individual |
| Total Income | Less than Rs. 5,00,000 | Less than Rs. 5,00,000 |
| Rebate available | Rs.5,000 | Rs.2,000 |
Example :
Calculation of Income Tax payable in case of an employee below the age of 60 years and having gross salary income of :
| Particulars | Rupees |
| Gross Salary Income (including allowances | 6,00,000` |
| Contribution of G.P.F. | 1,00,000 |
Computation of Total Income and Tax payable thereon
| Particulars | For AY2016-17 | For AY2017-18 |
| Gross Salary | 6,00,000 | 6,00,000 |
| Less: Deduction U/s 80C | 1,00,000 | 1,00,000 |
| Taxable Income | 5,00,000 | 5,00,000 |
| Tax payable on Rs.5,00,000 | 25,000 | 25,000 |
| Less: Rebate u/s 87A | 2,000 | 5,000 |
| Net Tax payable | 23000 | 20000 |
| Add: | ||
| (i) Education Cess @ 2%. | 460 | 400 |
| (ii) Secondary and Higher Education Cess @1% | 230 | 200 |
| Total tax payable | 23,690 | 20,600 |
(c) Sec 192A : Tax deduction at source from premature withdrawals from Recognized Employees’ Provident Fund :
The trustees of the EPF Scheme 1952 framed under section 5 of the EPF & Misc. Provisions Act, 1952 or any person authorized under the scheme to make payment of accumulated balance due to employees, at the time of payment of accumulated balance due to the employee, deduct income tax thereon @ 10% if the amount of such payment or aggregate of such payment exceeds Rs 50,000/-
(The limit has been increased from Rs.30,000 to Rs 50,000)
For the following cases the withdrawals shall not be taxable under rule 8 of Part A of the Fourth Schedule of the Income Tax Act:
(i) An employee had rendered continuous service of 5 years
(ii) Termination for a period less than 5 years is a reason of employee’s ill health or contraction or discontinuance of employer’s business or for any other reason beyond control of the employee.
(iii) if employee obtains other employment and the balance in the EPF account is transferred to the EPF maintained by the subsequent employer
Insertion of New Clause:
Every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee. For estimating the total income, the employer shall consider the particulars of Income received by the employee under any other head. The particulars may now be furnished in simple statement which is properly signed and verified by the employee in the manner as prescribed under Rule 26B(2) of the Rules and shall be annexed to the simple statement.
Following details shall be obtained and kept by the employer in respect of loss claimed under the head “Income from house property” separately for each house property:
a) Gross annual rent/value
b) Municipal Taxes paid, if any
c) Deduction claimed for interest paid, if any
d) Other deductions claimed
e) Address of the property
The DDO shall also ensure furnishing of the evidence or particulars in Form No. 12BB in respect of deduction of interest as specified in Rule 26C read with section 192 (2D).
FORM NO.12BB
(See rule 26C)
| 1.Name and address of the employee: | |||||
| 2.Permanent Account Number of the employee: | |||||
| 3.Financialyear: | |||||
| Details of claims and evidence thereof | |||||
| Sl No. | Nature of claim | Amount (Rs.) |
Evidence /particular | ||
| (1) | (2) | (3) | (4) | ||
| 1 | House Rent Allowance: | ||||
| (i)Rent paid to the landlord | |||||
| (ii)Name of the landlord | |||||
| (iii)Address of the landlord | |||||
| (iv)Permanent Account Number of the landlord | |||||
| Note: Permanent Account Numbers shall be furnished if the aggregate rent paid during the previous year exceeds one lakh rupees | |||||
| 2 | Leave travel concessions or assistance | ||||
| 3 | Deduction of interest on borrowing: | ||||
| (i)Interest payable/paid to the lender | |||||
| (ii)Name of the lender | |||||
| (iii)Address of the lender | |||||
| (iv)Permanent Account Number of the lender | |||||
| (a) Financial Institutions( if available ) | |||||
| (b)Employer ( if available ) | |||||
| (c) Others | |||||
| 4 | Deduction under Chapter VI-A | ||||
| (A)Section 80C,80CCCand80CCD | |||||
| (i) Section 80C | |||||
| (a) | …… ……….. | ||||
| (b) | |||||
| (c) | |||||
| (d) | |||||
| (e) | |||||
| (f) | |||||
| (g) | |||||
| (ii)Section80CCC | |||||
| (iii)Section80CCD | |||||
Correction to your article:
The Education and Secondary Higher education cess should be calculated Inclusive of Surcharge on Income tax payable. Correct your figures stated accordingly.