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FINANCIAL YEAR 1981-82

1686. Instructions for deduction of tax at source from salary during financial year 1981-82 at the rates specified in Part III of First Schedule to Finance Bill, 1981

1. I am directed to invite a reference to this Ministry’s Circu­lar No. 278 [F. No. 275/12/80-IT(B)], dated 26-8-1980 wherein the rates at which income-tax deduction during the financial year 1980-81, from the payments of income chargeable under the head “Salaries” under section 192, were intimated.

2. In the Finance Bill, 1981, some modifications in the exemption limit, etc., have been made. An extract of Sub-Paragraph 1 of Paragraph A of Part III of the First Schedule to the Finance Bill, 1981, is at Annex I.

3. The substance of the main provisions in the law insofar as they relate to income chargeable under the head “Salaries”, on which tax is to be deducted at source during the financial year 1981-82 is given hereunder :

(1) No tax will be deductible at source in any case unless the estimated salary income for the financial year exceeds Rs. 15,000. Some typical examples of calculations are at Annex II.

(2) The value of perquisites by way of free or concessional residential accommodation, or motor cars provided by employers to their employees, shall be determined under rule 3 of the Income-tax Rules. Further, the value of other benefits or ameni­ties provided free of cost or at concessional rates to the employees, like supply of gas, electric energy, water for house­hold consumption, educational facilities, etc., should also be taken into account for the purpose of computing the estimated salary income of the employees during the current financial year. [Example II at Annex II illustrates computation of some such perquisites.]

(3) The amount on account of the encashment of leave due to an employee on retirement is includible as salary in the relevant financial year in which the payment is made for the purpose of deduction of tax at source. [It is, however, liable to tax in the hands of the employee on accrual basis in the assessment year relevant to the financial year in which he retires from service in view of section 15(a).]

(4) The amount repaid to an employee from the Additional Dearness Allowance Deposit Account under the provisions of the Additional Emoluments (Compulsory Deposit) Act, 1974, shall be liable to be included in his total income of the previous year in which it is repaid, as already explained in this Ministry’s Circular No. 182 [F.No. 275/12/75-ITJ], dated 28-10-1975. The amount repaid will include an element of interest also. While the repayment of the principal sum will be regarded as salary paid during the relevant financial year and assessed to tax accor­dingly, the interest element will qualify for deduction in accordance with section 80L of the Act.

(5) The amount of deposit made by a taxpayer under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974, is not allowable to be as deduction in computing his taxable income. Accordingly, such deposit has to be ignored for the purpose of determining the amount of income-tax deductible at source.

(6) Under section 16 of the Act, the taxable salary is to be computed after providing for standard deduction. The standard deduction is to be allowed of an amount equal to 20 per cent of the salary, subject to a maximum of Rs. 5,000 for this purpose, the term “salary” will include fees, commission, perquisites or profits in lieu of or in addition to salary, but will not in­clude any payments received by the employees which are specifical­ly exempt from tax under clauses (10), (10A), (10B), (11), (12) and (13A) of section 10. Thus, house rent allowance to the extent exempt under section 10(13A), will not be taken into account for the purposes of computing the amount of the standard deduction. It is to be noted that standard deduction on the above basis is to be allowed irrespective of whether any expenditure incidental to employment is actually incurred by the employee or not. This deduction will be available also to persons drawing pension during the current financial year at the same rates and subject to the same ceiling as the employees in actual service. Further, the standard deduction will be limited to Rs.1,000 only in cases where the employee is provided with any motor car, motorcycle, scooter or other moped by his employer (for use otherwise than wholly and exclusively in the performance of his duties), or where he is allowed the use of any one or more motor cars (other­wise than wholly and exclusively in the performance of his du­ties) out of a pool of motor cars owned or hired by the employer at any time during the financial year. In this connection it may be noted that the use of a motor car by the employee for the purposes of going from his residence to the place where the duties of his employment are to be performed, or from such place back to his residence will not be regarded as use of the motor car in the performance of his duties.

(7)(a) Under section 80C while computing the taxable income, the disbursing officers should allow a deduction of the whole of the first Rs. 5,000; 50 per cent of the next Rs. 5,000 and 40 per cent of the balance of the qualifying amount of pay­ments towards life insurance premia, contributions to provident fund (including contribution to Public Provident Fund constitut­ed under the Public Provident Fund Act, 1968), contributions for participation in the Unit-linked Insurance Plan, 1971, made under section 19(1)(cc) of the Unit Trust of India Act, 1963, and deposits in a 10-year account or 15-year account under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959. The qualifying amount of payments of all these items will be limited to 30 per cent of the estimated “salary” (after allowance of standard deduction referred to in item 6 above), or Rs. 30,000, whichever is less.

(b) In respect of contributions to “recognised provident funds” there is another monetary ceiling limit laid down in clause (d) of sub-section (2) of section 80C, in that the employ­ee’s own contribution to his individual account in that fund will not exceed one-fifth of his salary during the financial year or Rs. 10,000, whichever is less. “Salary” for this purpose would include dearness allowance, if the terms of employment so pro­vide, but will exclude all other allowances or perquisites. The expression “recognised provident fund” has been defined in sec­tion 2(38), to mean “a provident fund which has been and contin­ues to be recognised by the Commissioner in accordance with the rules contained in Part A of the Fourth Schedule to the Act, and includes a provident fund established under a scheme framed under the Employees’ Provident Funds Act, 1952”.

(c) The additional monetary ceiling of one-fifth of salary or Rs. 10,000, whichever is less, will not be applicable to the contributions to the provident funds referred to in sub-clauses (iii) and (iv) of clause ( a) of sub-section (2) of section 80C. Such provident funds are :

     (i)   Government Provident Fund and Railway Provident Fund;

    (ii)   provident funds established by such local authorities and institutions as are mentioned in the Schedule to the Provi­dent Funds Act, 1925, and those notified by the Government from time to time under section 8(3) of that Act; and

   (iii)   any provident fund set up by the Central Government and notified by it in the Official Gazette – Public Provident Fund set up under the Public Provident Fund Act, 1968, is an example of such a fund.

(8) Under section 10(13A), any special allowance specifi­cally granted to an assessee by his employer to meet expenditure actually incurred on payment of rent (by whichever name called), in respect of residential accommodation occupied by the assessee, is exempt from income-tax to the extent (not exceeding Rs. 400 per month) as may be prescribed having regard to the area or place in which such accommodation is situated and other relevant con­siderations. Rule 2A of the Income-tax Rules prescribes the limits in respect of the amount which is not to be included in the total income of the assessee for the purpose of section 10(13A). It has to be noted that only the expenditure actually incurred on payment of rent in respect of residential accommodation occu­pied by the assessee, subject to the limits laid down in rule 2A, qualifies for exemption from income-tax. Thus, house rent allow­ance granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. The disbursing authorities should satisfy themselves in this regard by insisting on produc­tion of evidence of actual payment of rent before excluding the house rent allowance from the taxable income of the employee.

However, the Hon’ble Punjab and Haryana High Court has held in the case of CIT v. Justice S.C. Mittal [1980] 121 ITR 503, that even in the case of an assessee occupying his own house, the house rent allowance received from the employer is not liable to tax subject to the limitations imposed under section 10(13A) and rule 2A. That judgment has not been accepted by this Ministry and a special leave petition to the Hon’ble Supreme Court has been­ filed. The disbursing authorities are, however, required to allow exemption in respect of house rent allowance granted to every employee assessable/assessed to income-tax under the jurisdiction of the Hon’ble Punjab and Haryana High Court, and who is residing in the house/flat owned by him subject to the limits laid down in rule 2A. The actual rent paid for the purpose of the said rule would be deemed to be the annual letting value of the house/flat for which production of evidence in the form of a document show­ing the annual letting value fixed by the Municipal authority, etc., may be insisted upon before granting the exemption. In the annual salary return asterisk (*) against the name of each such employee may be given together with the following remark at the end of the return :

“*Admissible exemption of HRA allowed in view of judgment in Justice S. C. Mittal’s case.”

(9) No deduction should be made from the salary income in respect of any donations for charitable purpose. The tax relief on such donations as admissible under section 80G, will have to be claimed by the taxpayer separately at the time of the finali­sation of the assessment. However, in cases where contributions to the National Defence Fund, the Jawaharlal Nehru Memorial Fund, the Prime Minister’s Drought Relief Fund, or the Prime Minister’s National Relief Fund are made, 50 per cent of such contributions may be deducted in computing the taxable income of the employee. Deduction will not be admissible where the aggre­gate of all contributions for the year is less than Rs. 250.

(10) Under section 80GG, an assessee is entitled to a deduc­tion in respect of house rent paid by him for his own residence at the places specified under rule 11B of the Income-tax Rules. Such deduction is permissible subject to the following condi­tions :

    (a)   the assessee has not been in receipt of any house rent allowance specifically granted to him which qualifies for exemp­tion under section 10(13A);

    (b)   he will be entitled to a deduction in respect of house rent paid by him in excess of 10 per cent of his total income, subject to a ceiling of 15 per cent thereof, or Rs. 300 per month, whichever is less; the total income for working out these percentages will be computed before making any deduction under section 80GG;

    (c)   the assessee does not own any house property himself anywhere, nor his spouse, minor child, or the HUF of which he is a member, owns any house property anywhere;

    (d)   the accommodation occupied by him for the purpose of his own residence is situated in any of the following places, namely :

     (i)   Agra, Ahmedabad, Allahabad, Amritsar, Bangalore, Bhopal, Calcutta, Coimbatore, Delhi, Faridabad, Gwalior (Lashkar), Hyd­erabad, Indore, Jabalpur, Jaipur, Kanpur, Lucknow, Ludhiana City, Madras, Madurai, Nagpur, Patna, Pune (Poona), Srinagar, Surat, Vadodara (Baroda) or Varanasi (Banaras) or the urban agglomeration of each of such places; and

    (ii)   Bombay, Calicut, Cochin, Ghaziabad, Hubli-Dharwar, Madras, Sholapur, Trivandrum or Vishakhapatnam.

           Explanation : “Urban agglomeration”, in relation to a place, means the area for the time being included in the urban agglomeration of such place for the purpose of grant of house rent allowance by the Central Government to its employees under the orders issued by it from time to time in this regard.

The disbursing authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the assessee.They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent.

(11) Section 10(14) provides for exemption from income-tax of any special allowance or benefit, not being in the nature of an entertainment allowance or other perquisite within the meaning of clause (2) of section 17, specially granted to the employee to meet the expenses actually incurred wholly, necessarily and exclusively in the performance of the duties of an office or employment of profit. In view of this provision, the disbursing authorities have been authorised, vide the Board’s Circular No.196 [F. No. 275/29/76-ITJ], dated 31-3-1976, not to deduct tax at source from conveyance allowance granted to an employee, to the extent it is exempt under the said section. It has been stated therein that the employee in receipt of conveyance allowance would have to furnish the necessary certificate before the disbursing au­thority in support of the fact that the conveyance allowance is only a reimbursement of expenses laid out wholly, necessarily and exclusively in the performance of duties of an office or employ­ment of profit. This satisfaction of the disbursing authorities would still be liable for scrutiny by the Income-tax Officer during regular assessment proceedings before him. The disbursing authority is also required to endorse a certificate in terms of section 10(14), on the tax deduction certificate issued under section 203. In this connection, attention is invited to the Explanation to clause (14) of section 10 which clarifies that any allowance granted to the assessee to meet his personal expenses at the place where the duties of his office or employment of profit are ordinarily performed by him or at the place where he ordinarily resides, shall not be regarded for purposes of that clause, as a special allowance granted to meet expenses wholly, necessarily and exclusively incurred in the performance of such duties. This may be kept in view while deciding whether any expenditure from the special allowance has been actually incurred, and if so, the extent to which it has been incurred to meet the expenses wholly, necessarily and exclusively in the performance of duties of an office or employment of profit.

(12) Section 80RRA provides that where the gross total income of an individual who is a citizen of India, includes any remuneration received by him in foreign currency from any employer (i.e., a foreign employer or an Indian concern) for any services rendered by him outside India, 50 per cent of such remuneration will be deducted in computing the taxable income. It also pro­vides that where the assessee renders continuous service abroad for more than 36 months, the remuneration received by him for any period of service after the expiry of the said 36 months will not qualify for any deduction. In the case of employees of the Cen­tral Government or any State Government, or person who was, immediately before taking up service outside India, in the em­ployment of the Central Government or any State Government the deduction will be allowed only if the service of the employee is sponsored by the Central Government. In the case of other indi­viduals the deduction will be allowed only if the individual is a “technician” and the terms and conditions of his service outside India are approved for the purposes of the said section by the Central Government or the prescribed authority. It is pertinent to note that the deduction is to be allowed with reference to the remuneration received by the individual in “foreign currency”. Thus, if a part of the remuneration is paid to the Indian techni­cian, etc., in Indian currency, the amount paid in Indian curren­cy will not be taken into account for the purposes of the deduc­tion under section 80RRA.

The expression “foreign employer” has been defined under Explana­tion (b) to section 80RRA to mean—

     (i)   the Government of a foreign State; or

    (ii)   a foreign enterprise; or

   (iii)   any association or body established outside India.

Where the continuous service outside India exceeds 36 months, the deduction admissible under section 80RRA may be limited to a period of 36 months. In allowing the deduction, documentary evidence should be obtained on the following points :

     (i)   in the case of an individual who is in the employment of the Central Government or any State Government, the fact of his service having been sponsored by the Central Government; and

    (ii)   in the case of any other individual being a techni­cian, in the fact of the terms and conditions of his service outside India having been approved in this behalf by the Central Government (Ministry of Finance, Department of Revenue—Foreign Tax Division, New Delhi).

(13) Under section 80U in the case of every resident indi­vidual who is blind or suffers from permanent physical disabili­ty, which substantially reduces his capacity to be engaged in gainful employment, a deduction of Rs. 10,000 from the total income is allowable by the employer subject to the production of a certificate from the Income-tax Officer in favour of the employ­er as laid down in this Ministry’s Circular No.272, dated 27-5-1980. The certificate once issued will continue to be in force till it is withdrawn by the Income-tax Officer.

(14) The total income computed in accordance with the provi­sions of the Act should be rounded off to the nearest multiple of Rs. 10 by ignoring the fraction which is less than Rs. 5 and increasing the fraction which amounts to Rs. 5 or more to Rs. 10. The net amount of tax deductible should be similarly rounded off to the nearest rupee.

(15) Attention is also invited to section 276B, where it is provided that if a person without reasonable cause or excuse fails to deduct, or after deducting fails to pay the tax as required under the provisions of Chapter XVII-B of the Act, he shall be punishable—

     (i)   in a case where the amount of tax which he has failed to deduct or pay exceeds Rs. 1 lakh, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine; and

    (ii)   in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine.

4. While making the payment of tax deducted at source to the credit of the Central Government, it may kindly be ensured that the correct amount of income-tax and surcharge is recorded in the relevant challan. It may also be ensured that the right type of challan is used. New colour band challans are being introduced with separate numbers. The relevant challan for making payment of tax deducted at source from salaries is No. 9 with “blue colour band”. Along with this colour band challan, old challan forms will also continue to be used. The old challan form number is ITNS 39. Wherever the amount of tax deducted at source is credited to the Central Government through book adjustment, care should be taken to ensure that the correct amount of income-tax and surcharge is reflected therein.

5. For the information of employees, the rates of compulsory depos­it to be made during the financial year 1981-82 under the Com­pulsory Deposit Scheme (Income-tax Payers) Act, 1974, are given at Annex III. The deposit has to be made by a person whose current income during the financial year exceeds Rs. 15,000. The last date for making the deposit in the case of a person who is not re­quired to pay advance tax under the Act is March 31 of the financial year in which the deposit is to be made and the deposit can be made in one or more instalments of his choice at any time during the financial year. A person who is required to pay ad­vance tax, is liable to make the deposit (in one sum or in in­stalments of his choice) on or before the date on which the last instalment of advance tax is payable by him.

6. These instructions are not exhaustive and are issued only with a view to helping the employers to understand the various relevant provisions. Wherever there is a difference of opinion, a reference should always be made to the provisions of the Income-tax Act, and the relevant Finance Act through which the changes in the tax structure are made.

Circular : No. 298 [F. No. 275/3/81-IT(B)], dated 15-4-1981.

ANNEX I – EXTRACTS FROM PART III OF FIRST SCHEDULE TO
FINANCE ACT, 1981

Paragraph A

Sub-Paragraph I

In the case of every individual or Hindu undivided family or unregistered firm or other association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii ) of caluse (31) of section 2 of the Income-tax Act, not being a case to which Sub-Paragraph II of this Paragraph or any other Paragraph of this Part applies :

Rates of Income-tax

(1)
where the total income does not exceed Rs. 15,000
Nil;
(2)
where the total income exceeds Rs. 15,000 but does not exceed Rs. 25,000
30 per cent of the amount by which the total income exceeds Rs. 15,000;
(3)
where the total income exceeds Rs. 25,000 but does not exceed Rs. 30,000
Rs. 3,000 plus 34 per cent of the amount by which the total income exceeds Rs. 25,000;
(4)
where the total income exceeds Rs. 30,000 but does not exceed Rs. 50,000
Rs. 4,700 plus 40 per cent of the amount by which the total income exceeds Rs. 30,000;
(5)
where the total income exceeds Rs. 50,000 but does not exceed Rs. 70,000
Rs. 12,700 plus 50 per cent of the amount by which the total income exceeds Rs. 50,000;
(6)
where the total income exceeds Rs. 70,000 but does not exceed Rs. 1,00,000
Rs. 22,700 plus 55 per cent of the amount by which the total income exceeds Rs. 70,000;
(7)
where the total income exceeds Rs. 1,00,000
Rs. 39,200 plus 60 per cent of the amount by which the total income exceeds Rs. 1,00,000.

Surcharge on income-tax

The amount of income-tax computed in accordance with the preced­ing provisions of this Sub-Paragraph shall be increased by a surcharge for purposes of the Union calculated at the rate of ten per cent of such income-tax.

ANNEX II – TYPICAL EXAMPLES OF INCOME-TAX CALCULATION

Example I

Rs.
Rs.
1.
Total salary income
25,000
2.
Contribution to Government Provident Fund
3,000
3.
Payments towards Life Insurance Premia (LIP)
1,000
4.
Contribution for participation in Unit-linked Insurance Plan, 1971, made under section 19(1)(cc) of the Unit Trust of India Act, 1963
500
5.
Deposit in a 10-year account or 15-year account under the Post Office Savings Bank (Cumulative Time Deposits) Rules, 1959
500
5,000
6.
Total salary income
25,000
7.
Deduct : Amount of standard deduction under section 16(i) of the Income-tax Act at 20 per cent of the amount
5,000
8.
Gross total income (6—7)
20,000
9.
Deduct : Amount on account of contribution towards GPF, LIP, Unit-linked Insurance Plan and deposit in 10-year account or 15-year account under the Post Office Savings Bank (CTD) Rules
Total amount paid Rs. 5,000
5,000
10.
Taxable income
15,000
11.
Total tax payable
Nil

Example II

[Illustrating calculation of limits under section 80C and valua­tion of some perquisites and limits of deduction under section 80C of the Income-tax
Act in case of an employee of a private company posted at Bombay]

Rs.
1.
Salary including dearness allowance
48,000
2.
Bonus
9,600
3.
Contribution to RPF
11,000
4.
LIP
10,000
5.
Free gas, electricity, water, etc. (actual bills paid by the company)
2,400
6.
Furniture at cost (including television set, radio set, refrigerator, other household appliances and an air-conditioner) belonging to the company
40,000
7.
(i) Furnished flat provided to the employee for which actual rent paid by the company (actual rent assumed to be equal to the fair rental value)
24,000
(ii) Rent recovered from the employee
12,000

Computation of total income

1.
Salary
48,000
2.
Bonus
9,600
57,600
3.
Valuation of perquisites :
Furnished flat at concessional rent u/s 17(2) read with clauses (a) and (b) of rule 3 of the Income-tax Rules
Fair Rental Value (FRV) (assumed to be equal to actual rent) Rs. 24,000: 10 per cent of salary including bonus
5,760
Add : Excess of FRV over 30 per cent of salary including bonus of Rs. 57,600 (i.e., Rs. 24,000–Rs. 17,280)
6,720
Add : Perquisite value of the furniture (10 per cent of cost, i.e., Rs. 4,000)
4,000
16,480
Less : Rent paid by the employee
12,000
4,480
62,080
4.
Free gas, electricity, etc.
2,400
64,480
5.
Less : Standard deduction under section 16(i) at 20 per cent of the amount subject to a maximum of Rs. 5,000
5,000
6.
Gross total income(4—5)
59,480
7.
Less: Deduction under section 80C:
– PF paid Rs. 11,000 but restricted to one-fifth of salary of Rs. 48,000 (excluding bonus or Rs. 10,000, whichever is less
9,600
– LIP contribution
10,000
19,600
– The total of PF and LIP of Rs. 19,600 is to be further restricted to 30 per cent of the “gross total income” (i.e., 30 per cent of Rs. 59,480) or Rs. 30,000 whichever is less, i.e., Rs. 17,844
Deduction admissible on Rs. 17,844;
– first Rs. 5,000 (100 per cent)
5,000
– next Rs. 5,000 (50 per cent)
2,500
– of the balance of Rs. 7,844 (40 per cent)
3,138
10,638
8.
Taxable income
48,842
(Rounded off under section 288A)
48,840
9.
Tax payable thereon (Rs. 4,700+40 per cent of excess over Rs. 30,000)
12,236
10.
Surcharge at 10 per cent of income-tax payable
1,224
11.
Total tax payable
13,460

Notes :

1. In the case of a Government servant the value of perquisite of unfurnished accommodation provided free is derermined in accord­ance with the rules framed by the Government for allotment of residence to its employees. For determining the perquisite value of free furniture, it is taken, as in other cases, at 10 per cent per annum of the original cost of the furniture, or if it is hired from a third party, the actual hire charges payable.

2.Where the unfurnished accommodation is provided to its employ­ees by the Reserve Bank of India or any other public sector body specified in sub-clause (2) of clause (a) of rule 3 of the In­come-tax Rules, say a nationalised bank, State Trading Corpora­tion, etc., it is taken as 10 per cent of the salary due to the employees and where the accommodation is furnished, as in other cases, an additional 10 per cent of the original cost of furniture, or if it is hired from a third party, the actual hire charges payable therefor.

3. In the example given above, the actual rent has been assumed to be equal to the “fair rental value”. “Fair rental value” can, however, be different from the actual rent. It is defined in Explanation 2 below clause (a) of rule 3 to mean, in the case of an accommodation which is unfurnished, “the rent which a similar accommodation would realise in the same locality or the municipal valuation in respect of the accommodation, whichever is higher”.

4. In case the accommodation is situated in Bombay, Calcutta, Delhi and Madras, the excess of 30 per cent of salary over fair rental value, as against 20 per cent in other cases, is required to be added in determining the value of perquisite in view of the Board’s Circular No. 130, dated 16-3-1974.

Example III

[Illustrating limits of deduction under section 80C ]

Rs.
Rs.
1.
Total salary income (including Rs. 2,400 as conveyance allowance at Rs. 200 p.m. received from the employer)
30,000
2.
Contribution to RPF
9,500
3.
Payments towards LIP
1,000
4.
Contribution for participation in Unit-linked insurance plan, made under section 19(1)(cc) of the Unit Trust of India Act, 1963
1,500
5.
Deposit in a 10-year account or 15-year account under the Post Office Savings Bank (CTD) Rules
1,000
6.
Total salary income
30,000
7.
Deduct : Amount of standard deduction under section 16(i) at 20 per cent of the amount subject to a maximum of Rs. 5,000
5,000
8.
Gross total income (6—7)
25,000
9.
Deduction under section 80C :
– Contribution of Rs. 9,500 to PF under section 80C (2)(d ) restricted to one-fifth of salary of Rs. 30,000 or Rs. 10,000, whichever is less
6,000
– LIP
1,000
– Contribution to participation in Unit-linked-insurance plan, made under section 19(1)(cc) of the UTI Act
1,500
– Deposit in a 10-year account or 15-year account under the Post Office Savings Bank (CTD) Rules
1,000
9,500
– Restricted to 30 per cent of the “gross total income” or Rs. 30,000, whichever is less (i.e., 30 per cent of Rs. 25,000)
7,500
– Deduction admissible on Rs. 7,500 on the
– first Rs. 5,000(100 per cent)
5,000
– next Rs. 2,500(50 per cent)
1,250
6,250
10.
Taxable income (8—9)
18,750
11.
Income-tax payable at Rs. 18,750
1,125
12.
Surcharge on income-tax at 10 per cent
112.50
13.
Total tax payable (1+12)
1,237.50
14.
Rounded off (under section 288B)
1,238.00

ANNEX III – RATES OF COMPULSORY DEPOSIT

(1)
where the current income exceeds Rs. 15,000 but does not exceed Rs. 25,000
4.5 per cent of the current income;
(2)
where the current income exceeds Rs. 25,000 but does not exceed Rs. 35,000
Rs. 1,125 plus 11 per cent of the amount by which the current income exceeds Rs. 25,000;
(3)
where the current income exceeds Rs. 35,000 but does not exceed Rs. 70,000
Rs. 2,225 plus 12.5 per cent of the amount by which the total income exceeds Rs. 35,000;
(4)
where the total income exceeds Rs. 70,000
Rs. 6,600 plus 15 per cent of the amount by which the total income exceeds Rs. 70,000 :

Provided that—

    (a)   where the current income exceeds Rs. 15,000 but does not exceed Rs. 15,710 the compulsory deposit shall in no case exceed the amount by which the current income exceeds Rs. 15,000 ;

    (b)   where the amount of compulsory deposit calculated in accordance with the foregoing provisions is less than Rs. 100, it shall not be necessary for the taxpayer concerned to make such deposit.

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