WELCOME
Salary
Taxation
Department Website
•
The relevant Acts, Rules,
Forms and Notifications are
available at the website of
the Income-tax Department www.incometaxindia.gov.i
n
TDS rates for Financial Year 2013-14
Senior Citizen
above 60 Years Woman
Others
For Income
For Income
Between 0 to
Between 0 to
For Income Between 0
2,50,000
2,00,000
to 2,00,000
For Income
For Income
For Income Between
Between 2,50,001 Between 2,00,001 2,00,001 to 5,00,000
to 5,00,000
to 5,00,000
Tax (%)
0
10
For Income
For Income
For Income Between
Between 5,00,001 Between 5,00,001 5,00,001 to 10,00,000
to 10,00,000
to 10,00,000
20
For
Income above
10,00,001
Surcharge
30
Education Cess
For
Income above
10,00,001
>1,00,00,000
For Income above
10,00,001
>1,00,00,000
10
3
SECTION 87A
 Individual
whose net income does
not exceed Rs. 5,00,000/-is entitled
for rebate u/s 87A for Rs. 2,000/-.
 This is in addition to benefits of slab rates
given by Govt.
 AY 2014-15
Topics
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WHAT IS SALARY
ALLOWANCES
INCOMES WHICH DO NOT FORM PART
OF TOTAL INCOME.
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DEDUCTION UNDER SECTION 16
DEDUCTIONS UNDER CHAPTER VI A
What is salary ?
(Sec.15,16&17)
• Employer and Employee
relationship
• An income can be taxed under
the head salaries only if there is
a relationship of an employer
and employee between the
payer and payee.
What is salary ?
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Salary includes
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Wages,
Bonus
Annuity
Pension,
Gratuity,
Fees,
Commission,
Perquisites,
Leave encashment,
Arrears of salary
others.
What is salary ?
• Any salary, bonus, commission
or remuneration, by whatever
name called, due to, or received
by, a partner of a firm from the
firm shall not be regarded as
“Salary”.
Allowances which are Fully
exempted in case of Certain Person
 Indian
Citizen – Govt. Servant Working
Outside India
 SC and HC Judge
 UNO Employees
 Chairman, Member or Retired Member of
UPSC [10(45)]
HOUSE RENT
ALLOWANCE
u/s.10(13A)
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The least of the following exempted
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Actual HRA received
Rent paid in excess of 10% of salary
50% of salary in metro cities
40% in other places.
For this purpose “Salary” includes
dearness allowance if terms of
employment so provide
House Rent
Allowance
• The disbursing authorities should
satisfy themselves in this regard by
insisting on production of evidence
of actual payment of rent.
• It has been decided as an
administrative measure that salaried
employees drawing house rent
allowance up to Rs. 3,000 per month
will be exempted from production of
rent receipt. [Cir. 9/2003, dt. 18/11/03]
Allowances exempt, amount
received or limit specified,
which ever is less
1.
Children Education Allowance : Exempt up to
actual amount received per child or Rs.100 p.m.
per child up to maximum of two children, which
ever is less.
2.
Transport Allowance : Exempt to the extent of
Rs.800 p.m.
3.
Washing Allowance : Exempt to the extent of
actual expenditure.
S.10 – Incomes which do not
form part of total income.
These payments will not be part of salary subject to
limits prescribed
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LTC (Sec. 10(5))
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The exemption is allowed only in respect of fare
only.
Gratuity (Sec. 10(10))
Commuted value of pension (Sec. 10(10A))
Leave encashment at the time of retirement (Sec.
10(10AA))
Provident fund receipts and RPF receipts (Sec.
10(11) & 10(12))
LTC

LTA tax exemption can be claimed twice in
block of 4 years
01-Jan-2006 – 31-Dec-2009
 01-Jan-2010 – 31-Dec-2013
 01-Jan-2014 – 31-Dec-2017
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Amt spent on self, spouse, children (maximum
of two children), parent, brother, sister, and
dependent.
Travel within India via rail, air, road through
shortest route
lodging, boarding, food, cab fare, auto fare,
driver tip/allowance.
Gratuity
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Death Cum Retirement Gratuity
received by the Central Govt./State
Govt. /Local Authorities - EXEMPT
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Covered by gratuity Act, 1972 least of
the following is exempted.
1.
2.
3.
Actual amount received.
15 days salary (based on last drawn
salary) for each year of completed
service - (i.e. 15 days Salary x Length of
Service)
Rs.10,00,000/-.
EL Encashment
Central Govt / State Govt Employees –
Exempt
• Other Employees –
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Earned Leave received During the Tenure of
Service -Fully Taxable
Earned Leave received on Retirement or
Superannuation
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Least of the Following will be Deducted
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Amount Actually Received
Rs. 3,00,000/Average Salary x 10
(Maximum 30 Days for each
completed year of Service minus
Leave Available ) x Average Salary
Deduction under
section 16
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Tax on employment (professional tax)
paid is allowable as deduction from
salary. (max:- 2,500/- P.A)
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Entertainment Allowance : This
deduction is allowed only to a
Government employee to the least of
following.
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Actual amount received.
20% of salary exclusive of any allowance.
Rs.5000.
Deduction on income from
House property
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interest up to a maximum limit of Rs.
1,50,000 is allowed
Loan taken on or after 1-4-1999
for constructing/acquiring the residential.
house and
o completed within three years from the end
of the financial year in which capital was
borrowed.
o No limits for the let out property
o Only one property is eligible for deduction
o
o
Section 80EE
Deduction for interest on loan
on Residential House
 Inserted
wide FY 2013-14
 Deduction upto Rs.1,00,000
 Loan
taken during FY 2013-14
 Loan Amount does not Exceed 25 Lacs
 Value or Residential Property does not Exceed
40 Lacs
Deductions under chapter VIA
–u/s.80C,80CC &80CCD
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The following investments are eligible for
deduction:
Life Insurance Premium, Statutory
Provident Fund, RPF, PPF, NSC, ULIP,
Notified Units of Mutual Fund, Re-payment
of housing loan, Tuition Fee paid, fixed
deposit for 5 years or more with a
scheduled Bank, Senior Citizen Saving
Scheme, five year time deposit scheme in
Post Office etc.
Deductions
u/s.80C,80CC&80CCD
• Amount of deduction
allowable; gross
qualifying amount or
Rs.1,00,000 which ever
is lower.
Deduction u/s.80D
• Medical insurance premium
(Med claim Policy) paid: On the
health of taxpayer, spouse,
parents and dependent children
• The premium can be paid by any
mode other than cash.
Deduction u/s.80D
• Amount of deduction
Rs.15,000 –
• additional deduction Rs.5,000
is allowed if the policy is
taken on the health of senior
citizen.
• Preventive Medical Check up
Rs. 5,000 from 2012-13
Deduction u/s.80DD
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Deduction in respect of maintenance
including medical treatment of a
handicapped dependent :
Furnish a certificate issued by the
medical authority in form No.10-IA.
Amount of deduction Rs.50,000 is
allowed.
In case severe disability - Rs.1,00,000
is allowed.
The person claiming deduction under
this section, he should not claim any
deduction under section 80U.
Deduction
u/s.80DDB
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Medical treatment of dependent or self
for specified disease/ailment.
• Amount of deduction Rs.40,000: if the
person is a senior citizen Rs.60,000 is
allowed.
• This deduction is not
allowable by the employer.
Deductions -u/s.80E
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Payment of interest on loan taken for higher
education: spouse or children
The loan has to be taken from any financial
institution or approved charitable institution.
The deduction is available for a maximum of
8 years
Deductions -u/s.80G
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Deduction in respect of donations to certain
funds, charitable institutions etc.
Deduction can be allowed by the employer
only in respect of donations made to Prime
Minister Relief Fund, Chief Ministers Relief
Fund, Earthquake Fund, National Childern
Fund, etc.
In respect of donations to
charitable institutions,
deductions cannot be
allowed by the employer.
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Deductions u/s.80GG
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Deduction in respect of rent paid
The assessee should not be receipt of HRA
and he should not own any house
The least of the following amount is
exempted
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Rent paid in excess of 10% of total income
before allowing deduction under this section.
• Rs.2000 per month.
• 25% of total income before allowing deduction
under this section
Rajeev Gandhi Equity Saving
Scheme – 80CCG
 Total
Income does not Exceed 12 Lacs
 Investment – 50,000 (Max.)
 Deduction – 50% of Investment.
 For 3 Consecutive Years.
 Lock-in Period – 3 Years.
 Over & above Deduction of 1,00,000/under 80C
Deductionu/s.80GGC
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Any amount of contribution made
by a person to a political party or
an electoral trust is deductible.
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This deduction is not
allowable by the employer.
Deductions under
Chapter VI A-u/s.80U
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Deduction in case of a person with
disability: blindness, low vision, leprosy,
hearing impairment, mental retardation
and mental illness.
Conditions: Furnish a certificate issued
by the medical authority in form No.10IA.
Amount of deduction (fixed)Rs.50,000 is
allowed. In case severe disability Rs.1,00,000 is allowed.
Relief u/s.89(1)
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Relief is available when salary is
received in arrears or advance.
• Application in Form-10E has to
be obtained from the employee.
• Form 10E is required to allow
claim of relief u/s. 89(1)
Tax on Provident Funds &
various exemptions
Particulars
SPF/PPF
RPF
URPF
Employer's
Contribution to the
Fund
Not Taxable
Tax on Provident Funds
is exempt to the extent Not Taxable in the year
of 12% of Salary (refer of Contribution
note 1 below)
Employee's
Contribution to the
Fund
Deduction under section Deduction under section No Benefit Available
80C available
80C available
Interest Credited to
the Fund
Exempt
Exempt up to 9.5% rate Not Taxable at the time
of Interest
of Credit
Lumpsum amount
withdrawn from the
Fund
Exempt under section
10(11)
Exempt under section
10(12) subject to :
Completed 5 Years
Employer : Taxable
Employee: Exempt
Points to Ponder
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If the House Property is transferred
before expiry of five years no
deduction in the year of transfer
and earlier deductions allowed will
become income in the year of
transfer .
• No deductions u/s. 80C for the
repayment of principal amount if
the loan is taken from the private
persons and also not for
commercial properties.
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Thank you