Basic Concepts

Initial factors
Employee-employer relationship Surrender of Salary to CG under sec 2 of Vol Surrender Act

Doesnt matter
Full-time/part-time Foregoing (= app. of income)

9 Salary earned in India = Deemed to accrue in India no matter where it is paid 15 Basis of Charge DUE OR RECEIPT WHICHEVER EARLIER
ONCE ASSESSED ON DUE (e.g. arrears normally on due basis but not always such as Pay Commission revision of salaries) or RECEIPT (e.g. advance salary), cannot be taxed again. relief under Sec 89(1)for both ADVANCE AGAINST SALARY AND LOANS FROM EMPLOYERS NOT TAXED AS SALARY

17(1) Salary definition 17(3) Profits in lieu of salary = w.r.t termination + modification of T&C + PF/other funds w/o employees contri + Keyman Insurance + other
Annuities = Sums paid in respect of a particular year FROM PRESENT EMPLOYER = under Salary FROM PAST EMPLOYER = profit in lieu of Salary FROM NON-EMPLOYER = under Income from other sources

Section 10
NOTE: INCOME EXEMPTIONS UNDER SEC 10 WILL NOT BE INCLUDED AT ALL, THE ONES UNDER VI-A WILL BE FIRST INCLUDED

10 (1) Agricultural Income

Parliament has no power to levy tax on agricultural income.

Indirect way of taxing Extra tax is equal to (Income slab floor) x (b-a) % (b: tax rate for slab 2; a: tax rate for slab 1) INCOME DEFINITION 2(1A): Tilling, sowing and similar operations (e.g. sale of seeds, flowers and creepers, grazing of cattle for agri, bamboo). Nursery. Farm building with conditions. Other than tea agri (e.g. sale of sugarcane cost of cultivation) and business (e.g. sale of sugar cost of sugarcane cultivation manuf expenses) SEPARATE Rubber 65% Coffee (grown and cured) 75% Coffee (grown, cured,.) 60%

10 (2) Amount by member from income of HUF EXEMPT 10(4) Int. on CG securities (n.a.>2002) + CG saving certs (n.a > 2002) EXEMPT 10(5) LTC EXEMPT for individual and dependants on actual amount as per Rule 2 journeys in a Block of 4 years after 19B6
1 unavailed in 4 yrs carried forward to succeeding block fr exemption

10 (6) FOREIGN COMPANIES EXEMPT -> technical services + security to India + aircraft operations 10(7) Allowances + perks payable outside India - EXEMPT 10(10) Gratuity
DEF. RET. GR. CG/SG NG

PoGA

PoGA

15/26 * last salary * yrs of service (>6m)

Actual

10L

15/30* Avg salary (10m imm. B4 m of retirement) * yrs of service (>6m)

10(10a) Commuted
DEF. RET. GR. CG/SG (Judges <=.5) NG From annuity plan of LIC NOT rec. gratuity 1/3* (comm. Pension recd/comm. %) * (comm. Pension recd/comm. %)

Receiving gratuity

Uncommuted FULLY TAXABLE 10(10AA) Amt received for encashment of unutilized earned leave on Retirement
DEF. RET. GR. CG/SG NG

10 M salary (10m imm. B4 m of retirement)

Actual

3L

LeaveDue/30* Avg salary (10m imm. B4 m of retirement)

Leave Due = Leave Allowed Leave Taken Leave salary received during service fully taxable Limit of 3LAC reduced by amt of leave salary exempt earlier if leave salary received before from former employer 10(10B) Retrenchment compensation
15/26 * Avg salary of last 3 MONTHS * Completed yrs of service (>6m part thereof) OR

5lac OR Actual

N.A. if paid under protection of workmen CG SCHEME

COMPENSATION RECEIVED ON A/C OF DISASTER FROM CG/SG/LA EXEMPT

10(10C) Voluntary Retirement Receipts Gov company or insti of pub importance (e.g. IIT) EXEMPT UPTO:
Last salary* 3 MONTHS * Completed yrs of service (>6m part thereof) OR Last salary* remaining MONTHS of service OR 5lac OR Actual IF RELIEF UNDER 89 CLAIMED, THEN NO EXEMPTION

10(10D) Receipts from LIC

1.4.03 to 31.3. 2012 actual premium paid> 20 % * assured capital NO EXEMPTION 1.4.2012 actual premium paid > 10% * assured capital NO EXEMPTION

10(11 & 12) Payment from PFs - EXEMPT 10(13) Payment from superannuation fund - EXEMPT 10(13A) HRA

Metros

Others

50% of salary for relevant period

Actual

Rent paid 10% of sal.

40% of salary for relevant period

10(14) Special allowances for duty/personal expenses (i) Incurred wholly, necessarily and exclusively for duties
FULL UTILIZED AMOUNT EXEMPT Travel, Transfer, Conveyance, Helper, Uniform, Research

(ii)

Incurred for personal expenses

Special Compensatory (Hilly Areas)/ High Altitude/ Snow Bound/ Uncongenial Climate Border/ Remote Area/ Disturbed Area *

Tribal/ Scheduled Areas + agencies For employee working in transport sys Transport allow. to blind/ortho handicapped *Counter insurgency *Field Area Transport Allow. Underground Allow. (coal) Modified Field Area Children Education

70% OR `10000 `1600 p.m. `1300 p.m. `1300 p.m. ` 800 p.m. ` 800 p.m. ` 500 p.m. ` 100 p.m. PER CHILD (max 2)

10(15) Interest income arising to certain persons

Post Office Savings Bank A/C : 3500 (indiv); 7000 (joint)

10(16) Scholarship COMPLETE VALUE EXEMPT

(17) D.A. and Constituency Allowance to MP/MLA - EXEMPT (17A) Awards (e.g. literary, scientific,) EXEMPT (18) Gallantry Awards EXEMPT (19) Pension after death for Armed forces EXEMPT (20) Local auth. E.g. panchayat EXEMPT (23) Income of Prof assoc, employee welf fund, LIC pension scheme fund, insti/auth. For KhadiVillage, auth. To admin. Charit. Trusts, European EC through Gov scheme, SAARC fund, CERC, Prasar Bharti, EXEMPT (23C) Income of PM funds relief, folk art, students; Foundation for communal harmony; other funds, hospitals, educational insti. NOT for PROFIT annual receipts< 1cr OR wholly/subst fin. By Gov EXEMPT (23D) Income of Mutual Funds of PSB/SEBI/RBI/ Pub FI EXEMPT

(24) T.U. Income from HP + IFOS

(25) PF, Superannuation Fund, Gratuity Fund; ESIF

(26) ST resident; Sikkimese (income from sources in area + div./int. on securities)

+ Corporations for minority welfare - > Exempt + tax relief under 80G +Corporation for SC/ST interest promotion (27) Cooperatives for SC

(29) Income of certain bodies like Coffee Board etc. (30) Tea board subsidy by assessee engaged in tea growth and manufacturing business (31) Other subsidies for commodities

(32) Clubbed income of minor

IF INCOME INCLUDES INCOME OF HIS/HER MINOR CHILD w.r.t. 64(1), then 1500 EXEMPT (33) Income arising from transfer after 1.4.02, of unit of Unit Scheme, 1964

(34) Dividend income EXEMPT FOR SHAREHOLDER DDT (15, 5, 2, 1 = 16.225%) TAXABLE FOR COMPANY
(36) LTCG on transfer of listed equity shares b/w 03 and 04

(37) CG on compulsory acquisition of agri land within urban land

Compensation received after 1.4.04 EXEMPTION ONLY FOR HUF/INDIVIDUAL WAS used as agri land for 2 years.

(38) LTCG on sale of equity shares EXEMPT IF TRANSACTION CHARGEABLE TO STT

LTCG Shall be taken to compute book profit and INCOME TAX PAYABLE under 115JB (39) Sporting event; (40), (41) Power distribution and transmission

(43) Amount received by SENIOR CITIZEN as loan in a reverse mortgage transaction EXEMPT
(44) Income of NPS Trust (45) Specific allowances and perks paid to member/retired member of UPSC (46) SPECIFIED income of notified entities not engaged in commercial activity e.g. NSDC, CCI (48) Income received by foreign companies in Indian currency in India from sale of crude oil

Sections 11-13
Section 11 Income from Property held in trust or legal obligation for religious or charitable puposes wholly or in part Section 12 Exemption of income derived by such a trust from VOLUNTARY contributions Section 12A Conditions for registration of trust Section 13 Denial of exemptions Section 13A Tax exemptions to political parties Section 13B Tax exemptions for voluntary contributions to electoral trust

PF Contributions
Fully Taxable
RPF 12% of salary RPF(int) 9.5% URPF URPF(int) Salary: URPF, URPF(int) IFOS: URPFe(int)

Fully exempt
SPF, SPF(int), PPF(int)

Not taxable
Deductible: RPFe, PPFe, SPFe Not Deductible: URPFe

SPF, PPF RPF: If employee service> =5 years OR If employee service < 5 years and service terminates for reasons beyond employees control

Superannuation Contributions
Fully Taxable
Contribution 1,00,000

Fully exempt
Interest

Not taxable, Deductible

Employee contribution

Fully exempt allowances

(1) (2) (3) (4) Allowance from UNO Allowance to judge under article 222(2) Allowance to HC Judges u/s 22A of HC Judges Act Sumptuary Allowance to HC and SC judges

Perks

Deductions from Salary u/s 16

Entertainment Allowance
1. First included in salary and then deduction made 2.

GOV empl

Actual

5000

1/5* Basic Salary

Professional Tax under Article 276

1. IF EMPLOYER pays or reimburses, then first included in salary and then deduction made 2. IF EMPLOYEE pays, then deduction made