CENTRAL GOVERNMENT EMPLOYEES - INCOME TAX

INCOME TAX RATES

ASSESSMENT YEAR 2019-2020

RELEVANT TO FINANCIAL YEAR 2018-2019

The normal tax rates applicable to a resident individual will depend on the age of the individual. However, in case of a non-resident individual the tax rates will be same irrespective of his age.

For the purpose of ascertainment of the applicable tax slab, an individual can be classified as follows:

• Resident individual below the age of 60 years. i.e. born on or after 01-04-1959

• Resident individual of the age of 60 years or above at any time during the year but below the age of 80 years. (i.e. born during 01-04-1939 to 31-03-1959)

• Resident individual of the age of 80 years or above at any time during the year. i.e. born before 01.04.1939

• Non-resident individual irrespective of the age.  

 

I. Normal tax rates applicable to a resident individual below the age of 60 years, i.e. born on or after 01-04-1959

INCOME SLABS INCOME TAX RATES
Upto Rs.2,50,000 NIL
Rs. 2,50,000 to 5,00,000 5% of (total income minus Rs. 2,50,000)
Less: Tax Credit - 100% of income-tax or Rs. 2,500/-, whichever is less where net income does not exceed Rs. 3,50,000/- *.
Rs. 5,00,000 to 10,00,000 Rs. 12,500 + 20% of (total income minus Rs. 5,00,000)
Rs. 10,00,000 & above Rs. 1,12,500 + 30% of (total income minus Rs. 10,00,000)

II. Normal tax rates applicable to a resident individual of the age of 60 years or above at any time during the year but below the age of 80 years, i.e. born during 01.04.1939 to 31.03.1959

INCOME SLABS INCOME TAX RATES
Upto Rs. 3,00,000 NIL
Rs. 3,00,000 to 5,00,000 5% of (total income minus Rs. 3,00,000)
Less: Tax Credit - 100% of income-tax or Rs. 2,500/-, whichever is less where net income does not exceed Rs. 3,50,000/- *.
Rs. 5,00,000 to 10,00,000 Rs. 10,000 + 20% of (total income minus Rs. 5,00,000)
Rs. 10,00,000 & above Rs. 1,10,000 + 30% of (total income minus Rs. 10,00,000)

III. Normal tax rates applicable to a resident individual of the age of 80 years or above at any time during the year, i.e. born before 01.04.1939

INCOME SLABS INCOME TAX RATES
Upto Rs. 5,00,000 NIL
Rs. 5,00,000 to 10,00,000 20% of (total income minus Rs. 5,00,000)
Rs. 10,00,000 & above Rs. 1,00,000 + 30% of (total income minus Rs. 10,00,000)

* A resident individual (whose net income does not exceed Rs. 3,50,000) can avail rebate under section 87A. It is deductible from income-tax before calculating education cess. The amount of rebate is 100 per cent of income-tax or Rs. 2,500, whichever is less. 

SURCHARGE

Surcharge is levied @ 10% on the amount of income-tax if net income exceeds Rs 50 Lakh but doesn’t exceed Rs. 1 crore and @ 15% on the amount of income tax if net income exceeds Rs. 1 crore. In a case where surcharge is levied, health and education cess of 4% will be levied on the amount of income tax plus surcharge.

However, marginal relief is available from surcharge in such a manner that in the case where net income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 Crore, the amount payable as income tax and surcharge shall not exceed the total amount payable as income tax on total income of Rs 50 Lakh by more than the amount of income that exceeds Rs 50 Lakhs.

Further, in a case where net income exceeds Rs. 1 crore, marginal relief shall be available from surcharge in such a manner that the amount payable as income tax and surcharge shall not exceed the total amount payable as income-tax on total income of Rs. 1 crore by more than the amount of income that exceeds Rs. 1 crore.

HEALTH AND EDUCATION CESS ON INCOME TAX

The amount of Income-tax shall be further increased by Health Cess of 1%, Education Cess of 2% and SHEC of 1% on Income-tax.

ALTERNATE MINIMUM TAX

In the case of a non-corporate taxpayer to whom the provisions of Alternate Minimum Tax (AMT) applies, tax payable cannot be less than 18.5% (+HEC) of "adjusted total income" computed as per section 115JC. For provisions relating to AMT refer tutorial on “MAT/AMT” in tutorial section.

However, w.e.f. Assessment Year 2019-20, In case of a unit located in an IFSC which derives its income solely in convertible foreign exchange, the rate of AMT under section 115JF shall be at the rate of 9% instead of existing rate of 18.50%.

PERMANENT ACCOUNT NUMBER (PAN)

Every assessee is required to obtain 10 alpha numeric Permanent Account Number (PAN) and quote the same in his returns, challans & correspondence. PAN can be obtained by applying in new Form No.49A at the designated Service Centres of UTITSL OR NSDL. PAN is essential for processing the Return of Income and for giving credit for taxes paid. If a person who is required to quote his Permanent Account Number fails to do so or intimates false number, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of Rs.10,000.

INCOME TAX PAYMENTS

Advance tax payments and Self-assessment tax payments have to be made in Challan No.280.

# Cost Inflation Index – For Capital Gain

The cost inflation indices for the financial years so far have been notified as under:

    Financial Year Cost Inflation Index    
    2001 – 02 100    
    2002 – 03 105    
    2003 – 04 109    
    2004 – 05 113    
    2005 – 06 117    
    2006 – 07 122    
    2007 – 08 129    
    2008 – 09 137    
    2009 – 10 148    
    2010 – 11 167    
    2011 – 12 184    
    2012 - 13 200    
    2013 - 14 220    
    2014 - 15 240    
    2015 - 16 254    
    2016 - 17 264    
  2017 – 2018272    
      

CALCULATE YOUR INCOME TAX AFTER DEDUCTIONS

INCOME

Salary

Salary includes all kinds of pay, GP, DA, Overtime Allowance, Bonus, Leave Salary, Advance of pay, CCA, value of rent free quarters, fees, honoraria, Compensatory allowance, reimbursement of tuition fees, Leave encashment with LTC, pension, subsistence allowance, interim relief, Government or any other employer's contribution to the NPS and house rent allowance to the extent not exempted under Section 10(13-A) and Government's or any other employer's contribution to the new pension scheme. Salary does not include Children's education allowance not exceeding Rs. 100/- p.m. per child up to a maximum of two children.

Income from house property

If an employee has income under any other head, viz, income from house property, dividend, interests, etc, he can furnish the particulars of such income and tax deducted under source thereon to his employer in the prescribed form and the employer can compute the total tax liability taking into account such income also and deduct appropriate tax from salary.

'Loss' under the head 'Income from house property' - In the case of let-out property, if the net income happens to be a loss, it can be set off against the income under other heads. In the case of self-occupied property, interest on borrowed capital can be set off against income under any other head, subject to a maximum of Rs. 30,000/- or Rs. 2 Lakhs, as the case may be, under Section 24.

In case where the property was acquired or constructed through capital borrowed on or after 01.04.1999 and acquisition/ construction completed within 3 years from the end of the financial year in which capital was borrowed, interest on such borrowed capital is deductible up to a maximum of Rupees 2 lakhs.

DEDUCTIONS

The following deductions are allowed to the extent permissible from the salary:-

1. Deduction of Rs.40,000/- or the amount of salary, whichever is less, is allowed as standard deduction in lieu of exemption of the transport allowance and reimbursement of miscellaneous medical  expenses under Section 16(ia).

2. Professional Tax:- Amount actually paid during the year [Section 16(i)].

3. Entertainment Allowance :- Entertainment Allowance received by the Government servant up to one-fifth of his salary or Rs. 5,000, whichever is less. [Section 16(ii)].

4. Under Section 80C

a. Life Insurance Premia payment, limited to 10% of the sum assured;

b. Effect or keep in force a contract for deferred annuity;

c. Contribution to Provident Fund (does not include repayment of advances/ Loans);

d. Contribution to approved Superannuation fund;

e. Subscription of any such security/ deposit scheme of the Central Government;

f. Subscription to any such savings certificate as the Government may specify;

g. Contribution to Unit Linked Insurance Plan;

h. Subscription to units of any Mutual Fund;

i. Contribution to any Pension Fund set up by any Mutual Fund;

j. Subscription to any such Deposit scheme of National Housing Bank as may be notified by Central Government;

k. Subscription to any such Deposit scheme of a public sector company of any authority constituted in India which is engaged in long term financing for construction / purchase of houses for residential purposes or any authority constituted in India for purpose of planning, development, improvement of cities etc.

l. Tuition fees paid limited to two children;

m. Any installment or part-payment of the amount borrowed for construction / purchase of residential property from Govt./ Bank/ LIC/ Co-operative Bank/ Housing Board/ Development Authority, etc.;

n. Subscription to equity shares/ debentures forming part of any "eligible issue of capital".

5. Contribution to the new Pension Fund of LIC (Sec. 80 CCC): Payment Subject to a maximum of one hundred and fifty thousand rupees to keep in force any annuity plan of the LIC or any other insurer for receiving Pension from the Fund of Section should be deducted from the taxable income.

6. Contribution to the New Pension Scheme limited to 20% of Salary (Sec. 80CCD(1)) -

i. Contribution to the New Pension Scheme up to twenty percent of gross total income. [The amount received by a nominee on the death of the assessee shall not be deemed to be the income of the nominee under sub-section (3)(a).]

ii. A deduction not exceeding fifty thousand rupees is allowed as deduction apart from (i) above [section 80-CCD (1) and (1-B)

The aggregate amount of deductions under Section 80-C, 80-CCC and sub-section (1) of 80-CCD should not exceed one lakh fifty thousand rupees.

7. Investment made under an equity savings scheme (Sec 80CCG)

8. Medical Insurance/ CGHS/ Preventive Health Check-Up (Sec. 80D.):-

Any premium paid BY ANY MODE OF PAYMENT OTHER THAN CASH for medical insurance subject to a maximum of Rs. 25000/-. This is applicable to insurance under any scheme sponsored by the General Insurance Corporation of India or any other insurer. In addition, any premium paid for parents up to Rs.50,000/- if parents are senior citizens. Any amount paid for self/ family/ parents in any mode including cash, for preventive health check-up, upto Rs. 5000/-is also allowed within the maximum of Rs.50,000/-.

Payment for medical expenditure of a senior citizen without health insurance cover Rs. 50,000/-

Any contribution made to the central Government Health Scheme or such other scheme as may be notified by the Central Government.

The aggregate of the deduction should not be more than Rs.50,000/-. Rs.1,00,000/- in the case of senior citizens. (Sec. 80D.)

9. Handicapped dependent (Sec. 80DD):- An amount of Rs. 75,000 for assesses who incur expenditure in medical treatment (including nursing) / training and rehabilitation of a dependent being a person with disability and Rs.1,25,000 in the case of severe disability.

10. Medical Treatment (Sec 80 DDB):- Special deduction of actual expenditure limited to Rs. 40,000 to the patient or a dependent suffering from cancer or AIDs involving considerable expenditure on treatment and Rs. 1,00,000/- if such dependent is senior citizen, i.e., who is the age of 60 years or more. This will however be subject to deduction of any amount received through medical insurance if any.

11. Education Loan (Sec 80E):- If an assessee has taken any loan from any financial institution or charitable institution for purpose of his higher education, the amount of interest paid during the year can be deducted from the taxable income till the loan including interest is cleared or for a period of eight years whichever is less.

12. Section 80-U: Rs. 75,000/- in the case of assesses who is a person with disability and Rs.1,25,000/- if he is a person with severe disability.

13. Section 80-EE: Interest payable on loan taken from any financial institution for purpose of acquisition of a residential house property up to 'fifty thousand' subject to conditions.

Donations

Donations for charitable purposes fall under two categories, (a) those which can be taken into account by the Disbursing Officer and (b) those for which assessees can get refund only through their Annual Income Tax Return from the ITO concerned. In respect of some donations, i.e. from Sl. No. 1 to 4 fifty per cent of the total donation to be deducted from the taxable income, and from 5 to 23 whole amount of donation to be deducted from the taxable income.

Donations which can be taken into account by the Disbursing Officer.

1) Jawaharlal Nehru Memorial Fund

2) Prime Minister's Drought Relief fund

3) Indira Gandhi Memorial Trust

4) Rajiv Gandhi Foundation

5) National Children's fund

6) Prime Minister's National Relief Fund

7) Prime Minister's Armenia Earthquake Relief Fund

8) Africa (Public Contribution-India) Fund

9) National Foundation for Communal Harmony

10) A University or any Educational Institution of National eminence approved by the prescribed Authority

11. National Blood Transfusion Council or any State Blood Transfusion Council, having its sole object to the control, supervision, regulation or encouragement in India of the services related to operation and requirements of blood banks.

12) Army Central Welfare Fund or Indian Naval Benevolent Fund or Air Force Central Welfare Fund established by the Armed Forces of the Union

13) The Andra Pradesh Chief Minister's Cyclone Relief Fund

14) The National Illness Assistance Fund

15) The Chief Minister's Relief fund or the Lieutenant Governor's Relief Fund in respect of any State or Union Territory, as the case may be

16. National Sports Fund set up by the Central Government

17. National Cultural Fund set up by the Central Government

18. Fund for Technology Development and Application set up by the Central Government

19. National Trust for welfare of persons with Autism, Cerebral palsy, Mental retardation and Multiple Disabilities.

20) National Children's Fund

21) Swachh Bharat Kosh

22) Clean Ganga Fund

23) National Fund for Control of Drug Abuse

[In respect of any other donations to approved Institutions/ charitable trusts under Section 80-G, the employees have to claim refund from the ITO]

13. Deduction in respect of rent paid (Sec 80GG): - If the employee is living in a rented house, exemption is allowed to the extent of the least of the following:-

(a) the actual amount of HRA received.

(b) Rent paid in excess of 10% of salary. (Pay +GP)

(c) 50% of salary, if the residence is at Mumbai: Delhi, Calcutta and Chennai, 40% of salary if the residence is situated at any other place

If an employee lives in his own house, or in a house where he does not pay any rent/ pays rent not exceeding 10% of salary no exemption is available and the entire amount of HRA drawn by him is taxable.

Taxable income is arrived at by allowing deductions to the permissible extent and is rounded off to the multiple of ten rupees, rupees five and above being rounded off to the next higher ten rupees. [Section 288-A].

On the total taxable income arrived at, the income tax is worked out on the basis of the tariff for current year ancl rounded off to the nearest rupee. [Section 288-B]

# CBIT Notification No. 44/2017 - F.No. 370142/11/2017-TPL dated 05-06-2017

This notification will come into effect on 01-04-2018 and apply to the assessment year 2018-19