CENTRAL GOVERNMENT EMPLOYEES - INCOME TAX

INCOME TAX RATES

ASSESSMENT YEAR 2009-2010

RELEVANT TO FINANCIAL YEAR 2008-2009

I. TAX RATES FOR INDIVIDUALS OTHER THAN II & III

II. TAX RATES FOR RESIDENT WOMEN BELOW 65 YEARS

III. TAX RATES FOR INDIVIDUAL RESIDENTS AGED 65 YRS AND ABOVE

SURCHARGE ON INCOME TAX

In the case of every Individual, Hindu undivided family, Association of person and body of individuals, Surcharge on income-tax is calculated @10% if the total taxable income exceeds Rs.10,00,000.

EDUCATION CESS ON INCOME TAX

The amount of Income-tax and Surcharge shall be further increased by Education Cess of 3% on Income-tax plus Surcharge.

EXEMPTIONS/DEDUCTIONS FROM SALARY

1. VOLUNTARY RETIREMENT – 10(10C)

Amount received or receivable (i.e., in installments) by an employee on his voluntary retirement in accordance with any scheme of Voluntary Retirement is exempt to the extent of Rs.5,00,000, provided the VRS is in accordance with Rule 2BA of IT Rules.

2. HOUSE RENT ALLOWANCE EXEMPT U/S.10(13A)– Read with Rule 2A of IT Rules 1962

(a) Actual HRA received : Rs."A"
(b) Rent paid in excess of 10% of Salary: Rs."B"
(c) 50% of Salary in Metro Cities or 40% of Salary in other cities: Rs."C"
(d) Least of (A), (B), (C) is exempted.

NOTE: Salary means Basic Pay as well as DA if the terms of employment so provide.

3. CONVEYANCE ALLOWANCE

Any allowance granted to meet the expenditure incurred wholly, necessarily and exclusively on conveyance in performance of the duties of office and so certified by the employer is exempt u/s.10(14).

4. TRANSPORT ALLOWANCE

Any allowance granted to an employee to meet the expenditure for the purpose of commuting between the place of his residence and the place of his duty to the extent upto Rs.800/- per month is exempt u/s.10(14).

5. MEDICAL REIMBURSEMENT

An amount of Rs.15,000 or the actual amount reimbursed by the employer whichever is less is exempt u/s.17(2).

6. PROFESSIONAL TAX

Profession Tax levied by the State Government is allowable as a deduction from Gross Salary provided it has been paid.

STANDARD DEDUCTION U/S.16(1) IS NOT ALLOWABLE FOR A.Y.2008-09

DEDUCTIONS FROM HOUSE PROPERTY

1. DEDUCTION U/S.23(1)

For let out property, amount paid by the owner towards taxes levied by any local authority in respect of the property is deductible from Annual value(taxes pertaining to any previous years).

2. DEDUCTION U/S.24(a)

For let out property, deduction of 30% of the Net Annual Value is allowed. No separate deduction for Repairs, Collection Charges, Insurance Premium, Annual Charge and Ground Rent.

3. INTEREST ON BORROWED LOAN (U/S. 24(b))

FOR SELF OCCUPIED PROPERTY

a. If Property is acquired or constructed with loan taken after 01/04/99 and construction is completed within 3 years from the end of the financial year in which the capital was borrowed – Rs.1,50,000 or actual interest paid/payable whichever is less is deductible.
b. If new housing loan is taken for repayment of old loan (old loan taken after 1/4/99) – Rs.1,50,000 or actual interest paid/payable whichever is less is allowed as deduction.
c. If Property is acquired or constructed with loan taken before 01/04/99, Rs.30,000 or actual interest paid/payable whichever is less is allowed as deduction.
d. If loan taken for Repairs, renewal, reconstruction of property, Rs.30,000 or actual interest paid/payable whichever is less is allowed as deduction.
FOR LET OUT PROPERTY, actual interest paid/payable can be claimed as deduction.
ONLY OWNER OF THE HOUSE PROPERTY CAN AVAIL THE ABOVE DEDUCTIONS.

CAPITAL GAINS

With effect from 01/10/2004, Long Term Capital Gains arising on sale of equity shares or unit of equity oriented fund through recognized stock exchange is exempt if such transaction is chargeable to Securities Transaction Tax (u/s. 10(38)).

With effect from 01/10/2004, Short Term Capital Gains arising on sale of equity shares or unit of equity oriented fund through recognized stock exchange is subject to tax at the rate of 10% if such transaction is chargeable to Securities Transaction Tax.

EXEMPTION U/S.54EC

The Capital Gain arising out of sale of long term capital asset can be invested in National Highways Authority of India, Rural Electrification Corporation Limited, within six months from the date of sale (Lock-in period is 3 years).

STANDARD DEDUCTION FOR FAMILY PENSION U/S.57(iia)

An amount of Rs.15,000 or 331/3% of family pension whichever is less is allowed as deduction. If an assessee receives arrears of family pension, then Relief u/s. 89(1) can be claimed by him.
Family Pension received by the widow or children or nominated heirs, as the case may be, of a member of the armed forces (including para-military forces) of the union, where the death of such member has occurred in the course of operation is exempt.

EXEMPTIONS – OTHER SOURCES

Any income by way of Dividends from company, Income received in respect of units from the Unit Trust of India, Income received in respect of the units of a mutual fund are exempt.

DEDUCTIONS FROM GROSS TOTAL INCOME (CHAPTER VIA)

FRINGE BENEFIT TAX (FBT)

Fringe Benefit Tax is a tax for the Fringe Benefits provided to the Employee by his Employer as defined u/s. 115WB(1) and (2). It means any privilege, service, facility or amenity, directly or indirectly received by present & former Employees.

Fringe Benefit Tax (FBT) is calculated @ 30% (+SC+EC) on the percentage value of Fringe Benefits.

TAX ON FRINGE BENEFITS

The tax on fringe benefits provided by their employer to their employee as defined u/s.115WB(1) and (2) is payable by the Employer.

PENALTY U/S.271F

If a person who is required to furnish a return of income as required under section 139(1) or by the proviso to sub-section, fails to furnish such return before the end of the relevant assessment year, shall be liable to pay by way of penalty a sum of Rs.5,000.

INTEREST U/S.234A

Where the return of Income of any assessment year u/s. 139(1) or 139(4) or in response to a notice u/s.142(1), is furnished after the due date as specified in sub-section 1 of section 139, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one percent for every month or part of a month comprised in the period commencing on the date immediately following the due date.

INTEREST U/S.234B

Where an assessee who is liable to pay advance tax under section 208 has failed to pay such tax or, where the advance tax paid by such assessee under the provisions of section 210 is less than 90% of the assessed tax, the assessee shall be liable to pay simple interest at the rate of one percent for every month or part of a month comprised in the period from the 1st day of April following the financial year.

INTEREST U/S.234C

Where an assessee other than a Company, who is liable to pay advance tax under section 208 has failed to pay such tax or,
1) The advance tax paid by the assessee on his current income on or before the 15th day of September is less than 30% of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than 60% of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one percent per month for a period of three months on the amount of the shortfall from 30% or, as the case may be, 60% of the tax due on the returned income.
2) The advance tax paid by the assessee on his current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of one percent on the amount of the shortfall from the tax due on the returned income.

DUE DATES FOR FILING RETURN OF INCOME

All Individuals/HUF/Firms deriving Income from Salary, House Property, Capital Gains, Business or Other Sources and not covered under section 44AB are required to file the Return of Income by 31st July. All Tax Audit Cases covered under section 44AB, Company returns are required to file the Return of Income by 31st October.

PERMANENT ACCOUNT NUMBER

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 (Log on to our website). 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.

TAX PAYMENTS

Advance tax payments and Self-assessment tax payments have to be made in Challan No.280. Please obtain counterfoil of challan containing Challan Identification Number (CIN) from the Bank and enclose copy of the same with the return and quote CIN in the return.