Salaried peoples expectations from Budget 2017-18
New Delhi: Finance Minister Arun Jaitley unveils the budget on 1 February. The salaried class has a lot of expectations from the Budget. Increase in the personal income tax exemption limit and a higher deduction limit on home loan interest are among the common ones, say analysts.
The following salaried people’s expectations from FM Jaitley’s Budget 2017-18:
1. Raise minimum limit for taxable income
Considering the increase in cost of living, the current basic exemption limit of 2.5 lakh should be raised to Rs. 3 lakh. If the minimum limit is increased, it will not only benefit taxpayers at the bottom but also salaried class youth who are starting out as employees.
2. Change in tax slabs
A Change in of tax slabs will be a big balm for the salaried class. Currently, 10 per cent tax is charged on annual income of Rs 2.5 lakh to Rs 5 lakh, 20 per cent on Rs 5 lakh to Rs 10 lakh and 30 per cent on income above Rs 10 lakh. The first two slabs can be widened or taxed at a lower rate.
3. Raise exemption limit on allowances
Salaried employees enjoy exemption from tax on several allowances/benefits that the employer provides such as children’s education, conveyance, medical reimbursement, house rent and leave travel. The allowance limits were fixed a long time ago and need to be revised in view of inflation.
4. Increase deduction under Section 80C
Currently, deduction under Section 80C of the Income-tax Act is allowed from Rs 150,000 to Rs 300,000. If Jaitley increases the limit, he can boost household savings which can ultimately get invested and power growth.
5. Bring back deduction on infrastructure bonds
The government may reintroduce deduction of Rs 20,000 or actual amount invested, whichever is lower, for investments made in infrastructure bonds. This will also boost spending, spur growth and create more jobs.
6. Offer more incentives for NPS investment
Jaitley can offer more incentives for taxpayers to invest in the National Pension System (NPS). He can increase the deduction under Section 80CCD (1B) to Rs 100,000 from the existing Rs 50,000. He can also being NPS on par with the Employees Provident Fund or Public Provident Fund with respect to exemption of 100 per cent of the accumulated balance on withdrawal, subject to certain conditions.
7. Offer interest subvention on home loans
Prime Minister Narendra Modi has already offered interest subvention of 3 per cent and 4 per cent for loans of up to Rs 12 lakh and Rs 9 lakh, respectively, under the Pradhan Mantri Awas Yojana. However, these subventions are targeted at buyers in Tier 3 cities. Budget 2017 has scope of offering interest subvention on larger amounts of loan which will benefit buyers in big cities and other urban areas.
8. Allow higher deduction on home loan EMIs
Currently, the deduction available on interest on home loan is up to Rs 2,00,000. The deduction can be claimed on the principal repayment for up to Rs 1.50 lakh. There is a large scope in both cases to raise the deduction limits.
9. Allow early deduction on home loan EMIs
Deduction for interest on home loan is currently available only after the buyer gets the possession of the property. This means the benefit begins several years after the buyer gets the home loan and begins paying the EMIs. This deduction can be given right from the payment of the first EMI.
10. Raise exemption limit for senior citizens
The existing exemption limit of Rs 300,000 for senior citizens (60 years to less than 80 years) and Rs 500,000 for super senior citizens (80 years and above) could be enhanced to Rs 400,000 and Rs 600,000 respectively.
Budget 2017 – Expectations of the Salaried Class
With the Union Budget 2017 just a couple of weeks away, there are expectations that the government will take some measures to help the common man, especially the salaried class, who has rallied behind the government’s decision on demonetization despite suffering a lot post the note ban.
Experts are also of the view that the upcoming Budget 2017 should provide some tax gain for the common people to soothe at least the cash ban pain.
Otherwise also, “there are only a few tax concessions available to individual tax payers. Most of the current set of tax benefits like medical reimbursement, conveyance allowance etc., at the present level, do not offer any real economic benefit to the individual tax payers.
Instead they only add to the administrative burden for the employers as claims made by the employees have to be reviewed and processed by them,” says Vikas Vasal, National Leader-Tax, Grant Thornton India LLP.
Thus, either these tax benefits should be substantially increased or they should be done away with and instead a special tax benefit like the erstwhile standard deduction be introduced. “This would simplify the tax law, reduce administrative burden and curtail unnecessary litigation associated with these tax concessions,” suggests Vasal.
In view of the above, here’s what to expect from the Budget 2017 for the salaried class:
1. Tax slab rates should be revised upwards
It is widely expected that there may be some upward revision in the income tax slabs to provide some relief to the common tax payers. What is making people more optimistic is the recent hint from Finance Minister Arun Jaitley himself that income tax slabs could further be increased, lowering the tax burden on taxpayers due to higher revenue being collected on account of cashless systems.
Some people are even expecting that the government should increase the current income tax exemption limit from Rs 2.5 lakh to Rs 4 lakh. However, the common expectation is that the exemption limit be raised from the current Rs 2.50 lakh per annum to Rs 3 lakh, while the subsequent slabs of 10 per cent, 20 per cent and 30 per cent should be applicable to annual income range of above Rs 3 lakh and up to Rs 10 lakh, above Rs 10 lakh and up to Rs 20 lakh and above Rs 20 lakh, respectively. If implemented, this will help alleviate the common man’s sufferings to some extent.
2. Reduction in tax rates
Salaried individuals are always at a loss when it comes to tax rates since they end up paying high amount of taxes when they fall into high salary brackets. Currently anyone who earns more than Rs. 10 lakh per annum pays 30% tax on the amount exceeding Rs. 10 lakh. Thus, he has to forgo a large portion of his income in taxes. Hence, apart from revision in tax slabs, change in tax rates would always be a welcome move.
“The IDS scheme of the government launched last year is expected to add a lot of tax revenues to the government coffers with almost Rs. 75,000 crore declared as black money. Considering a tax rate of 45%, almost Rs. 35,000 will be collected as taxes. These revenues are expected to help the government reduce the tax rates in the coming FY,” informs Vaibhav Sankla, Director, H&R Block India.
3. Higher deduction for interest paid on housing loan
Housing and the real estate sector are facing a lot of hardship. The recent media reports indicate that sales have declined substantially and the sentiment is quite low. It is a fact that the real estate sector is one of the key growth engines for a developing economy like India.
It provides large-scale employment to unskilled and semi-skilled workers in the country, which is a need of the hour, to boost employment opportunities for a large scale population. This sector also impacts a few of the critical sectors like cement, steel, logistics etc., which in turn are important for the overall growth of the GDP.
Also, “keeping in view the government’s agenda of providing housing for all, it is imperative that some tax concessions are provided in the Budget. One such option could be to increase the tax deduction for interest paid on housing loan from Rs 2 lakh to Rs 3 lakh. This will also provide an immediate boost to the banking services sector, which is flush with funds post demonetization and looking at avenues to lend money to the masses,” says Vasal.
Some tax experts also believe that people having a single home need to be allowed to deduct the entire amount paid as interest on home loan. Vaibhav Sankla, for instance, says that currently the home loan interest deduction is capped at Rs. 2 lakh per annum for self-occupied house property and deduction of actual interest paid is allowed for a second home that is given on rent or is deemed rented.
However, “nowadays buying a second home is not very common owing to high property prices. In such cases, home owners possessing a single home need to be allowed to deduct the entire amount paid as interest on home loan. This would be a welcome relief for salaried individuals since they do not have much scope for tax saving and moreover this is an expense-based deduction,” says Sankla.
4. Increase in deduction for insurance premium
The deduction under 80D is currently capped at Rs. 25,000 for self, spouse and dependent children. An additional deduction of Rs. 25,000 is available for parents and Rs. 30,000 if they are senior citizen parents. Hence the total deduction available under this section can go up to Rs. 55,000. A deduction for preventive medical expenses is also available up to Rs. 5,000 spent as a part of the overall deduction.
A deduction for the actual expenses made in this regard on medical insurance premiums will be a welcome move since insurance premiums are very high, especially when it comes to parents. The cap of Rs. 5,000 on preventive health check-up expenses should also be removed in budget 2017. It will help salaried individuals to save huge amounts in taxes.
5. Increase in deduction for education and childcare expenses
Childcare nowadays has become very expensive for parents, especially for those staying in metro cities. The maximum deduction for tuition fees permitted under Section 80C is Rs 1.5 lakh per financial year, with deductions eligible only for two children per assessee. Tuition fees generally constitute a very small portion of the entire education fees for the year. This deduction should be extended to other portions of the fees as well.
“Childcare in big cities also calls for daycare expenses, especially for working parents. The expenses many a time run into more than Rs 1-2 lakh per annum. These expenses should also form a part of deductions under Section 80C. This will provide another expense-based deduction to individuals and be a great move towards providing a deduction aimed at working parents,” says Sankla.
6. Deduction for rent paid where no HRA is paid by the organization
Generally, organisations pay HRA to employees in order to ease the burden of rent and there is an exemption available under the tax laws on HRA. However, there are instances when organisations do not include HRA in the salary components.
When HRA is not paid by the organization, salaried individuals are being allowed a deduction of Rs. 5,000 per month under Section 80GG from FY2016-17. This deduction should be increased to at least Rs. 10,000 for metro cities. This is because rent for a decent accommodation in metro cities has risen to this level and there is a need to increase the deduction so that salaried individuals get the benefit of this deduction.
7. Standard Deduction
There are many deductions/ exemptions like medical reimbursement, conveyable allowance, meal allowances etc. Employees actually incur much more cost and obtain very little tax benefit. To highlight, a family of four members will incur on an average, say, Rs 50,000 plus on general medical ailments. And if the family has senior/ailing households, then this expenditure for general hospital/doctor visits and medicines may be much higher.
Therefore, there is need to take a re-look at all such benefits and increase them substantially in line with the current economic reality. Same is the case with other tax benefits like travel allowance etc. Keeping this in view, there is need for a special tax benefit like the erstwhile standard deduction to be introduced the budget 2017.
Revision of interest rates for Small Savings Schemes
Government Of India
Ministry Of Finance
Department of Economic Affairs
North Block, New Delhi
Dated: December 30, 2016
Subject: Revision of interest rates for Small Savings Schemes.
The undersigned is directed to refer to this Department’s OM of even number dated 16th February,2016, vide which the various decisions taken by the Government regarding interest fixation for small savings schemes were communicated to all concerned.
2. On the basis of the decision of the Government interest rates for small savings schemes are to be notified on quarterly basis. Accordingly, the rates of interest on various small savings schemes for the fourth quarter of financial year 2016-17 starting on 1st January, 2017 and ending on 31st March 2017 on the basis of the interest compounding/payment built-in the schemes, shall be as under:
|Instrument||Rate of interest w.e.f. 01.10.2016 to 31.12.2016||Rate of interest w.e.f. 01.01.2017 to 31.03.2017||Compounding frequency*|
|1 Year Time Deposit||7.0||7.0||Quarterly|
|2 Year Time Deposit||7.1||7.1||Quarterly|
|3 Year Time Deposit||7.3||7.3||Quarterly|
|5 Year Time Deposit||7.8||7.8||Quarterly|
|5 Year Recurring Deposit||7.3||7.3||Quarterly|
|5 Year Senior Citizens Savings Scheme||8.5||8.5||Quarterly and paid|
|5 Year Monthly Income Account Scheme||7.7||7.7||Monthly and Paid|
|5 Year National Savings Certificate||8.0||8.0||Annually|
|Public Provident Fund Scheme||8.0||8.0||Annually|
|Kisan Vikas Patra||7.7 (will mature in 112 months)||7.7 (will mature in 112 months)||Annually|
|Sukanya Samriddhi Account Scheme||8.5||8.5||Annually|
* No Change
3. This has the approval of Finance Minister.
Deputy Secretary to the Government of India
Revised Income Tax Exemption Calculator for Interest paid on Housing Loan – Income or Loss or House Property Calculation under Section 24 of the Income Tax Act.
After enactment of Finance Act 2014, maximum housing loan interest amount (Interest on house property) which can be deducted from the income of a tax payer under Section 24 of the Income Tax Act in respect of self occupied house, is Rs. 2 Lakhs (Rs. 2,00,000).
Also there is no limit specified for deduction of home loan interest amount from income in the case of House property being rented out.
How to calculate Income / loss on House Property (Deduction of Home Loan Interest from Total Income) ?
In the case of Self Occupied House Property:
Actual annual value of Interest paid on Home loan or Rs. 2,00,000 whichever is maximum
In the case of House Property rented out:
- Actual annual value of Interest paid on Home loan
- Add annual rental value of the house property
- Less House property Tax paid
- Less Rebate 30% of the Annual Value of Rent as Repairs and Maintenance
Section 80EE reintroduced in Finance Act 2016
As per Finance Act 2016, the tax payer is entitled to claim additional deduction of Rs. 50,000 under Section 80 EE if you are a first time home buyern interest. This deduction is over and above the Rs 2 lakhs limit under section 24 of the income tax act. Read more about deduction of Rs 2 lakhs on interest on home loan here.
Section 80EE was introduced effective 2013-14 and was available for 2 years, FY 2013-14 and FY 2014-15 only (assessment year 2014-15 and 2015-16). However, this section has been reintroduced effective FY 2016-17 (assessment year 2017-18).
Who can avail this Deduction?
- This is the 1st house you have purchased
- Value of this house is Rs 50 lakhs or less
- Loan taken for this house is Rs 35 lakhs or less
- Loan has been sanctioned by a Financial Institution or a Housing Finance Company
- Loan has been sanctioned between 01.04.2016 to 31.03.2017
- As on the date of sanction of loan no other house is owned by you
Income Tax 2016-17 (A.Year 2017-18) Rate, Exemptions, Deductions and Rebate for Salaried Employees under Section 10, Section 24, Section 89(1), Chapter VIA, and Section 87A
Income Tax Rate 2016-17
|TAXABLE INCOME RANGE||RATE OF INCOME TAX|
|Up to RS.2,50,000||NIL|
|Rs.2,50,001 to Rs.5,00,000||10% of the amount by which the income exceeds Rs.2,50,000|
|Rs.5,00,001 to Rs.10,00,000||Rs.25,000 plus 20% of the amount by which the income exceeds Rs.5,00,000|
|Above Rs.10,00,001||Rs.1,25,000 plus 30% of the amount by which the income exceeds Rs.10,00,000|
3% on Total Income Tax Payble
Section 10 (13A) – Exemption in respect of HRA:
Under Sec. 10(13A), an employee who is in receipt of House Rent Allowance (HRA) can claim exemption, if he does not live in his own house, and pays rent in excess of 10% of his salary for his residential accommodation.
Exemption u/s 10(13A) is the least of the following
1. Actual amount of HRA received
2. 50% (for Chennai, Mumbai, Kolkata and Delhi) / 40% (for other places) of the Salary for the relevant period
3. Rent paid Less 10% of Salary for the relevant period.
Section 87A – Rebate of Income Tax for Taxable income up to Rs. 5 Lakh
Finance Act 2016 provides for rebate of Income up to Rs. 5000/- in respect of Persons who have Taxable not exceeding Rs. 5 lakh.
Section 10(14) – Transport Allowance and Children Education Allowance (CEA)
Under Section 10(14), the Budget FY 2016-17 lets you claim Rs. 19,200 tax exemption as transport allowance and Rs. 2,400 tax exemption as Children Education Allowance (CEA) in a financial year.
Section 24(b) – Home Loan
If you have taken a Home Loan, then you can claim a tax deduction on the interest component of the loan under Section 24(b). For self-occupied properties, you can benefit from deductions of up to Rs. 2,00,000.
Section 89(1) – Income Tax relief in respect of Arrears of Salary pertaining to previous years
If arrears of salary has been received in Financial year 2016-17 related to previous years then Relief of Income Tax can be claimed u/s 89(1) by accounting income from arrears in respective years on notional basis.
Deductions allowed under Chapter VI A of Income Tax Act
Deduction Limit – Sec 80CCE. As per Section 80CCE, deduction can be claimed upto Rs. 1,50,000 for the payments / contributions made under Sections 80C, 80CCC and 80CCD
Section 80C – Subject to overall limit of Rs. 1,50,000 under Section 80CCE
For investments in specified schemes, saving instruments etc.
- Life insurance premium for policy:
a) in case of individual, on life of assessee, assessee’s spouse and any child of assessee
b) in case of HUF, on life of any member of the HUF
- Sum paid under a contract for a deferred annuity:
a) in case of individual, on life of the individual, individual’s spouse and any child of the individual (however, contract should not contain an option to receive cash payment in lieu of annuity)
b) in case of HUF, on life of any member of the HU
- Sum deducted from salary payable to Government servant for securing deferred annuity or making provision for his wife/children [qualifying amount limited to 20% of salary]
- Contributions by an individual made under Employees’ Provident Fund Scheme
- Contribution to Public Provident Fund Account in the name of:
a) in case of individual, such individual or his spouse or any child of such individual
b) in case of HUF, in the name of any member there of
- Contribution by an employee to a recognized provident fund
- Contribution by an employee to an approved superannuation fund
- Subscription to any notified security or notified deposit scheme of the Central Government.
For this purpose, Sukanya Samriddhi Account Scheme has been notified vide Notification No. 9/2015, dated 21/1/2015. Any sum deposited during the year in Sukanya Samriddhi Account by an individual would be eligible for deduction. Amount can be deposited by an individual in the name of her girl child or any girl child for whom such an individual is the legal guardian.
- Subscription to notified savings certificates [National Savings Certificates (VIII Issue)]
- Contribution for participation in unit-linked Insurance Plan of UTI:
a) in case of an individual, in the name of the individual, his spouse or any child of such individual
b) in case of a HUF, in the name of any member thereof
- Contribution to notified unit-linked insurance plan of LIC Mutual Fund:
a) in the case of an individual, in the name of the individual, his spouse or any child of such individual
b) in the case of a HUF, in the name of any member thereof
- Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank [Home Loan Account Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008]
- Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children
- Certain payments for purchase/construction of residential house property
- Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both
- Sum paid towards notified annuity plan of LIC or other insurer
- Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005)
- Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund)
- Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions
- Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of subscription to such units is subscribed only in ‘eligible issue of capital’ referred to above. 21. Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme framed and notified.
- Subscription to notified bonds issued by the NABARD.
- Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)
- 5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions)
Section 80CCC – Subject to overall limit of Rs. 1,50,000 under Section 80CCE
Contribution to certain specified Pension Funds such as LIC or other authorised Insurance Companies
Section 80CCD(1) – Subject to overall limit of Rs. 1,50,000 under Section 80CCE
Deduction in respect of contributions to National Pension Scheme / System (NPS) notified by Central Government
Limit : 10% of salary in case of employees, 10% of gross total income in case of others
Deduction in respect of the deposit under a pension scheme notified by Central Government (NPS) up to Rs. 50,000/-
Deduction in respect of employer contributions to NPS – National Pension Scheme / System – This deduction is available over and above the Rs. 1.5 lakh limit
Section 80 CCG
Amount invested in listed shares covered by Rajiv Gandhi Equity Equity Saving Scheme. Deduction of 50% of total investment subject to maximum of Rs. 25,000 is allowed for 3 consecutive assessment years, beginning with the assessment year relevant to the previous year in which the listed shares or list units of equity oriented funds are first acquired
Amount invested in Health Insurance
In case of Individual, amount paid: a) For self, spouse and dependent children: Up to Rs. 25,000 (Rs. 30,000 if specified person is a senior citizen or very senior citizen) b) For parents: additional deduction of Rs. 25,000 shall be allowed (Rs. 30,000 if parent is a senior citizen or very super senior citizen) In case of HUF, up to Rs. 25,000 (Rs. 30,000 if specified person is a senior citizen or very senior citizen).
The aggregate amount of deduction cannot exceed Rs. 60,000/- in case of an individual.
Expenditure incurred for the medical treatment of a dependent (spouse, children, parents, brothers and sisters of the individual) up to Rs. 75,000 (Rs. 1,25,000 in case of severe disability)
Expenditure incurred for medical treatment of specified diseases for self, or wholly dependent spouse, children, parents, brothers and sisters up to Rs. 40,000 (Rs. 60,000 in case of senior citizen and Rs. 80,000 in case of very senior citizen)
Interest paid on Educational Loan with no limit
Interest on loan for acquiring residential house property, sanctioned during the financial year 2016-17. The Housing Loan availed should be up to Rs. 35 lakh and should have been availed in the year 2016-17
Deduction in respect of donations to certain funds, charitable institutions, etc.
Rent paid for residential accommodation from the income of Tax Payer / assessee who is not in receipt of HRA
Least of the following shall be exempt from tax: a) Rent paid in excess of 10% of total income*;
b) 25% of the Total Income; or
c) Rs. 5,000 per month.
Section 80 TTA
Interest on Savings Bank accounts subject to maximum of Rs. 10,000
Exemption of income tax for an income up Rs. 75,000 for persons with disability (Rs. 1,25,000 in case of persons with severe disability)
Income Tax 2016-17 : All Salaried Employees to declare deductions and savings under Form 12BB : Download Form 12BB as a Word, Excel or PDF file- All Employees to file Declaration under Form 12BB to claim deduction for savings under Section 80 C, payment of house loan interest under Section 24, and HRA exemption under Section 10
The Finance Act, 2015 had introduced section 192(2D) of the Income-tax Act, 1961 (the Act) wherein the person responsible for making payment of salary (employer) was obliged to collect the necessary evidence or proof in the prescribed form and manner to allow any claim for any deduction and/or tax saving investments. However, the relevant rules and form were yet to be prescribed. The Central Board of Direct Taxes (CBDT) has come out with the relevant rules1 and also prescribed the form i.e. Form 12BB, in which salaried employees would now be required to furnish evidence of claims and tax saving investments to the employer.
Till Finance Act 2016, there was no standard format for salaried employees for filing declaration with their employer to claim deduction for savings under Section 80 C, payment of house loan interest under Section 24, and HRA exemption under Section 10. In the absense of single declaration form, employees had to submit proof for each investment made in the year.
As a relief to employees and also to employer, Income Tax Department has introduced a new Form 12BB. This form, applicable from June 1, 2016, will act as a single entity that you can use to declare your to claim deduction for savings under Section 80 C, payment of house loan interest under Section 24, and HRA exemption under Section 10.
Deductions that can be declared under Form 12BB:
The standard Form 12BB is for all salaried Employees to claim tax deductions. You use can use it to claim deductions for leave travel allowance (LTA/LTC), house rent allowance (HRA), interest paid on home loans, and all other tax deductions pertaining to Chapter VI-A of the Income Tax Act.
House Rent Allowance (HRA):
With form 12BB, you can claim any HRA tax deductions under Section 10 (13A) of the Income Tax Act. Along with 12BB you will need to provide the relevant rent receipts for this deduction. You will also need to submit the name and address of the landlord. In the event the aggregate rent paid by you exceeds Rs 1 lakh, you will also need to submit the Permanent Account Number (PAN) of your landlord.
Amount claimed under Leave travel Concession (LTC)
With Form 12BB, you need to furnish amount and provide evidence of expenses made towards your travel. Unlike in the past, it is now mandatory to provide proof of all travel expenses in the form of receipts for your claim.
Interest on home loan under Section 24:
Earlier to claim deduction for interest paid on home loan, we have to submit interest certificate from the concerned bank. Now, in addtion to the same we will have to fill up Form 12BB to claim deductions under Section 24 of the Income Tax Act.
Savings / deductions under Chapter VI-A:
All tax deductions under Section 80C, Section 80CCC, and Section 80CCD, as well as other sections like 80E, 80G, and 80TTA come under Chapter VI-A of the IT Act. For deductions, fill up Form 12BB and provide details and proof of your investments and expenditures incurred related to the relevant section you are seeking deductions under.
No TDS on Disability Pension to Armed Forces Personnel
By Prashant Thakur -February 3, 2016
The tax exemption of disability pension received by Armed Force Personnel are among those exemptions under Income Tax Act for which you may not get a direct reference in the Income Tax Act.
However , such tax exemption are allowed by the executive instruction issued by either Finance Ministry notification or under the delegated powers to CBDT . Armed Forces personnel get the disability pension which is basically aggregate of two components-disability pension and service pension. Previously , this website had posted earlier 3 Types of Pension to Armed Forces Completely Tax Free!
Disability Pension to Armed Forces : What is it ? Update :
The below portion is modified as the government, has issued new circular for minimum disability pension .
The circular is applicable to all Pre-2006 Armed Forces Disability/War Injury Pensioners who were/ are in receipt of Disability Pension/ Liberalized Disability Pension/ War Injury Pension as on 24th September 2012.
Download the Circular 542 dated 27/05/2015
As per the website of Principal Controller of Defence Accounts (Pension), where an Armed Forces Personnel is invalided out of service, which is accepted as attributable to or aggravated by military service, he shall be entitled to disability pension consisting of Service Element & Disability Element as follows:-
Service Element The amount of service element shall be determined as 50% of less emoluments drawn as given in para 6 of MOD letter dt- 12.11.2008 which is subject to minimum Rs 3500/- p.m.
Disability Element The rates of disability elements for 100% disability for various ranks shall be 30% of emolument last drawn subject to Rs. 3510/- per month. Disability lower than 100% shall be computed by reducing proportionately.
Disability Element on Invalidment Where an Armed Force personnel is invalided out of service under circumstances mentioned in para 4.1 of Govt. letter dt. 31.01.01, the extent of disability shall be determined as follows for the purpose of computing the DE :- Percentage as finally assessed by Competent AuthorityPercentage to be reckoned for computing DE Between 1 to 4950 Between 50 & 7575 Between 76 &100100 Disability Element on Retirement/Discharge Where an Armed Forces personnel is retained in service despite disability and subsequently retired/ discharged on completion of tenure or on attaining the age of retirement, he shall be entitled to Disability Entitlement at the rate prescribed for 100% disablement. For disablement less than 100% but not below 20%, the rates shall be reduced proportionately.
No disability element shall be payable for disability less than 20% .
Is Disability Pension to Armed Forces Tax Free ?
Yes, although there is nothing in section 10 of the Income Tax Act , which is a general exemption section under Income tax Act , the disability pension has been made tax free through Finance Ministry notification No 878-F (Income Tax) dated 21-3-1922 .
The following instruction from CBDT explains that the entire disability pension is exempt
INSTRUCTION NO 136F.NO. 34/3/68-IT(AI)GOVT OF INDIA CENTRAL BOARD OF DIRECT TAXES NEW DELHI, DATED THE 14TH JAN 1970
FROM :SHRI S N NAUTIALSECRETARY, CBDT
TO:ALL COMMISSIONERS OF INCOME TAX
SUBJECT : EXEMPTION – SERVICE AND DISABILITY ELEMENT OF DISABILITY PENSION GRANTED TO A DISABLED OFFICER OF THE INDIAN ARMY –
WHETHER EXEMPTED FROM INCOME TAX. REFERENCE IS INVITED TO THE BOARD’S LETTER F NO 42/9/59-IT(AI), DATED THE 5TH SEPT 1960 ON THE ABOVE SUBJECT WHEREIN IT WAS MENTIONED THAT IN THE CASES FALLING UNDER ITEM (29) OF FINANCE DEPTT NOTIFICATION NO 878-F (INCOME TAX) DATED 21-3-1922, THE‘DISABILITY ELEMENT’ OF THE DISABILITY PENSION RECEIVED BY AN OFFICER OF THE ARMY WILL ONLY BE EXEMPTED FROM TAX AND THAT THE ‘SERVICE ELEMENT’ WILL BE SUBJECTED TO TAX.
2. ON RECONSIDERATION OF THE MATTER, IN CONSULTATION WITH THE MINISTRY OF LAW, THE BOARD ARE ADVISED THAT ITEM 29 OF THE NOTIFICATION DOES NOT DIFFERENTIATE BETWEEN TYPES OF PENSIONS. ACCORDINGLY IN THE CASES FALLING UNDER ITEM 29 OF THE ABOVE NOTIFICATION, ENTIRE DISABILITY PENSION WILL BE EXEMPTED FROM INCOME-TAX.
3.THE ABOVE INSTRUCTIONS MAY BE BROUGHT TO THE NOTICE OF ALL ASSESSING OFFICERS INYOUR CHARGE. YOURS FAITHFULLY,
SD/- (S N NAUTIAL) SECRETARY ,CBDT
Confusion on Exemption Disability Pension & Service Element As the disability pension is aggregate of two elements- disability element and service element- a confusion was created in filed formation of tax authorities , whether the disability element only is tax free and not the service element. CBDT , therefore , in order to wipe out any confusion , issued another instruction
F. No. 200/51/00-ITA-1 dt. 02.7.2001 to stress that both element of disability pension is tax exempt.
Read the instruction below :
[F. NO. 200/51/00-ITA-1 DT. 02.7.2001 FROM MINISTRY OF FINANCE DEPTT. OF REVENUE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI.]
SUBJECT: EXEMPTION FROM INCOME TAX TO DISABILITY PENSION, I.E. ” DISABILITY ELEMENT” AND “SERVICE ELEMENT” OF A DISABLED OFFICER OF THE INDIAN ARMED FORCES- INSTRUCTIONS REGARDING.
REFERENCE HAVE BEEN RECEIVED IN THE BOARD REGARDING EXEMPTION FROM INCOME TAX TO DISABILITY PENSION, I.E. “DISABILITY ELEMENT” AND “SERVICE ELEMENT” OF A DISABLED OFFICER OF THE INDIAN ARMED FORCES.
2. IT APPEARS THAT FIELD FORMATIONS IN CERTAIN CASES ARE NOT UNIFORMLY ALLOWING DISABILITY, PENSION IN SPITE OF BOARD’S INSTRUCTION NO.136 DATED 14TH JANUARY, 970 (F.NO.34/3/68-IT(A.1)).
3. THE MATTER HAS BEEN RE-EXAMINED IN THE BOARD AND IT HAS BEEN DECIDED TO REITERATE THAT THE ENTIRE DISABILITY PENSION, I.E. ” DISABILITY ELEMENT” AND “SERVICE ELEMENT” OF A DISABLED OFFICER OF THE INDIAN ARMED FORCES CONTINUES TO BE EXEMPT FROM INCOME TAX.
4. THIS MAY BE BOUGHT TO THE NOTICE OF ALL THE OFFICERS WORKING UNDER YOU.
SD/- B.L. SAHU OFFICER ON SPECIAL DUTY (ITA .1)
No TDS on Disability Pension to Army Personnel
As it happens in India, everyone becomes the super authorities against the common man. The government received complaint that certain banks are deducting the tax on the disability pension .
So , government issued a press release that no TDS is required on the said disability pension paid to Armed Forces personnel.
Read below the excerpt. PRESS RELEASE, DATED 20-12-2007
IT HAS BEEN REPORTED IN THE PRESS THAT SOME BANKS WERE DEDUCTING TAX FROM PENSION OF DISABLED EX-SERVICEMEN IN VIOLATION OF GOVERNMENT INSTRUCTIONS.
RBI WAS REQUESTED TO HAVE THE MATTER INVESTIGATED AND REMEDIAL ACTION TAKEN. AFTER EXAMINATION, RBI DISCOVERED THAT IN ONE SPECIFIC INSTANCE, DUE TO OVERSIGHT, THE PENSIONER’S DISABILITY PENSION WAS WRONGLY TAKEN INTO ACCOUNT WHILE CALCULATING INCOME-TAX.
RBI HAS ISSUED INSTRUCTIONS TO ALL AGENCY BANKS TO STRICTLY ADHERE TO THE PROVISIONS OF PARA 88.3 OF DEFENCE PENSION PAYMENT INSTRUCTIONS, 2005, REGARDING EXEMPTION OF INCOME-TAX OF THE DISABILITY PENSION OF THE PENSIONERS OF ARMED FORCES.
BANKS HAVE BEEN ADVISED TO ISSUE SUITABLE INSTRUCTIONS TO ALL THEIR PENSION DISBURSING BRANCHES THAT INCOME-TAX SHOULD NOT BE DEDUCTED FROM THE DISABILITY PENSION PAID TO THE PENSIONERS OF THE ARMED FORCES.
The disability pension given to Armed Forces Personnel are having two components-disability element & service element. Both are tax free vide Ministry of Finance notification read with clarification from CBDT and also there can not eb any TDS as the amount is fully tax free.
New form to claim tax rebate on LTA, HRA
NEW DELHI: The income tax department has come out with a standard Form 12BB for salaried taxpayers to claim tax deduction on leave travel allowance concession (LTALTC), house rent allowance (HRA) and interest paid on home loans.
Taxpayers will have to furnish to their employers proof of travel in Form 12BB for claiming LTALTC benefits. In case of HRA, the Central Board of Direct Taxes (CBDT) requires employees to furnish details like name, address and PAN number of the landlord if the aggregate rent paid exceeds Rs 1 lakh a year.
For claiming deduction of interest on home loan, the name, address and PAN of the lender will have to be furnished. Evidence of investment or expenditure will have to be provided for claiming tax deduction under Chapter VI-A.
Chapter VI-A pertains to allowable deductions under Section 80C, Section 80CCC, Section 80CCD as well as other sections like 80E, 80G and 80TTA.
The CBDT, in the same order, also extended the time limit for depositing tax deducted at source (TDS) on transfer of immovable property from 7 to 30 days. Also, the due date for filing quarterly TDS returns in Form 24Q, 26Q and 27Q was extended by 15 days.
The amended rules will be applicable from June 1, 2016, the CBDT said. Under section 80C, a deduction of Rs 1.5 lakh can be claimed from total taxable income if invested spent in employee’s share of PF contribution, life insurance, etc.
Source : Economic Times
Confusion on EPF due to bad phrasing in Budget speech: Union Revenue Secretary Hasmukh Adhia
Union Revenue Secretary Hasmukh Adhia today defended the proposal to tax Employee’s Provident Fund withdrawals, saying the intention was only to encourage investment in pension schemes, but the phrasing in the Budget speech caused the confusion.
“The entire thing happened not because of any illogicality in the step but due to the communication gap,” Adhia said at an interaction on Budget at the Ahmedabad Management Association here.
“In the budget we try to concise the speech by minimising the words. If it goes beyond 1 hour and 30 minutes it becomes boring. When we were reducing the number of words and when it came to this paragraph we chopped it off and that is how the problem occurred,” Adhia said.
“If we had paraphrased this paragraph differently then less confusion would have been created.”
The government has in fact continued with the policy of exempting EPF at all three stages (entry, during the scheme and exit), he argued.
“We have not said that we will be taxing remaining 60 per cent (of withdrawn EPF). The first 40 per cent is totally exempt. Regarding remaining 60 per cent the expectation is you should put it in some pension scheme….To encourage people to put their money in pension products we have said if you put the remaining 60 per cent in annuity scheme it will not be taxed….original corpus after your death will go to your heir and that will also be tax exempt,” he said.
“So in a way we have continued exempt, exempt, exempt scheme, but with a time period,” he said.
“We do not wish to get anything out of this, it is not a revenue mobilisation effort,” Adiha said.
“The Finance Minister has already said that he will make the announcement on it in a very short time (in Parliament)”, he noted.
The government could not raise the Income Tax exemption limit as when it was raised the last time from Rs 2 lakh to 2.5 lakh, it lost some 40 lakh tax payers, he said to another question.
Deduction of Income Tax on withdrawal of Provident Fund 60%
NATIONAL COUNCIL (STAFF SIDE)
Joint Consultative Machinery for Central Government Employees
13-C, Ferozshah Road, New Delhi – 110001
E Mail: email@example.com
Dated:- 1st March, 2016
The Hon’ble Finance Minister,
Government of India,
Sub: Deduction of Income Tax on withdrawal of P.F. 60%
We are deeply shocked to learn about imposing of tax on withdrawal of P.F.(Provident Fund) which is our hard earn money which used to be utilized in all emergencies for medical, educational, building of house, marriage of daughters etc.
Imposition of tax on that had created all round agitation among govt. employees.
On behalf of National Council/JCM it is very humbly requested that this tax proposal should be withdrawn immediately to stop the mental agony of government employees.
I hope Central Govt. will not give any chance of serious agitation on this issue and will not disturb industrial peace as a whole.
Thanking you ,
(Shiv Gopal Mishra)
House Rent Paid : 80GG has also been raised to 60,000 from 24,000
The limit of deduction of house rent paid under section 80GG has also been raised to Rs. 60,000 from the existing Rs. 24,000 per annum to give relief to employees who live in rented houses.
Certain Tax Reliefs announced for small tax payers and others
While presenting the General Budget 2016-17 in Lok Sabha here today, the Union Finance Minister Shri Arun Jaitley said that the taxation is a major tool available to Government for removing poverty and inequality and this has to be cautiously exercised. But, he would like to give relief to small tax payers, the Finance Minister added.
Thus the ceiling of tax rebate under Section 87A of IT Act has been proposed to be raised to Rs. 5,000 from Rs. 2,000 for individuals with income less than Rs. 5 lakhs. He said that above 2 crore tax payers would get a relief of Rs. 3,000. The limit of deduction of house rent paid under section 80GG has also been raised to Rs. 60,000 from the existing Rs. 24,000 per annum to give relief to employees who live in rented houses.
Under the presumptive taxation scheme under Section 44AD of the Income tax Act, the limit of turnover or gross receipts has been raised to two crore rupees from the exiting one crore rupees to benefit about 33 lakh small business people. It frees a large number of such assesses in the MSME category from the burden of maintaining detailed books of account and getting audit done.
The presumptive taxation scheme is to be now extended to professionals with gross receipts up to Rs. 50 lakh with the presumption of profit being 50% of the gross receipts.
Ex-servicemen gets property tax exemption after 9 year wait
An ex-servicemen from Hyderabad used the RTI act in order to get his due. As per the state government all ex-servicemen/widows are exempted from paying property tax for any one house owned by them.
An Ex-Serviceman had to struggle for 9 long years with the civic authorities to get exemption from property tax. After repeated failures to get his due, he used the RTI act and woke up the civic authorities from their slumber.
This is the story of an ex-serviceman who had to struggle with the civic authorities for 9 long years to get his due. Mr. PP Sebastian worked in the Indian Air Force and is now settled in Hyderabad. He had to run after the local municipal authorities for 9 long years to get his property tax exemption order.
The Background Story
Most state governments extend a variety of welfare measures for serving personnel and ex-servicemen. The erstwhile Andhra Pradesh Government also extended similar facilities to ex-servicemen. As per the orders of the erstwhile Andhra Pradesh State government, all serving army personnel and ex-servicemen/widows are exempted from paying property tax for any one house owned by them.
18. Exemption from property tax one house/property of Ex-Servicemen/widows/serving personnel when it is occupied by the Widows/Ex-Servicemen and by the family in case of serving personnel for their self dwelling purpose.
Application for exemption filed in 2006
Mr. Sebastian applied for property tax exemption in October 2006 in accordance to the Government Order. He submitted his application to Alwal Municipality, duly submitting all the required certificates. Instead of granting him exemption, the civic authorities kept sending him property tax bills. Moreover, the ex-serviceman received threatening calls to clear his dues
This is to bring to your kind notice that, I am ex-serviceman and had applied for tax exemption on 23rd October, 2006 as per the regulation after paying tax twice. I am yet to receive my tax exemption papers from your end.
Instead I have been receiving property tax bill every year. I had approached 4 to 5 times pertaining to my tax exemption as soon as the receipt of the property tax bill. But I have received no reply from Alwal Municipality so far.
RTI to the Rescue
Meanwhile in 2007, the Alwal Municipality was merged into the Greater Hyderabad Municipal Corporation (GHMC). After repeated trials to know the status of his earlier application, Mr. Sebastian was exhausted and was resigned to his fate.
In early 2013, Mr. Sebastian came to know of Right to Information (RTI) through an awareness workshop. As soon as he realized its power, he filed an application under RTI with the GHMC authorities to know the status of his earlier request for property tax exemption.
After repeated follow-ups and intervention from the State Information Commission, the GHMC finally admitted that they had lost his application that was filed in 2006. They also requested Mr. Sebastian to submit all the documents once again to initiate further action.
With reference to subject cited, it is to inform that the application related to Exemption of Property Tax pertains to——– situated at Temple Alwal was given in erstwhile Alwal Municipality on 23.10.2006. Efforts were made to trace out the application, but the same is not traced out. Therfore, you are requested to kindly submit the required documents for taking further necessary action for exemption of property tax of above said property.
Finally, after submitting the application once again, the GHMC issued the property tax exemption order in December 2015.
In exercise of the powers conferred as per the M.C.H Act 1955 and in accordance with the Government Orders, Vide Ref 2nd cited the following Property (Assessment) is hereby temporarily exempted from the payment of Property tax with effect from 01.04.2007 till further orders, since the under mentioned premises are under the possession of Ex-Serviceman/ Widow of Ex-Serviceman/Serving Army Personnel.
H.No. & Locality Name of the Assessee Exemption
Asst.No. Amount per annum
Sri.P.P.Sebastian 01.04.2007 1124/-
‘If not for RTI, I would not have got this exemption’
‘If not for RTI, I would not have got this exemption. Thanks for my living God who guided me to that workshop’, Mr. Sebastian said. He is now a contented individual who feels that every citizen should know and use RTI.
Income Tax Calculation for Interest on Housing Loan and Deduction u/s 80C with illustration
One Computation of Taxable Salary and allowances, Deduction for Interest on Housing Loan and Deduction u/s 80C.
Mr. X, a Central Govt. Officers in Delhi, is receiving Basic Pay Rs.23,720, grade Pay Rs.7,600, DA at prescribed rates, transport allowances @ Rs.3200+DA thereon, and HRA 30% of basic pay + grade pay (though living in his own house). His date of increment is Ist July. The following are other particulars of his income. Compute his taxable income and tax payable, for A.Y.2015-16.
Authority: IT Circular issued by CBDT on 1.12.2015
Raise income tax exemption limit to Rs 5 lakh: Unions
New Delhi: Trade unions today asked the government to increase the income tax exemption limit to Rs 5 lakh and the minimum wage to Rs 18,000 besides raising the minimum monthly pension to Rs 3,000 for all.
They also sought a special package for victims of the recent Tamil Nadu floods.
These demands were raised under a 15-point charter submitted by 11 central trade unions to Finance Minister Arun Jaitley during pre-Budget consultations held here. The Union Budget for the next financial year, 2016-17, is slated to be presented in Parliament in February end. It will take effect from April 1.
“We have demanded a minimum wage of Rs 18,000 per month which is higher than our earlier demand of Rs 15,000,” Bharatiya Mazdoor Sangh Zonal Organisation Secretary Pawan Kumar said after the meeting.
The Seventh Pay Commission has recommended Rs 18,000 as minimum monthly wage for central government employees and it should be the benchmark, he said.
All Indian Trade Union Congress Secretary D L Sachdev said: “We have also demanded Rs 3,000 minimum monthly pension for all and asked for a special package for flood ravaged Tamil Nadu to provide relief to workers as well as industry in the next Budget.”
Sachdev said that in view of price rise “we have also demanded from the government to increase the income tax exemption limit to Rs 5 lakh per annum”.
The union have also asked that fringe benefits like housing, medical and educational facilities and running allowances in railways should be exempted from Income Tax.
Unions also demanded that PSUs should be strengthened and expanded and the disinvestment of government shares in profit making PSUs should be stopped.
Besides, they said that the budgetary support should be provided for revival of potentially viable sick PSUs.
On the price rise, the charter said: “Take effective measures to arrest the spiralling price rise especially of food and essential items of daily use. Ban speculative forward trading in essential commodities, check on hoarding and universalise and strengthen Public Distribution System.”
Expressing concerns over steel and aluminium sectors, the unions said: “Relentless and increasing flow of import of industrial commodities including capital goods must be contained and regulated to prevent dumping and also to protect and promote domestic industries and prevent loss of employment.”
It also said that “FDI should not be allowed in crucial sectors like defence production, Railways, financial sector, retail trade and other strategic sectors. In other areas, terms and conditions for FDI should be made public.”
Budget 2016: Assocham demands income tax exemption to Rs 2.5 lakh, re-introduce standard deduction
New Delhi: Industry body Assocham demanded an increase in income tax exemption ceiling for salaried people to Rs 2.5 lakh and and re-introduce standard deduction for salaried employees to boost consumption in the upcoming Budget.
The income tax exemption ceiling at present is Rs 1.5 lakh.
“And re-introduce the concept of standard deduction for salaried employees who can then give a boost to consumption demand and boost economic growth,” Assocham said in a release.
Besides, Assocham has also pitched for revision of the deduction of interest on housing loans to at least Rs 3 lakh from the existing Rs 2 lakh and a similar limit be set for principal loan repayment from Rs 1 lakh at present.
Explaining the rationale for its demand for standard deduction, it said the salary of the employees has gone up moving along with inflation and other cost factors.
“So in order to benefit the salaried employees, the standard deduction should be reintroduced as one-third of salary or Rs 2,00,000 whichever is less”.
It has also suggested a depreciation allowance for salaried tax-payers in line with professionals.
Assocham said the deduction of depreciation is allowed under the head ‘Business and Profession’. No tax benefit is accrued to the salaried employees when they add assets. Though the assets get depreciated when owned by an employee, tax laws do not recognise this.
Moreover, to help salaried employees, it has suggested for leave encashment exemption limit for tax calculation to be raised to Rs 10 lakh.
“The current limit of Rs 3 lakh was notified by the CBDT way back in 1998 and needs to be raised substantially,” Assocham President Sunil Kanoria said.
Further, it has also asked for re-fixing of monetary limits under HRA/transport allowance and children education.
For the salaried employees, transport allowance is presently exempt from tax up to Rs 800 per month which should be raised to Rs 3,000 per month, it added.
Assocham pre-Budget memorandum to the Finance Ministry Arun Jaitley also suggested that a provision may be made in the Income Tax Act that any expenditure incurred by an employee for education of under-privileged children by making payment directly to a recognised school should be allowed as deduction from salary income up to Rs 1,000 per month for maximum of two children.
Inputs with PTI
Government sets target to add one crore more Income Tax payers this year
New Delhi: Government targets adding one crore new income tax payers in the current financial year, Minister of State for Finance Jayant Sinha said today.
“The government has set a target of adding one crore new Income tax payers during the financial year 2015-16. The said target has been further distributed among various field units of the Income Tax Department,” Sinha said in a written reply in the Lok Sabha.
Sinha said in this financial year over 2.4 crore income tax returns have been filed till October 31, 2015.
The respective figures for 2014-15 were 3.67 crore; 3.74 crore in 2013-14 and 3.27 crore in 2012-13.
The number of income tax payers in the income bracket of Rs 1 crore and below was 2.39 crore as of October 31, 2015. For 2014-15 it was 3.66 crore; 3.73 crore in 2013-14 and 3.26 crore in 2012-13, said the minister.
“The total net direct collection in the current financial year (up to October 2015) is Rs 3.44 lakh crore showing growth of 13.20 per cent as compared to the collection made during the corresponding period of the previous financial year,” he said.
Sinha said government has taken a number of steps to expand the income tax base.
These steps include developing strategies to identify and add new taxpayers; collection of information about high value transactions; improving compliance to TDS/TCS provisions; encouraging voluntary compliance through education, camps and seminars
Enhancement of Income Tax exemption limit in the case of Running Staff in Railways
National Federation of Indian Railwaymen
3, CHELMSFORD ROAD, NEW DELHI – 110 055
Indian National Trade Union Congress (INTUC)
International Transport Workers’ Federation (ITF)
No. II/58/Part II
The Secretary (E),
Sub: Enhancement of Income Tax exemption limit in the case of Running Staff in Railways-reg.
Ref: (i) NFIR’s PNM item no. 39/2012.
(ii) Railway Board’s O.M. No. F(X)I-2014/23/4 dated 23/05/2014 & 08/05/2015.
(iii) Ministry of Finance, Department of Revenue, CBDT (TPL Division)’s O.M No. 149/21/2013 TPL dated 23/07/2015 addressed to Railway Board.
On perusal of contents of O.M. dated 23/07/2015, (addressed to the Railway Board by Department of Revenue, CBDT TPL Division), copy handed over to the NFIR during the PNM meeting held on 819`” October 2015, Federation felt disappointed that the view of CBDT is unconvincing as the points raised by the Federation in the PNM agenda Item No, 39/2012 have not been taken into consideration. As a matter of fact, the CBDT has generalized the issue ignoring the Federation’s demand seeking revision of tax exemption to the specific category of Running Staff of Railways.
2. Federation however re-iterates below the key points for making proper reference by the Railway Ministry to the MoF/CBDT:-
- In para 1507 of IREC-Vol II (sixth Edition 1987/2″ Reprint Edition 2005), it has been stipulated that the Running Allowance is granted to the Running Staff for the performance of duty directly connected with charge of moving trains and includes “kilometerage allowance” or “allowance in lieu of kilometerage” and is paid on the kilometerage basis.
- The argument of CBDT that the exemption limit was raised from Rs. 6000 to 10,000 p.m. which takes care of progressive requirement of employees working in the different transport sector including Railway employees is not relevant as the revision of exemption sought pertains to Running Staff. Federation’s demand is that when the rates of kilometerage allowance of Running Staff on Indian Railways have been enhanced on DA reaching 50% of pay w.e.f. 01/01/2011 and again on reaching 100% as on 01/01/2014, the exemption limit of Income Tax correspondingly needs to be enhanced retrospectively as there is T.A. component in the kilometerage amount. Therefore, the present exempteq. amount of Rs. 10,000/- is grossly insufficient particularly in the context of upward revision of the rates of T.A which are not taxable.
- The CBDT’s view that moderation of tax rates by way of increase in the basic exemption limits and widening of tax slabs has raised every individual’s exemption limit is not relevant to the issue raised by NFIR seeking revision of exemption limit in the case of Running staff in Railways.
NFIR, therefore, requests the Railway Board to write back to MoF/CBDT duly highlighting that “kilometerage amount paid to Running staff includes T.A. component towards out of pocket expenses” and urging for approval for upward revision of tax exemption limit from the existing Rs. 10,000/- to Rs. 20,000/-
(Dr. M. Raghavaiah)
Source: NFIR – https://drive.google.com/file/d/0B40Q65NF2_7UNjRyY0p1NFdlM2c/view?pli=1
Revised Norms of IT Returns; Electronic Verification of Income Tax Returns For A.Y. 2015-16 Introduced
Revised Norms of IT Returns; Electronic Verification of Income Tax Returns For A.Y. 2015-16 Introduced
As per rule 12 of the Income-tax Rules, in case of individuals and certain other specified taxpayer, returns may be filed electronically followed by submission of signed paper copy of ITR-Verification form (ITR-V). However, to provide end-to-end enabled services to the tax payers, a facility has been introduced for electronic verification of the Income-tax Returns for A.Y. 2015-16 in these cases.
Under this, a taxpayer may verify his return through Internet Banking or through Aadhaar based authentication process.
For the convenience of small taxpayers having total income of Rs. 5 lakhs or below without any claim of refund, facility for generating Electronic Verification Code (EVC) has also been provided on the E-filing website of the Department. In such cases EVC will be sent to the Registered Email ID and Mobile Number of the taxpayer. Persons using this facility will not be required to submit a signed paper copy of ITR-V to the Income-tax Department.
Taxpayers are permitted to use Digital Signature Certificate (DSC) to verify their e-filed Income-tax return. The electronic signature is a type of DSC and can be used to verify e-filed Income-tax return. As mentioned above, the taxpayers can use their Aadhaar number for e-filing of return as per the Aadhaar based authentication process.
This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Rajya Sabha today.
Pension Fund Regulatory and Development Authority
First Floor, ICADR Building, Plot No 6, Institutional Area Phase II,
Vasant Kunj, New Delhi-110070
ATAL PENSION YOJANA – BENEFITS AND FEATURES
1. Anybody in the age group of 18-40 years can join !!
2. You can choose your pension plan from Rs 1,000/- to Rs 5,000/- per month.
3. Your contribution depends on your age and the pension plan you choose!
4. You can be a member of any existing PF/Pension scheme such as EPF/PPF/Govt. pension and still join APY!
5. You can be an Income tax payer and still join APY.
6. For (4) and (5) above, Govt. Co-contribution is not available but Govt. guarantee for pension will be available!
7. Govt. Co-contribution of 50% of subscribers’ contribution or Rs 1,000/- per annum, whichever is lower will be available for five years only to subscribers joining by 31st December 2015.
The monthly contribution chart for different age groups and pension amounts is given below:
|Joining Age||Years of Contribution||
Indicative Monthly Contribution under APY (Rs.)
|Monthly pension of Rs. 1000. Indicative return of corpus Rs 1.70 lacs||Monthly pension of Rs. 2000. Indicative return of corpus Rs3.40 lacs||Monthly pension of Rs. 3000. Indicative return of corpus Rs 5.10 lacs||Monthly pension of Rs. 4000. Indicative return of corpus Rs 6.80 lacs||Monthly pension of Rs. 5000. Indicative return of corpus Rs 8.50 lacs|
SUBMIT YOUR APPLICATION FORM AT YOUR BANK BRANCH
For more information, Please call on our APY Toll free No. 1800110069
Exemption u/s 80 (G) of Income Tax Act on donation to DCMAF – PCDA Orders
Defence Civilians Medical Aid Fund (DCMAF)
Ministry of Defence
Room No. PC – l, B-Block
Dalhousie Road,New Delhi-110011
19 March 2015
Heads of All Defence Units
All Labour Welfare Commissioners
Subject- Exemption u/s 80(G) of Income Tax Act on donations to DCMAF
1. Consequent on the decision taken by the Managing Committee in its 57th annual meeting held on 28th June 2013 under the chairmanship of Defence Secretary, the Defence Civilians Medical Aid Fund (DCMAF) has been registered u/s 80(G) of Income Tax Act 1961 for the period from Assessment year 2014-15 onwards. All civilian employees working under Ministry of Defence can get exemption on income tax u/s 80(G) of the IT Act on their donations to DCMAF exceeding Rs. 250/-.
2. it is requested that the contents of this letter may please be widely disseminated for information of all members/employees under your administrative jurisdiction.
Dy CAO (DCW) &