Income Tax

1. Income:   Income is classified under the following Heads:-
 

  1. Salaries
  2. Income from house property
  3. Profits and gains of business or professions
  4. Capital gains
  5. Income from other sources

2. Definition of Salary:

Salary includes  all kinds of pay, dearness allowance , overtime allowance, bonus, leave salary, advance of pay, compensatory allowance, HRA, fees, honoraria, reimbursement of tuition fee and government contribution to NPS. Salary due, whether paid or not, advance salary, and arrears of salary paid will be chargeable to income tax for the year.

3. Salary does not include:

  1. T.A. granted on transfer/tour
  2. Composite Hill Compensatory Allowance.
  3. Any special compensatory allowance such as Border area allowance, remote locality allowance, Difficult area allowance or Disturbed area allowance or tribal area allowance.
  4. Children education allowance
  5. Hostel subsidy
  6. Transport allowance.
  7. Special allowance granted to those working in any transport system to meet their personal expenditure.


4. Tax Deduction at source (TDS):
TDS for each employee is deducted by the DDO in monthly installments on the salaries disbursed. Final adjustment would be made from the last salary payable before the end of March.

5. Income fully exempted from income tax:

  1. Commuted portion of pension
  2. Cash equivalent of leave salary paid on retirement or quitting service.
  3. Leave travel concession.
  4. House rent allowance:- If the employee is living in a rented house, exemption is allowed to the extent of the least of the following:
     
    • The actual amount of HRA received,
    • rent paid in excess of 10% of the salary,
    • 50% of the salary if the residence is at Mumbai, Kolkata, Delhi or Chennai and 40% of salary if residence is at any other place in the country.
    • If the employee is living in rent free accommodation, amount equal to the license fee would be added to the salary.

6. Permissible deductions: Following contributions made are exempted from income tax upto
   specified limits (Rs. 100000/-  as now)
 

  1. Contribution to GPF
  2. Contribution to approved superannuation fund
  3. Contribution to specified saving certificates, unit linked insurance plan, subscription to mutual fund or pension fund set up by mutual fund
  4. Tuition fee paid for 2 children
  5. Contribution to life insurance or any other insurer notified by the Govt.
  6. Contribution to NPS, limited to 10% of salary.
  7. post office 5 year term deposit scheme
  8. Any payment of house building advance and interest paid thereon would be reduced from gross income.
  9. Interest paid during the year on loan taken on higher education of spouse or children can be deducted from taxable income.
  10. Donations for charitable purposes would be deducted from the gross income.


g. Income Tax slab for Assessment Year 2010-11

Taxable Income
(in rupees)
Income Tax
General Tax Payee
(in rupees)
Women
(in rupees)
Senior Citizen
(in rupees)
      Age 60 -80 years Above 80 years
Up to 1,60,000 NIL NIL NIL NIL
1,60001–190000 10% NIL NIL NIL
190001 to 240000 10% 10% NIL NIL
240001 to 500000 10% 10% 10% 10%
500001 to 800000 20% 20% 20% 20%
Above 800000 30% 30% 30% 30%

Note: Education Cess @ 3% on will be levied all assesses.

h. Income Tax slabs for Assessment Year 2011-12

Taxable Income
(in rupees)
Income Tax
General Tax Payee
(in rupees)
Women
(in rupees)
Senior Citizen
(in rupees)
      Age 60 -80 years Above 80 years
Up to 1,80,000 NIL NIL NIL NIL
1,80001–190000 10% NIL NIL NIL
190001 to 250000 10% 10% NIL NIL
250001 to 500000 10% 10% 10% NIL
500001 to 800000 20% 20% 20% 20%
Above 800000 30% 30% 30% 30%


Note: Education cess @ 3% on will be levied all assesses.