TIOL-DDT 253 · the untouched capture
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<strong><font color="#996699" size="3">TIOL-DDT 253</font><br>
02 12 2005<br>
Friday</strong></font></div>
<p align="center"><strong><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">INCOME-TAX
DEDUCTION FROM SALARIES - CBDT issues detailed circular</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CBDT
has issued the usual detailed circular about TDS for salaried class and responsibilities
of the DDO. Highlights from the Circular.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>RATES
OF INCOME-TAX - Normal Rates of tax:</strong></font></p>
<table width="450" border="1" align="center" cellpadding="1" cellspacing="1">
<tr>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Total
Income</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Tax</font></strong></td>
</tr>
<tr>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Up
to 1,00,000 ( 1,35,000 for women)</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Nil</font></strong></td>
</tr>
<tr>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,00,001
to 1,50,000</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">10%
of the income above 1,00,000</font></strong></td>
</tr>
<tr>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1,50,001
to 2,50,000</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5000
+ 20% of the income above 1,50,000</font></strong></td>
</tr>
<tr>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Above
2,50,000</font></strong></td>
<td><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">25,000
+ 30% of the income above 2,50,000</font></strong></td>
</tr>
</table>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Method
of Tax Calculation:</strong> Average tax payable has to be deducted by DDO on
every payment</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Payment
of Tax on Non-monetary Perquisites by Employer:</strong> Employer may,
at his option, make payment of the tax on perquisites himself
without making any TDS from the salary of the employee. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Furnishing
of Declaration by Taxpayer in Form 12C:</strong> Form 12 C has been omitted
but tax payers can still furnish information about other income to the DDO.
This should not be a loss except in the case of Income from House Property.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Salary
Paid in Foreign Currency:</strong> For the purposes of deduction of tax
on salary payable in foreign currency, the value in rupees of
such salary shall be calculated at the prescribed rate of
exchange.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>PERSONS
RESPONSIBLE FOR DEDUCTING TAX AND THEIR DUTIES:</strong> “persons responsible
for paying" means the employer himself or if the employer is a Company,
the Company itself including the Principal Officer thereof.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Deduction
of Tax at Lower Rate:</strong> The employee can apply to the DDO to deduct tax
at a lower rate or not to deduct at all.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Deposit
of Tax Deducted:</strong> Tax deducted has to be deposited with the government
within a week of the following month.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Penalty
for Failure to Deposit Tax Deducted: </strong></font></p>
<ul>
<li><font size="2" face="Verdana, Arial, Helvetica, sans-serif" align="justify"><strong> simple
interest at twelve per cent per annum </strong></font></li>
<li><strong align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> penalty
of a sum equal to the amount of tax not deducted by him. </font></strong></li>
<li><strong align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> rigorous imprisonment
for a term which shall be between 3 months and 7 years, and with
fine.</font></strong></li>
</ul>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Furnishing
of Certificate for Tax Deducted:</strong> The employee has to be issued a certificate
of deduction in Form 16 or 16AA</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Annual
Return of TDS:</strong> It is now mandatory for all offices of the Government
and all companies to file the annual return of TDS on computer media only. Failure
to file the return will attract penalty of Rs. 100 per day.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>TDS
on Income from Pension:</strong> Banks are equally liable to deduct tax on pensions.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>New
Procedure for TDS Returns and Quarterly Statements with effect from 1st of April,
2005:</strong> The person deducting the tax (employer in case of salary income),
is required to file Quarterly Statements for the periods ending on 30th June,
30th September, 31st December and 31st March of each financial year, duly verified,
to the Director General of Income Tax (Systems) or M/s National Securities Depository
Ltd (NSDL). These statements are required to be filed on or before the 15th July,
the 15th October, the 15th January in respect of the first three quarters
of the financial year and on or before the 15th June following the last
quarter of the financial year.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Incomes
not included in the Head "Salaries"(Exemptions)</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) LTC
(Leave Travel Concession)</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) Death-cum-retirement gratuity </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(3) commutation
of pension </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(4) leave salary at
the time of retirement</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(5) retrenchment
compensation </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(6) VRS
benefits up to Rs. 5 Lakhs</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(7) Certain
Insurance benefits</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(8) Provident
Fund</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(9) HRA
subject to certain limits and conditions. No need of rent receipt if HRA is
less than Rs.3000/-</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(10) Certain
special allowances</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(11) Interest
on Deposit Scheme for Retiring Government Employees, 1989</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(12) Pension
of gallantry awardees like Param Vir Chakra</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(13) The
following medical expenditure </font></p>
<blockquote>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. medical
treatment in a hospital maintained by employer</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. reimbursement
of actual fees paid to hospitals</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Treatment
for certain diseases in hospitals approved by the Chief Commissioner </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. premium
paid by employer for medical insurance</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. re
imbursement of medical expenditure up to Rs. 15,000.</font></p>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(14) <strong>Deductions</strong></font></p>
<blockquote>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">a. Entertainment
allowance up to Rs. 5,000 - only for government servants.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">b. Professional
Tax</font></p>
</blockquote>
</blockquote>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>No
standard Deduction - The standard deduction of Rs. 30,000 (or Rs. 20,000)
allowed earlier is now withdrawn.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Other
deductions</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(1) <strong>80
C up to Rs. 1 Lakh.</strong></font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">c. insurance
premium</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">d. deferred
annuity</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">e. Provident
Fund</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">f. NSC</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">g. ULIP</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">h. Equity
Linked Saving Scheme</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">i. pension fund set up
by any Mutual Fund</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">j. deposits
to National Housing Bank and other Public Sector companies</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">k. payment
for purchase or construction of a residential house property including
repayment of loans</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">l. Tuition
fees paid to any university, college, school or other educational institution
situated in India, for the purpose of full-time education of any two children
of the employee</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">m. Certain
subscriptions to shares and debentures.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(2) <strong>80
D - Health Insurance up to Rs. 10,000.</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDO
not to allow deduction for</strong> donations to charitable institutions though
50% deductions can be allowed for certain donations and 100% for certain other
donations. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>DDOs
to satisfy themselves of the genuineness of claim:</strong> The Drawing and
Disbursing Officers should satisfy themselves about the actual deposits/
subscriptions / payments made by the employees, by calling for such particulars/
information as they deem necessary before allowing
the aforesaid deductions. In case the DDO is not satisfied about
the genuineness of the employee's claim regarding any deposit/subscription/payment
made by the employee, he should not allow the same, and the employee
would be free to claim the deduction/ rebate on such amount by filing his
return of income and furnishing the necessary proof etc., therewith, to the
satisfaction of the Assessing Officer.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/pdfnoti/pdfcbdt/pdf2005/it05cir09.pdf">CBDT
CIRCULAR NO.: 9/ 2005, dated 30-11-2005</a></strong></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Data
Structure for making corrections in TDS returns</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
DG(IT), Systems has directed that for making corrections in the quarterly statements
of TDS and TCS in Form 24Q, 26R, 27Q and 27EQ, the data structure shall be as
per Annexure A, B, C and D respectively.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/itnotti.htm">Notification
in F. No. SW/9/3/2003-04 - DIT(S) TIN dated 29.11.2005</a></strong></font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>FTP
- LIST OF THE BRANCHES OF CENTRAL BANK OF INDIA AUTHORISED TO RECEIVE PAYMENTS
FOR APPLICATION FEE</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Central
Bank of India, Bhilwara Branch, PB No. 19, Patch Area, Bhopalganj, Bhilwara-311001,
Distt. Bhilwara (Rajasthan) is added to the list of the branches of Central
Bank of India, under Appendix-3, authorized to receive payments towards application
fee etc., payable to Office of the Joint Director General of Foreign Trade,
Jaipur</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2005/dgft05pn069.htm">PUBLIC
NOTICE NO. 69 /(RE-2005) 2004-09, Dated: November 29, 2005</a></strong></font></p>
<p align="center"><strong><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Import
of Air Conditioner without ODS gases - DGFT asks customs to allow clearance</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Several
representations have been received by DGFT that Customs is not allowing clearance
even of Air Conditioners which do not contain ODS gases. So the DGFT clarifies
that the policy of Air conditioners containing HCFC - 22 only is under
review. Air Conditioners which do not contain ODS substances will be allowed
to be imported freely both under EPCG Scheme and under normal imports.</font></p>
<p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=46&filename=notification/dgft/2005/dgft05cir035.htm">DGFT
POLICY CIRCULAR NO. 35(RE-2005)/2004-09 Dated : December 1, 2005 </a></strong></font></p>
<p align="center"><strong><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif">INTELLIGENCE
BUREAU Chief gets extension</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Director
of the Intelligence Bureau E.S.L. Narasimhan has been given extension till December
31st 2006 by the Government. He is a 1968 batch IPS officer from Andhra Pradesh
cadre. He took over as Director, Intelligence Bureau on February 1st, 2005.
</font></p>
<p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>AMENDMENT
TO THE CENTRAL SALES TAX ACT, 1956 </strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Union Cabinet today gave its approval for introduction of a Bill in the Parliament
for Amendment in the Central Sales Tax Act, 1956, in order to streamline and
improve the functioning of the Central Sales Tax Appellate Authority (CSTAA).
This will resolve inter-state disputes regarding levy of Central Sales Tax,
in respect of inter-state trade or commerce expeditiously and smoothly. In the
original CST Act, 1956, there was no mechanism to resolve inter-state disputes.
</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">A
king, a prostitute, Lord Yamaraja, fire, a thief, a young boy, and a beggar
cannot understand the suffering of others. The eighth of this category is the
tax collector - Koutilya </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6666">Until
Monday with more DDT</font></strong></font></p>
<p align="justify"><font color="#FF6666"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Have
a nice weekend. </font></strong></font></p>
<p align="justify"><font color="#FF6666"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail
your comments to</font></strong></font><font color="#FF9999"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">
</font></strong></font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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