Deduction of Income Tax at source from Salaries for FY 2020 ...

FINANCE DIVISION, HEAD OFFICE

PLOT NO.4, SECTOR-10, DWARKA, NEW DELHI-110075

Page 1 of 51 Deduction of tax at source from Salaries – FY 2020-21

31.08.2020 TO ALL OFFICES

CIRCULAR NO. HO / FD / 24 / 2020 Deduction of Income Tax at source from Salaries for FY 2020-21 1. INTRODUCTION

The Income Tax Act, 1961, imposes the responsibility of deducting tax at source at specified rates from certain payments including salary and perquisites. The relevant provisions of the Income Tax Act, 1961, in relation to deduction of Tax at source on salary as amended by the Finance Act, 2020, are given hereunder for meticulous compliance thereof.

2. DEFINITION OF SALARY [Sec. 17(1)]:

“Salary” includes wages, any annuity, pension, gratuity, any fee, commission, perquisites or profits in lieu of or in addition to any salary or wages, any advance of salary, leave encashment, interest on Provident Fund over and above the interest rate fixed by the Central Government through their notification from time to time and contribution by the Central Govt. to the account of the employee under a pension scheme referred to in section 80CCD.

Note: Dearness Allowance (D.A.), City Compensatory Allowance (C.C.A.) or any other cash allowance given by the bank is taxable. Since the Pigmy Deposit Collectors (Mini Deposit Collectors in our bank) are being treated as workmen as per the Judgment of Hon’ble Supreme Court, the remuneration (Commission) earned by the Pigmy Deposit Collectors will be treated as salary and subjected to TDS under section 192 of the Income Tax Act, 1961

3. RATES OF INCOME TAX

3.1. Individuals (including woman) other than resident senior citizens and resident super senior citizen)

Total Income Income tax rates Surcharge Health & Education Cess

Upto Rs.2,50,000/- Nil Nil Nil

Above Rs. 2,50,000/- to Rs. 5,00,000/-

5% of (total income minus Rs.2,50,000/-)

Nil 4% of income tax

Above Rs.5,00,000/- to Rs.10,00,000/-

Rs. 12,500/- + 20% of (total income minus Rs.5,00,000/-)


Above Rs 10,00,000 to Rs 50,00,000

Rs 1,12,500/- + 30% of (total income minus


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PUNJAB NATIONAL BANK


Page 2 of 51 Extension of contract period of TDS Compliance vendor

3.2. For resident senior citizen (who is 60 years or more at any time during the

previous year but less than 80 years on the last day of the previous year)

3.3 For resident super senior citizen (who is 80 years or more at any time during the

previous year)

Total Income Income tax rates Surcharge Health & Education Cess

Up to Rs. 5,00,000/- Nil Nil Nil

Above Rs.5,00,000/- to Rs. 10,00,000/-



Above Rs 10,00,000 to Rs 1,00,000/- + 30% of Nil 4% of income

Rs.10,00,000/-)

Above Rs.50,00,000/- to Rs 1,00,00,000/-

Rs. 13,12,500/- + 30% of (total income minus Rs.50,00,000/-)

10% of income tax

4% of income tax and surcharge

Above Rs 1,00,00,000/- to Rs 2,00,00,000/-

Rs 28,12,500/- + 30% of (total income minus Rs 1,00,00,000/-)

15% of Income Tax


Above Rs 2,00,00,000/- to Rs 5,00,00,000/-


25% of Income Tax


Above Rs 5,00,00,000/- Rs 1,48,12,500 + 30% of (total income minus Rs 5,00,00,000/-)

37% of Income Tax


Total Income Income tax rates Surcharge

Health & Education Cess

Upto Rs. 3,00,000/- Nil Nil Nil

Above Rs. 3,00,000/- to Rs. 5,00,000/-



Above Rs.5,00,000/- to Rs.10,00,000/-

Rs. 10,000/- +20% of (total income minus Rs.5,00,000/-)


Above Rs 10,00,000 to Rs 50,00,000

Rs 1,10,000/- + 30% of (total income minus Rs.10,00,000/)


Above Rs.50,00,000/- to Rs 1,00,00,000/-


10% of income tax


Above Rs 1,00,00,000/- to Rs 2,00,00,000/-


15% of Income Tax


Above Rs 2,00,00,000/- to Rs 5,00,00,000/-


25% of Income Tax



37% of Income Tax


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Rs 50,00,000 (total income minus Rs.10,00,000/-)

tax

Above Rs.50,00,000/- to Rs 1,00,00,000/-


10% of income tax

4% of income tax

Above Rs 1,00,00,000/- to Rs 2,00,00,000/-


15% of Income Tax


Above Rs 2,00,00,000/- to Rs 5,00,00,000/-


25% of Income Tax



37% of Income Tax


Rebate under section 87A is available in case of a resident individual if his/ her taxable income (i.e. gross total income minus deduction under section 80C to 80U) does not exceed Rs 5,00,000/- for AY 2021-22 (FY 2020-21) (previously it was Rs 3,50,000/ for FY 2018-19). Amount of rebate under this section is 100% of Income Tax or Rs 12,500/- whichever is less.

3.4 Alternative taxation regime in the case of Individual or HUF under section 115BAC of IT Act

1. On satisfaction of conditions specified in point no (2), an individual or HUF shall,

from assessment year 2021-22 (FY 2020-21) onwards, have the option to pay tax in respect of the total income at following rates:

Total Income (Rs.) Rate Upto Rs 2,50,000 Nil From Rs. 2,50,001/- to Rs. 5,00,000/- 5 percent From Rs.5,00,001/- to Rs.7,50,000/- 10 percent From Rs.7,50,001/- to Rs.10,00,000/- 15 percent From Rs.10,00,001/- to Rs.12,50,000/- 20 percent From Rs.12,50,001/- to Rs.15,00,000/- 25 percent Above Rs 15,00,000/- 30 percent

Note:

a. Section 87A Rebate on salary upto Rs.5 lacs allowed maximum Rs.12500/-

b. Surcharge at applicable rate(s) and Health & Education cess @ 4% will also be levied.

The option shall be exercised for every year where the individual has no business income.

2. The condition for concessional rate shall be that the total income of the individual or HUF is computed without any exemption or deduction under the provisions —

a) Leave travel concession as contained in clause (5) of section 10;

b) House rent allowance as contained in clause (13A) of section 10;

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c) Allowances as prescribed in clause (14) of section 10 (Other than those as may be prescribed for this purpose.

d) Allowance for income of minor as contained in clause (32) of section 10;

e) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16;

f) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law);

g) Deduction under section 57(iia) in the case of family pension.

h) Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.

i)Without set off of any loss,-

(i) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; or (ii) under the head house property with any other head of income;

j) by claiming the depreciation, if any, under section 32, except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; and k) Without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force. The under mentioned Allowances u/s 10(14) of the Income Tax Act, read with Rule 2BB of the Income Tax Rules amended by CBDT vide its notification no 38/2020 dated 26.06.2020,will continue to remain allowable even under the New Regime of Personal Taxation. i) Transport Allowance of Rs. 3,200/- p.m granted to a divyang employee to meet expenditure for the purpose of commuting between place of residence and place of duty ii) Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office; iii) Any Allowance granted to meet the cost of travel on tour or on transfer; iv) Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.

Further, CBDT also notified that the exemption provided in the Rule 3(7),- first proviso, in respect of free food and non-alcoholic beverage provided by employer through paid voucher shall not apply to an employee, being an assessee, who has opted New Regime of Personal Taxation.

3. An employee, having income other than the income under the head "profit and gains of business or profession" and intending to opt for the concessional rate under section 115BAC of the Act, may intimate the employer of such intention for each previous year and upon such intimation, the employer shall compute employee total income, and make TDS thereon in accordance with the provisions of section 115BAC of the Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 115BAC of the Act.

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4. It is also clarified that the intimation so made to the deductor shall be only for the purposes of TDS during the previous year and cannot be modified during that year. However, the intimation would not amount to exercising option in terms of sub-section (5) of section 115BAC of the Act and the person shall be required to do so alongwith the return to be furnished under sub-section (1) of section 139 of the Act for that previous year.

Employees or Pensioners have to adopt any one regime i.e. existing or new regime under section 115BAC as explained above and TDS deduction needs to be made accordingly by Employer.

4. PERQUISITES – RULES FOR VALUATION

4.1 RESIDENTIAL ACCOMODATION

4.1.1 The value of perquisite of a residential accommodation provided by the Bank during the previous year shall be determined on the basis of details provided in the table below:

S. No.

Circumstances Where the accommodation is unfurnished

Where the accommodation is furnished

(1) (2) (3) (4)

(1) Where the accommodation is provided by the Bank. (a) Where the accommodation is owned by the Bank. (b)Where the accommodation is taken on lease or rent by the Bank.

i) 15% of ‘salary’ in cities having population exceeding 25 lakhs as per 2001 census; ii) 10% of ‘salary’ in cities having population exceeding 10lakhs but not exceeding 25 lakhs as per 2001 census; iii) 7.5% of ‘salary’ in other areas in respect of the period during which the said accommodation was occupied by the employee during the previous year as reduced by the rent, if any, actually paid by the employee. Actual amount of lease rental paid or payable by the Bank or 15% of salary whichever is lower as reduced by the rent, if any, actually paid by the employee.

The value of perquisite as determined under col. (3) and increased by 10% per annum of the cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, by the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the employee during the previous year

(2) Where the accommodation is provided by the Bank in a hotel (except where the employee is provided such

Not applicable. 24% of salary paid or payable for the previous year or the actual charges paid or payable to such

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accommodation for a period not exceeding in aggregate 15 days on his transfer from one place to another).

hotel, which is lower, for the period during which such accommodation is provided as reduced by the rent, if any, actually paid or payable by the employee.

a) Salary for this purpose means Basic Pay and other pay which are taken for the purpose of computing retirement benefit.

b) If on account of an employee’s transfer from one place to another the employee is provided with accommodation at the new place of posting while retaining the accommodation at the other place, the value of perquisite shall be determined with reference to only one such accommodation which has the lower value as per the above table for a period up to 90 days. However, after the period of 90 days, the value of perquisite shall be charged for both accommodations as prescribed.

4.1.2 However, in this regard, High Court of Madras on writ petition no. 14126/2008 filed by All India Bank Officers’ Confederation (AIBOC) Chennai has vide interim injunction order restrained the Respondent viz Union of India and CBDT, New Delhi from deducting income tax at source on the value of perquisite under sec. 17(2) of the Income Tax Act. In view of the injunction order, all our Branches/Offices are advised to take note that perquisite value of furnished/unfurnished accommodation provided need not be reckoned and no income tax need to be deducted in respect of rent free/concessional residential accommodation provided on furnishing of undertaking letter as per Annexure II. The above treatment of valuation of perquisite to Officer Employees is subject to the final decision of the Hon’ble High Court of Madras.The undertaking may be obtained from the Officer employee concerned and preserved in Branch/Office records.

4.1.3 Further, all the branches/offices are advised to incorporate the following note in Form No.16 and Form No.12BA while issuing the same to Officer Employees.

“Following the interim injunction ordered by the Hon’ble High Court of Madras vide orders in the Writ Petition No.14126/2008, perquisite value of accommodation provided by the Bank has not been reckoned for Financial Year 2020-21”.

4.2 INTEREST FREE LOAN OR LOAN AT CONCESSIONAL RATE OF INTEREST (Rule

3(7)(i))

4.2.1 Value of perquisites in respect of interest free or concessional loans made available by the Bank to the employee or any member of his household shall be worked out taking interest rates as on 01.04.2020 of similar loans granted by State Bank of India for the same purpose. For reference SBI rate of housing loan as on 01.04.2020 are provided below : (A) Home Loans

Term Loans upto Rs 30 Lacs Women LTV ≤ 80 7.15%

LTV > 80 LTV ≤ 90

7.25%

Other LTV ≤ 80 7.20% LTV > 80 7.30%

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LTV ≤ 90 Term Loans above Rs 30 Lacs upto Rs 75 Lacs Women 7.40%

Other 7.45% Term Loans above Rs 75 Lacs

Women 7.50% Other 7.55%

Further rates on other loans (including Car, Vehicle and Personal Loan) can be checked on website of SBI or at taxmann.com/readyreckoner.aspx :

4.2.2 The perquisite is calculated on following basis:

Step 1: Find out the ‘maximum outstanding monthly balance” (i.e. aggregate outstanding balance for each loan on the last day of each month)

Step 2: Find out ROI charged by SBI as on 01.04.2020 in respect of loan for same purpose advanced by it.

Step 3: Calculate interest for each month on the outstanding amount mentioned in Step 1 at the ROI given in Step 2.

Step 4: From the total interest calculated for the entire year under Step 3, deduct interest actually recovered, if any, from the employee during the year.

Step 5: The balance amount is taxable value of the perquisite.

4.2.3 Hon'ble High Court of Madras on writ petition no. 7816/2013 filed by All India Punjab National Bank Officers’ Association (AIPNBOA) vide interim injunction order dated 28.03.2013 and Hon'ble High Court of Madras on WP No. 8466/2015 filed by All India Punjab National Bank Officers Federation (AIPNBOF) affiliated to AIBOA vide interim injunction order dated 25.03.2015 have restrained the Respondents including PNB from deducting income tax at source on the value of perquisite in respect of interest free loan or loan at concessional rate of interest (Rule 3(7)(i))

4.2.4 However, the Hon. High Court, Madras as per their orders dated 20.04.2016 have dismissed WP 8466/2015 filed by All India Punjab National Bank Officers Federation (AIPNBOF) affiliated to AIBOA as devoid of any merits. All India Punjab National Bank Officers’ Federation (AIPNBOF) has filed SLP against order dated 20-04-2016 of the High Court of Madras. Hon'ble Supreme Court vide it’s order dated 27.02.2017 has decided in similar SLPs filed by other Bank’s Unions / Associations that “the interim protection granted by Madras High Court will continue till further orders” for the purpose of perquisite value of interest free loans or loans at concessional rate of interest. Giving credence to aforesaid order, our Law division has opined that there is no impediment in extending the benefit to members of AIPNBOF after obtaining undertaking. In view of the above, all Branches/Offices are advised to take note that perquisite value of interest free loan or loan at concessional rate of interest given to members of All India Punjab National Bank Officers’ Federation (AIPNBOF) need not be reckoned and no income tax needs to be deducted in respect of interest free loans or loans at concessional rate of interest provided officer member furnishes an undertaking letter as per Annexure III. The above treatment of valuation of perquisite to Officer Employees is subject to the final decision of the Hon’ble Supreme Court. The undertaking should be obtained from the concerned officer and preserved in Branch/Office records. However, the above benefit is not available to officers already retired/ceased to be in the service of the Bank during the Financial Year 2020-21. Further, all the branches/offices are

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advised to comply with other guidelines including issuing of Form 16 and Form 12BA contained in this circular.

4.2.5 As regard WP No. 7816/2013, filed by All India Punjab National Bank Officers’

Association (AIPNBOA) and applicable to the members of this Union the status of said Writ in the Court’s website is showing ‘Pending’. Hence, in view of the injunction order and opinion of Law Division, all our Branches/Offices are advised to take note that perquisite value of interest free loan or loan at concessional rate of interest provided against WP No. 7816/2013, filed by All India Punjab National Bank Officers’ Association (AIPNBOA) need not be reckoned and no income tax need to be deducted in respect of interest free loan or loan at concessional rate of interest provided on furnishing of undertaking letter as per Annexure III. The above treatment of valuation of perquisite to Officer Employees is subject to the final decision of the Hon’ble High Court of Madras. The undertaking may be obtained from the Officer employee concerned (covered by WP No. 7816/2013) and preserved in Branch/Office records. Further, branches/offices are advised to incorporate the following note in Form No.16 and Form No.12BA while issuing the same to Officer Employees. “Following the interim injunction ordered by the Hon’ble High Court of Madras vide order in the Writ Petition No.7816/2013, perquisite value of interest free loan or loan at concessional rate of interest has not been reckoned for Financial Year 2020-21”.

4.2.6 The perquisite would, however, be not charged to tax if

1. Loan is made available for medical treatment in respect of diseases specified in rule 3A (the exemption is, however, not applicable to so much of the loan as has been reimbursed to the employee under any medical insurance scheme).

2. The amount of original loan(s) does not exceed in the aggregate Rs. 20,000/- ‘Member of household’ includes spouse(s), children and their spouses, parents, servants and dependants.” 4.3 LEAVE TRAVEL CONCESSION - Section 10(5) Read with Rule 2B

4.3.1 The value of any travel concession or assistance received by or due to an employee

from his employer or former employer for himself and his family in connection with his proceeding:

a) on leave to any place in India or

b) after retirement from service, or, after termination of service to any place in India

is exempt under clause (5) of Section 10 subject, however, to the conditions prescribed in rule 2B of the Income Tax Rules, 1962. Amount is exempt to the extent amount is actually spent on travel:

Where journey is by air : Up-to economy fare of Air India by shortest route

Journey other than air (Direct rail connection)

: Not exceeding A/C first class Rail fare by shortest route.

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Where place of origin and destination or part thereof is not connected by Rail

Where a recognized public transport system exist

: 1st Class or deluxe fare by shortest route

Where no recognized public transport system exist

: An amount equivalent to the A/C 1st Class Rail fare by shortest route for the distance of journey

4.3.2 The exemption referred to above shall be available to an individual in respect of two

journeys performed in a block of four calendar years commencing from the calendar year 1986, irrespective of the block in which the employee falls as per his service conditions.

4.3.3 In the event of an employee being unable to avail the leave travel concession during a block of 4 calendar years, it can be availed of by him in the first calendar year of the next block of 4 calendar years after taking necessary approval of Competent Authority and this would be ignored for deciding the taxability of leave fare concession availed by him in the subsequent block.

1. For the purpose of this section, family means the spouse and children and also includes parents, brothers and sisters or any of them, wholly or mainly dependent on the employee.

2. The exemption is not available for the third child if the third child is born on or after 1st October, 1998. However, this restriction is not applicable in case of multiple births after the birth of the 1st child.

Notes: Fixed sum paid to employees by way of leave travel allowance on the basis

of self declaration made by employee would not be exempt.

W.e.f. 01.06.2016, in case of leave travel concession, it is mandatory for the employee to furnish the evidences of expenditure in Form no.12BB to the employer for allowing deduction under section 10(5) [Notification 30/2016 dated 29.04.2016].

4.4 SUKANYA SAMRIDDHI ACCOUNT [Section 10 (11A)]

A special small savings instrument for the welfare of the girl child has been introduced under the Sukanya Samriddhi Account Rules, 2014. The following tax benefits have been envisaged in the Sukanya Samriddhi Account Scheme:

• The investment made in the scheme will be eligible for deduction under section 80C (within the overall ceiling limit of Rs 1,50,000)

• The interest accruing on such deposits in such account will be exempt from income tax under section 10(11A)

• The withdrawal from the said scheme in accordance with the Rules of the said scheme will be exempt from tax.

• The deduction can be claimed in case of an individual, by the individual or any girl child of that individual or any girl child for whom such person is the legal guardian.

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PROVIDENT FUND DUES [Section 10(12)] – TAX TREATMENT OF RECOGNISED PROVIDENT FUND

4.5.1 Tax treatment of contribution made by employer, employee and interest

accrued thereon is given in the table below:

Item Tax Treatment

Employer’s contribution Contribution in excess of 12% of Basic Pay is taxable in the hand of employees.

Employee’s contribution Employee can claim deduction under section 80C.

Interest on deposit Exempt from tax upto rate of interest fixed by the Central Government from time to time.

4.5.2 Tax treatment of accumulated Balance of Provident Fund A/c of an

Employee The accumulated balance due and becoming payable to an employee participating in a recognized provident fund at the time of retirement or termination of service is exempt from tax in following cases:

1. If, he has rendered continuous service with the employer for a period of five years or more, or

2. If, though he has not rendered such continuous service, his service has been terminated by reason of the employee's ill-health or by the contraction or discontinuance of the employer's business or due to any other cause beyond the control of the employee, or If, on the cessation of employment, the employee obtains employment with any other employer, to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in any recognized provident fund maintained by such other employer.

3. If the entire balance standing to the credit of the employee is transferred to his account under NPS.

For cases other than those mentioned above, lump sum payment received at the time of retirement/ termination shall be taxable as follows:

1. Payment received in respect of employer’s contribution and interest thereon is taxable under the head “Salaries”.

2. Payment received in respect of interest on employee’s contribution is taxable under the head “Income from other Sources”.

3. Payment received in respect of employee’s contribution is not chargeable to tax.

NOTE Where the accumulated balance due and becoming payable to an employee participating in a recognized provident fund maintained by his employer includes any, amount transferred from his individual account in any other recognized provident fund or funds maintained by his former employer or employers, then, in computing continuous service for the purpose of sub- clause (i) or sub-clause (ii) above, the period or periods for which he rendered services with former employer or employers shall be included.

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4.5.3 Widening of Definition of Perquisite under section 17(2)(vii) of IT Act (AY 2021-22)

The term perquisite is widened by including the amount or the aggregate of amounts of any contribution made to the account of the assessee by the employer––

(a) in a recognized provident fund;

(b) in the scheme referred to in sub-section (1) of section 80CCD; and

(c) in an approved superannuation fund,

to the extent it exceeds seven lakh and fifty thousand rupees in a previous year; The annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme referred above in any previous year computed in such manner as may be prescribed.

4.6 PERQUSITES OF MOTOR CAR

4.6.1 VALUE OF PERQUISITE PER CALENDAR MONTH AS PER RULE 3(2)(A) OF INCOME TAX RULES, 1962

Sl. No.

Circumstances Where cubic capacity of engine does not

exceed 1.6 liters

Where cubic capacity of

engine exceeds 1.6 liters

(1) (2) (3) (4) (1) Where the motor car is

owned or hired by the employer and

a) is used wholly and

exclusively in the performance of his official duties;

b) is used exclusively for

the private or personal purposes of the employee or any member of his household and the running and maintenance expenses are met or reimbursed by the employer

No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Actual expenditure incurred by the employer including remuneration, if any, paid to the chauffeur plus the amount representing normal wear and tear of the motor car and less any amount charged from the employee for such use.

No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer. Actual expenditure incurred by the employer including remuneration, if any, paid to the chauffeur plus the amount representing normal wear and tear of the motor car and less any amount charged from the employee for such use.

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is used partly in the performance of duties and partly for private or personal purposes of his own or any member of his household and

(i) the expenses on maintenance and running are met or reimbursed by the employer,

Rs. 1,800 (plus Rs. 900, if chauffeur is also provided)

Rs. 2,400 (plus Rs. 900, if chauffeur is also provided )

(ii) the expenses on running and maintenance for such private or personal use are fully met by the employee.

Rs. 600 (plus Rs. 900, if chauffeur is also provided )

Rs. 900 (plus Rs. 900, if chauffeur is also provided )

(2) Where the employee owns a motor car but the actual running and maintenance charges (including remuneration of the chauffeur, if any) are met or reimbursed to him by the employer and

(i) such reimbursement is for the use of the vehicle wholly and exclusively for official purposes,

No value: Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.


(ii) such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee or any member of his household.

Subject to the provisions of clause(B)of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by the amounts specified in Sl.No.(1)(c)(i) above

Subject to the provisions of clause(B)of this sub-rule, the actual payment of expenditure incurred by the employer as reduced by the amounts specified in Sl.No.(1) (c) (i) above

(3) Where the employee owns any other automotive conveyance but the actual running and maintenance charges are met or reimbursed to him by the employer and i. such reimbursement is

for the use of the vehicle wholly and exclusively for official purposes,


Not applicable

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ii. such reimbursement is for the use of the vehicle partly for official purposes and partly for personal or private purposes of the employee.

Subject to the provisions of clause(B)of this sub-rule, the actual amount of expenditure incurred by the employer as reduced by an amount of Rs.900 and amount recovered from employee.

4.6.2 Provided that where two or more motor-cars are owned or hired by the

employer and the employee or any member of his household are allowed the use of such motor-car or all or any of such motor-cars (otherwise than wholly and exclusively in the performance of his duties), the value of perquisite shall be the amount calculated in respect of one car (as selected by the employee) in accordance with Sl. No. (1)(c)(i) of Table above as if the employee had been provided one motor-car for use partly in the performance of his duties and partly for his private or personal purposes and the amount calculated in respect of the other car or cars in accordance with Sl. No. (1)(b) of Table above as if he had been provided with such car exclusively for his private or personal purposes.

Documents specified as per Clause (B) Where the employer or the employee claims that the motor-car is used wholly and exclusively in the performance of official duty or that the actual expenses on the running and maintenance of the motor-car owned by the employee for official purposes is more than the amounts deductible in Sl. No. 2(ii) or 3(2) of Table above, he may claim a higher amount attributable to such official use and the value of perquisite in such a case shall be the actual amount of charges met or reimbursed by the employer as reduced by such higher amount attributable to official use of the vehicle provided that the following conditions are fulfilled:

a) the employer has maintained complete details of journey undertaken for official purpose which may include date of journey, destination, mileage, and the amount of expenditure incurred thereon;

b) the employer gives a certificate to the effect that the expenditure was incurred wholly and exclusively for the performance of official duties.

4.6.3 Explanation: For the purposes of this sub-rule, the normal wear and tear of a

motor-car shall be taken at 10% per annum of the actual cost of the motor-car or cars.

4.6.4 High Court of Madras on writ petition no. 8564/2011 filed by All India Punjab National Bank Officers’ Association vide interim injunction order restrained the Bank from deducting income tax at source on the value of perquisite under sec. 17(2) (ii) (c) and 17 (2) (iii) of the Income Tax Act, 1961. In view of the injunction order, all our Branches/Offices are advised to take note that perquisite value of car facility provided need not be reckoned and no income tax need to be deducted in respect of car facility provided on furnishing of undertaking letter as per Annexure IV. The above treatment of valuation of perquisite to Officer Employees is subject to the final decision of the Hon’ble High Court of Madras.

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4.7 FREE FOOD AND NON ALCOHALIC BEVERAGES PROVIDED BY EMPLOYER TO EMPLOYEE

The value of perquisite shall be the amount of expenditure incurred by such employer.

Provided that nothing contained in this clause shall apply to free food and non-

alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof in either case does not exceed Rs. 50 per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.

The amount so determined shall be reduced by the amount, if any, paid or recovered

from the employee for such benefit or amenity.

4.8 ANY GIFT IN KIND OR VOUCHER OR TOKEN IN LIEU OF WHICH SUCH GIFT RECEIVED

Any gift in kind, or voucher, or token in lieu of which such gift may be received by the employee or by member of his household on ceremonial occasions or otherwise from the employer, shall be determined as the sum equal to the amount of such gift. However, where the value of such gift, voucher or token, as the case may be, is below Rs. 5,000/- in the aggregate during the previous year, the value of perquisite shall be taken as nil. Gift made in cash or convertible into money (like gift cheques) are considered as perquisites and valued on actual cost.

MEMBERSHIP FEE AND ANNUAL FEES

Such expenses incurred by the employee or any member of his household, which is charged to a credit card (including any add-on-card), provided by the employer, or otherwise, paid for or reimbursed by such employer shall be taken to be the value of perquisite chargeable to tax. However, there shall be no value of such benefit where the expenses are incurred wholly and exclusively for official purposes and the following conditions are fulfilled (a)Complete details in respect of such expenditure are maintained by the employer which may, inter alia, include the date of expenditure and the nature of expenditure; (b)The employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties. The amount so determined shall be reduced by the amount, if any paid or recovered from the employee for such benefit or amenity.

4.9 BENEFIT RESULTING FROM PAYMENT OR REIMBURSEMENT Payment or reimbursement by the employer, of any expenditure incurred (including the amount of annual or periodical fee) in a club by him or by any member of his household shall be determined to be the actual amount of expenditure incurred or reimbursed by such employer on that account. The amount so determined shall be reduced by the amount, if any paid or recovered from the employee for such benefit or amenity.

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However, where the employer has obtained corporate membership of the club and the facility is enjoyed by the employee or any member of his household, the value of perquisite shall not include the initial fee paid for acquiring such corporate membership. Nothing contained in this clause shall apply if such expenditure is incurred wholly and exclusively for business purposes and the following conditions are fulfilled:

a) complete details in respect of such expenditure are maintained by the employer which may, inter alia, include the date of expenditure, the nature of expenditure and its business expediency;

b) the employer gives a certificate for such expenditure to the effect that the same was incurred wholly and exclusively for the performance of official duties;

c) nothing contained in this clause shall apply for use of health club, sports and similar facilities provided uniformly to all classes of employees by the employer at employer’s premises.

4.10 EMPLOYER’S MOVEABLE ASSETS [Rule 3(7)(vii)]

Benefit for use of moveable assets other than specified elsewhere in the circular, belonging to employer or hired by him shall be determined @ 10% p.a. of the actual cost of such asset or the amount of rent paid or payable by the employer as reduced by the amount, if any, paid or recovered from the employee for such use.

Exceptions: Computer / laptop given to an employee for official / personal use.

4.11 TRANSFER OF EMPLOYER’S MOVEABLE ASSETS [Rule 3(7)(viii)]

The value of benefit is the actual cost of the asset and as reduced by wear and tear and be, further, reduced by the amount, if any, paid or recovered from the employee.

Rate of normal Wear & Tear is as follows:-

- Computer & electronic items: 50% by reducing balance method.

- Motor cars: 20% by reducing balance method.

- Any other assets: 10% of actual cost of such asset

Normal wear and tear is to be calculated for each completed year during which asset was put to use by employer.

4.12 ANY OTHER BENEFIT The value of any other benefit or amenity, service, right, or privilege provided by the Bank shall be determined on the basis of cost to the Bank under an arm’s length transaction as reduced by the employee’s contribution, if any.

5. EXEMPTIONS (SEC 10)

Provided that nothing contained in this clause shall apply to expenses on telephones including a mobile phone actually incurred on behalf of the employee by the employer. The following payments to the employees are exempt from the scope of taxable salary to the extent provided under the law.

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5.1. GRATUITY [Section 10(10)]

Gratuity received by an employee on his retirement or on his becoming incapacitated prior to such retirement or on termination of his employment or by his legal heir(s) on his death, is exempt from Income Tax subject to the following conditions: In the case of received payment in terms of Payment of Gratuity Act, 1972

Gratuity received by an employee is exempted from tax to the extent of least of followings:

• 15 days’ salary based on the salary last drawn for every completed year of service or part thereof in excess of 6 months.

• Rs 20,00,000/-, or

• Gratuity actually received. In the case of an employee received payment in terms of service conditions:

Gratuity received by an employee is exempted from tax to the extent of least of followings:

• Half month's salary for each completed year of service, calculated on the basis of average salary of 10 months immediately preceding the month, in which any of the above referred events occur.

• Rs.20,00,000/- ,or

• Gratuity actually received.

1. Gratuity in excess of the least of the aforesaid limits is taxable in the hands of the recipient. Therefore, the amount in excess of the aforesaid limits is includible in salary for the purpose of tax deduction at source under section 192. However, relief can be claimed under section 89.

2. Salary for this purpose means Basic Pay last drawn and Dearness Allowance, if the terms of employment so provide, but does not include any bonus, commission, HRA, overtime wages and any other allowance.

5.2 Encashment of Privilege Leave on Retirement [Section 10 (10AA)]

Encashment of Privilege Leave is exempt from tax when received at the time of retirement whether on superannuation or otherwise to the extent of least of the following:

a) 10 months average salary (calculated on the basis of the average salary drawn by the employee during the period of ten months immediately preceding his retirement, whether on superannuation or otherwise)

b) Rs.3,00,000/-

c) Amount actually received

Other Important Points:

1. The entitlement to earned leave of an employee shall not exceed 30 days for every year of actual service rendered by him as an employee. [Explanation to Section 10(10AA)(ii)].

2. Where any such payment or payments was or were received on termination/cessation of an earlier employment in any one or more earlier financial years also and the whole

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or any part of the amount of such payment or payments was or were not included in the total income of the employee of such previous year or years, the amount exempted from Income Tax under this clause shall not exceed Rs. 3,00,000/- (Rs. Three lakh only) as reduced by the amount or, as the case may be, the aggregate amount not included in the total income of any such earlier financial year or years.

3. Salary for this purpose means Basic and other pay including dearness allowance as per the terms of employment .All other allowances and perquisites are not to be included for this purpose.

5.3 Commutation of Pension [Section 10(10A)(ii)] If the gratuity is not received commuted value of half of Pension received by employee is exempt.

If the gratuity is received commuted value of one third of Pension received by employee is exempt.

5.4 House Rent Allowance: [Section 10(13A) Read With Rule 2A]

5.4.1 The House Rent Allowance, least of the following, received by an employee from the

employer to the extent of the limits, and subject to the conditions, is not to be included in the taxable income;

a) The actual amount of House Rent Allowance received by the employee in respect of the relevant period; or

b) The actual expenditure incurred in payment of rent in excess of 1/10th of salary due of the relevant period; or

c) Where such accommodation is situated at Mumbai, Kolkata, Delhi or Chennai, 50% of the salary due to the employee for the relevant period;

or

Where such accommodation is situated at any other place, 40% of the salary

due to the employee for the relevant period

5.4.2 Other Important Points:

a) Salary for this purpose means Basic and dearness allowance as per the terms of employment. All other allowances and perquisites are not to be included for this purpose.

b) Relevant period means the period during which the employee occupied the said accommodation during the financial year.

c) It may be clarified here that house rent allowance received by an employee, for staying in his own house or in a house in which he/she does not pay any rent is fully taxable without any exemption.

d) The Branch Manager should satisfy by insisting on production of evidence of actual payment of rent, before excluding HRA or any portion thereof from total income of employee.

e) Employees drawing house rent allowance upto Rs.3000/- per month will be exempted from production of rent receipt. It may, however, be noted that this concession is only for the purpose of tax-deduction at source. Further, in case of salaried employees drawing house rent allowance exceeding Rs.3,000/- per month and upto Rs.1,00,000/- per annum, the submission of rent receipts is mandatory. However, if landlord does not have a PAN, a declaration to this effect from the

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landlord along with the name and address of the landlord should be filed by the employee

f) W.e.f. 01.06.2016, if annual rent paid by the employee exceeds Rs.1,00,000 per annum, it is mandatory for the employee to furnish the evidences of Name, address and permanent account number (PAN) in newly introduced Form no.12BB of the landlord to the employer for allowing deduction of HRA to the concerned employee [Notification 30/2016 dated 29.04.2016]. In view of the above, all branches/offices are advised to obtain form no.12BB from the employee where rent payment exceeds Rs.1,00,000/- per annum. In the absence form no.12BB from concerned employee, no deduction of HRA be given.

5.5 Amount Received on Voluntary Retirement [Section 10(10C)]

An amount not exceeding Rs.5,00,000/- received or receivable by an employee at the time of his voluntary retirement, or termination of service under a scheme of voluntary separation is exempt.

However, where any relief has been allowed to an assessee under section 89 for any assessment year in respect of any amount received or receivable on his voluntary retirement or termination of service or voluntary separation, no exemption under this clause shall be allowed to him in relation to such, or any other, assessment year.

5.6 Notified Exempted Allowances {Sec.10(14) and Rule 2BB}

5.6.1 Section 10(14)(i) – The following allowances are exempt to the extent expenses actually incurred for that purpose. The same are listed below {Rule 2BB(1)}

a) Cost of travel and D.A on tour / transfer and cost of packing & transportation of personal effects on such transfer.

b) Conveyance allowance for performance of duty provided free conveyance is not provided.

c) Helper allowance, where such helper is engaged for the performance of duties.

d) Allowance for encouraging the academic, research and training pursuits in educational and research institutes.

e) Allowance for purchase / maintenance of uniform for wear during the performance of duties.

5.6.2 Section 10(14)(ii) – The following allowances are exempt irrespective of expenses

that are actually incurred for that purpose. The list of the relevant allowances are given below {Rule 2BB(2)}

i). Special Compensatory Allowance (Hilly areas) -Rs.300 to Rs.7000 p.m. ii). Special Compensatory Allowance (Border areas)-Rs.200 to Rs.1300 p.m. iii). Special Compensatory Allowance (Tribal areas)-Rs.200 p.m. iv). Children Education Allowance - Rs.100 p.m. per child upto two children v). Children Hostel Allowance - Rs.300 p.m. per child upto two children. vi). Compensatory Field area allowance-Rs.2600 p.m. vii). Compensatory Modified Field area allowance-Rs.1000 p.m. viii). Transport allowance for journey between Residence & Office (physically

handicap) - Rs.3200 p.m.

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ix). Underground allowance-Rs.800 p.m. x). Any other specified allowance as per Rule 2BB 5.7 Section 10(15)(i)- Post Office Saving Bank interest exemption

Post office saving bank interest is exempt upto Rs.3,500/- (in an individual account) and Rs.7,000/- in a joint account under section 10(15)(i) by virtue of notification no.32/2011 dated 03.06.2011 read with notification no.GSR 607 dated 09.06.1989.

5.8 Section 10(15)(vi)- Interest on Deposit certificates issued under “Gold Monetization Scheme” Interest on deposit certificates issued under the “Gold Monetization Scheme 2015” is exempt from income tax w.e.f. AY 2016-17.

6. Deduction (Section 16 (iii)]:

6.1 Professional Tax

Any sum paid by the employee on account of tax on employment i.e. Professional Tax is deductible from the taxable income.

6.2 Standard Deduction [section 16 (ia)]

From Assessment Year 2019-20, standard deduction is allowed while computing income chargeable under the head “Salaries”. The amount of standard deduction w.e.f Assessment Year 2020-21 is Rs 50,000/- (previously it was Rs 40,000/-) or the amount of salary whichever is lower.

Further, w.e.f. Assessment Year 2019-20, exemption pertaining to reimbursement of medical expenditure of Rs 15,000/- and exemption of Rs 1,600/- per month of transport allowance has been withdrawn. However, transport allowance exemption at enhanced rate of Rs 3,200/- per month shall continue to be available to differently abled persons.

7. Inclusion of Other Incomes for Deducting Tax from Salary at Source at the Option of the Employee (Rule 26B):

Where an employee is in receipt of any income chargeable under any head of income other than "salaries" (not being a loss under any such head other than the loss under the head "Income from house property"), he may submit in a statement, the particulars of such income and the tax deducted from that income. On receipt of such intimation, the Bank shall take into account such income and the tax deducted there from while arriving at the tax deductible from the salaries. The employee can set off loss under head “income from house property” from the salary income. Such set off can be affected by the Bank and can deduct tax at source on such reduced income. The employee is required to furnish the statement duly verified to the Bank. Verification in the following form shall be annexed to the statement.

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FORM OF VERIFICATION

I, ___________________(NAME OF EMPLOYEE), DO DECLARE THAT WHAT IS STATED ABOVE IS TRUE TO THE BEST OF MY INFORMATION AND BELIEF

7.1 In a case where an employee joins the office during the year, it is mandatory for him to

fill Form 12B furnishing the details of income under section 192(2) from his previous employer, if any.

7.2 Income/Loss from house property declared by the employee

The guidelines for computing income/loss in case of let out and self-occupied house property are given below for ready reference of the employees:

a) For let-out House Property Following deductions are allowed from let out house property:

1. Deduction is allowed equal to thirty percent of the annual value of the house property.

2. Where property has been acquired, constructed, repaired, renewed or reconstructed with borrowed capital, the amount of any interest payable on such capital. Here, it is pertinent to mention that there is no monetary ceiling of deduction on account of interest on loan taken for above mentioned purposes.

b) For Self Occupied House Property

Following deductions are allowed from self-occupied house property:

1. Deduction up to Rs. 30,000/- is allowed in respect of interest on borrowed capital if loan is taken before 01.04.1999 while computing income/loss under the head “Income from house property” provided that residential house is a self occupied house or lying vacant on the fact that employee is posted at another station.

2. From FY 2014-15 , deduction on account of interest up to Rs. 2,00,000/- is available if such loan has been taken on or after 01.04.1999 and construction /acquisition of such residential house has been completed within 5 years from the end of financial year in which loan was taken.

3. For the purpose of repairs or renovation of an existing house, deduction upto Rs. 30,000/- is allowed in respect of interest on borrowed capital.

4. For claiming deduction the employee should furnish a certificate from the person extending the loan to the effect that such interest is payable in respect of the amount borrowed for acquisition /construction of the residential house or as a refinance of the principal amount outstanding under an earlier loan taken for such acquisition/construction.

5. In case of self occupied residential house/ vacant house due to the fact that the employee is posted at another station the working is to be made as under:

(Amount in Rs.)

Annual value Nil Less: Interest paid on money borrowed subject to the limits

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1. If the loan actually availed on or before 31.3.99 then the actual interest paid but not exceeding Rs.30,000/-

2. If the loan actually availed on or after 1.4.99 then the actual amount of interest paid but not exceeding Rs.2,00,000

Income/Loss from house property.

Notes:

1. Date of availment of loan will be the date on which the loan is actually disbursed.

2. It is possible that part of the loan is availed before 1.4.1999 and part of the loan is availed on or after 1.4.1999. In such cases if the interest on the loan availed on or after 1.4.1999 is more than Rs.30,000/-, then, this interest will be allowed subject to a maximum of Rs.2,00,000/-. Otherwise the maximum amount will be restricted to Rs.30,000/-.

3. The initial repayment installment will first go to adjust the loan availed first i.e. before 1.4.1999.

4. The above specified limit of Rs.30,000/- or Rs.2,00,000/- as the case may, would also include 1/5th of interest charged on the house building loan before such house was completed.

5. If capital is borrowed for reconstruction, repairs or renewals of a house property then the maximum amount of deduction on account of interest is Rs.30,000/-.

6. The final deduction of tax is required to be made before 31st March of each year. However, the employee can claim deduction for interest accrued and due on housing loan till 31st March each year. Therefore, the Bank may make estimate of the actual interest chargeable/which would accrue up to 31st March each year on the basis of available Housing Loan balance and installments being paid by the employee and the estimated interest for the whole year, should be allowed as a deduction.

From Assessment Year 2020-21, section 23(4) has been amended to allow the deduction of interest on loan taken against two self-occupied house properties as against one self-occupied house property earlier. There is no change in the amount of deduction on interest.

7.3 Income/Loss from Property neither Occupied nor Let Out

Where the house property cannot be occupied by the employee due to the fact that he has been posted at a different station and the property is not let out or put to any other use, then, the annual value of such house property should be treated as NIL. However, this treatment is available to two house property owned by the employee.

In all other cases, the annual value is taxable.

7.4 Restriction on set off of loss from Income from House Property [section 71(3A)]

W.e.f. AY 2018-19, the loss, if any, under the head “Income from House Property” shall be set off with the income under any other heads of income to the extent of Rs.2,00,000/-. The remaining loss, if any, shall be allowed to be carried forward for set

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off with the income from house property under in subsequent assessment years but not more than 8 assessment years.

7.5 Furnishing of evidences in Form no.12BB [Notification no.30/2016 dated

29.04.2016]

W.e.f. 01.06.2016, it is mandatory for the employee to furnish the evidences of Name, address and permanent account number (PAN) of the lender in Form no.12BB to the employer for allowing deduction under the head “Income from House Property” to the concerned employee.

8 Deduction Allowable under Chapter VI-A of the Act

Deductions granted under section 80C to 80U While computing salary for the purpose of tax deduction at source under section 192, the person responsible for paying salary should give deductions under sections 80C, 80CCC, 80CCD, 80CCF, 80CCG, 80D, 80DD, 80E, 80G, 80GG, 80TTA and 80U. Deduction under other sections of chapter VIA will have to be claimed by employees, separately at the time of finalisation of assessment. Some important deductions for employees, available under this chapter are discussed as under

Section 80C

Section 80C provides deduction in respect of specified qualifying amounts paid or deposited by the employee in the financial year. As per Section 80CCE of the Act, aggregate deductions under section 80C, 80CCC and 80CCD shall not exceed Rs.1.50 lakh. Under Section 80C deduction is available from gross total income. The Eligible savings/investments as per Provisions of Section 80C are given below: A. Payment of Insurance premium to effect or keeping in force an insurance on the life

of the individual, spouse or any child subject to a maximum of 10 per cent of actual sum assured (sum assured does not include any premium agreed to be returned or any benefit by way of bonus). However, the limit of 10% is applicable only in the case of policies issued on or after April 1, 2012. In respect of policies issued prior to April 1, 2012, the earlier limit of 20% of actual sum assured will be applicable.

This limit has been further increased to 15% for insurance (if policy is issued on or after April 1, 2013) on the life of any person who is:

a) A person with disability or a person with severe disability as referred to in section 80U or

b) A Person Suffering from disease or ailment as specified in the rules made under section 80DDB.

Discontinuation of insurance policy before 2 years

Where a tax payer discontinues a policy of life insurance before premium for 2 years has been paid, no tax deduction is allowed in respect of any premium paid on that policy in the year in which the policy is terminated. Further, the amount of deduction

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allowed in earlier years would be deemed to be the income of the employee of the year in which the policy is terminated.

In the case of any single premium policy, if such policy is surrendered within two years of the date of commencement of insurance, the amount of deduction allowed in earlier years would be deemed to be the income of the employee of the year in which the policy is terminated.

B. Payment in respect of contract of deferred annuity plan taken in the name on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity.

C. Contribution (not being repayment of loan) towards statutory provident fund and recognized provident fund.

D. Contribution (not being repayment of loan) towards 15 year Public Provident Fund.

To get the benefit of deduction under Section 80C, amount deposited by an employee in his own account or in the account of his/ her spouse or in the account of any child is eligible for deduction. Under the Public Provident Fund Scheme, the maximum contribution is Rs 1,50,000.

E. Contribution towards an approved superannuation fund.

F. Subscription to National Savings Scheme.

G. Subscription to National Savings Certificates, VIII & IX issue i.e. those issues on

which interest is accumulated and reinvested and paid at the time of maturity only. Accrued interest (which is deemed as reinvested) also qualifies for deduction for any year (Except for the last year)

The cumulative rate of interest applicable to each year is given in the table below:

NSC VIII Issue

Amount of Interest (Rs.) accruing on certificates in denomination of Rs.100/-

The year for

which interest accrues

The period when the NSC was purchased

On or after

December 1, 2011

but before April 1, 2012

On or after April 1,

2012 but before April 1, 2013

On or after April 1,

2013 but before

31.03.2016

During April 1, 2016 to Sept 30,

2016

During Oct 1,2016 to

March 31,2017

During April 1,

2017 but before

June 30, 2017

During July 1,

2017 but before

December 31, 2017

During January 1, 2018

but befor March

31, 2018

During July 1,

2019 and March 31,

2020

During April 1,

2020 and June

30,2020

First Year

8.58 8.78 8.68 8.26 8.16 7.90 7.80 7.60 7.90 6.80

Second Year

9.31 9.56 9.43 8.95 8.83 8.52 8.41 8.18 8.52 7.26

Third Year

10.11 10.40 10.25 9.69 9.55 9.20 9.06 8.80 9.20 7.76

Fourth Year

10.98 11.31 11.14 10.49 10.32 9.92 9.77 9.47 9.92 8.28

Fifth Year

11.92 12.30 12.11 11.35 11.17 10.71 10.53 10.19 10.71 8.85

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NSC IX Issue Amount of Interest (Rs.) accruing on certificates in denomination of Rs.100/- The year for

which interest accrues


Before April 1, 2012

During the year 2012-13

During 2013-14 to 2015-16

First Year 8.89 9.10 8.99 Second Year 9.68 9.93 9.80 Third Year 10.54 10.83 10.68 Fourth Year 11.48 11.81 11.64 Fifth Year 12.50 12.89 12.69 Sixth Year 13.61 14.06 13.83 Seventh Year 14.82 15.34 15.08 Eighth Year 16.13 16.74 16.43 Ninth Year 17.57 18.26 17.91 Tenth Year 19.13 19.92 19.52

Note: The amount of interest accruing on a certificate of any other denomination shall be proportionate to the amount specified in the Table above.

H. Contribution for participating in the unit-linked insurance plan (ULIP) of Unit Trust of

India or unit-linked insurance plan of LIC Mutual Fund. In the case of an individual, ULIP should be taken on his own life, life of the spouse or any child. Termination of unit linked insurance plan before 5 years

Where a member participating in the unit linked insurance plan terminates his participation before making contribution for a period of five years, no tax deduction is allowed in respect of contributions made in such year. Further, the amount of deduction allowed in earlier years would be deemed to be the income of the employee of the year in which he terminates his participation in the plan.

I. Payment for notified annuity plan of LIC (i.e. New Jeevan Dhara, New Jeevan

Akshay, New Jeevan Dhara I, New Jeevan Akshay I, New Jeevan Akshay II, New Jeevan Akshay III and New Jeevan Akshay VI), Annuity Plan of the ICICI Prudential Life Insurance Company Limited and Tata AIG Easy Retire Annuity Plan of the Tata AIG Life Insurance Company Limited etc.

J. Subscription towards notified units of Mutual Fund notified under section 10(23D) or from administrator or specified company under any plan formulated in accordance with Equity Linked Saving Scheme 1992, 1998 and 2005. The lock in period is three years.

K. Contribution to notified pension fund set up by Mutual Fund referred to in clause 23D of section 10 or by administrator or the specified company, as the Central Government may by notification in official gazette specify in this behalf.

L. Any sum paid (including accrued interest) as subscription to Home Loan Account Scheme of the National Housing Bank or contribution to any notified pension fund set up by the National Housing Bank.

M. Any sum paid as subscription to any scheme of

1. public sector company engaged in providing long-term finance for purchase or construction of residential houses in India

2. any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or

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for the purpose of planning, development or improvement of cities, towns and villages, or for both.

N. Any sum paid as tuition fees (not including any payment towards development fees or donation or payment of similar nature) whether at the time of admission or thereafter to any university/college/ school or other educational institution situated in India for full time education for any two children. It is also clarified that full time education includes play school activities, pre nursery classes.

"Other educational institution" has not been defined. Consequently, it also includes any educational institution in India (recognized or unrecognized) offering a course of education whether or not leading to a degree or diploma.

O. Any payment towards the cost of purchase or construction of a residential property (including repayment of loan taken from Government, bank, cooperative bank, LIC, National Housing Bank, employee's employer where such employer is public company/public sector company/university/cooperative society). The following payment made towards the cost of purchase/construction of a new residential house property is qualified for the purpose of section 80C:

1. any installment or part payment of the amount due under any self-financing or other scheme of any development authority, housing board or other authority engaged in the construction and sale of house property on ownership basis; or

2. any installment or part payment of the amount due to any company or cooperative society of which the employee is a shareholder or member towards the cost of the house property allotted to him (it is not applicable if the employee is not a shareholder or member of the company/cooperative society which provides house to the employee); or

3. repayment of amount borrowed by the employee from –

a) the Central Government or any State Government, or b) any bank, including a co-operative bank, or c) the Life Insurance Corporation of India, or d) the National Housing Bank, or e) any public company formed and registered in India with the main object of

carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes which is eligible for deduction under section 36(1)(viii), or

f) any company in which the public are substantially interested or any co-operative society, where such company or co-operative society is engaged in the business of financing the construction of houses, or

g) the employee's employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

h) the employee's employer where such employer is a public company or public sector company, or a university established by law or a college affiliated to such university or local authority or co-operative society;

4. Stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the employee.

The following payments made towards the cost of purchase/construction of a new residential house property are not qualified for the purpose of section 80C:

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1. the admission fee, cost of the share and initial deposit which a shareholder of a company or a member of a co-operative society has to pay for becoming such shareholder or member; or

2. the cost of any addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate in respect of the house property by the authority competent to issue such certificate or after the house property (or any part thereof) has either been occupied by the employee or any other person on his behalf or been let out; or

3. any expenditure in respect of which deduction is allowable under the provisions of section 24.

Transfer of house property before 5 years -

Where the house property, in respect of which a deduction has been allowed, is transferred by tax payer at any time before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, no tax deduction under these provisions shall be allowable in respect of the previous year in which the transfer is made and the amount of deduction allowed in earlier years would be deemed to be the income of the employee of the year in which such transfer takes place.

P. Amount invested in approved debentures or equity shares of a public company

engaged in infrastructure including power sector or units of a mutual fund proceeds of which are utilized for the developing, maintaining etc. of a new infrastructure facility.

Q. Amount deposited in a fixed deposit for 5 years or more with a scheduled bank in

accordance with a scheme framed and notified by the Central Government (it shall be minimum of Rs 100 or multiples thereof)

R. Subscription to any notified bonds of National Agricultural Bank Rural Development

(NABARD).

S. Investment in (i) Five year time deposit in an account under the Post Office Time Deposit Rules 1981 and (ii) Senior Citizens Saving Scheme Rules, 2004.

NOTE: The Incumbent Incharge 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 deduction. It may also be mentioned here that the deposits / subscriptions / payments towards the items qualifying for the deduction from Gross Total Income should be made out of the employees’ income chargeable to tax.

Deduction In Respect Of Contribution to certain Pension Funds (Section 80 CCC):

Where an employee (an individual) has in the FY paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer approved by IRDA for receiving pension from fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to the provisions of this section, be allowed a deduction in the computation of his total income for the amount paid or deposited (excluding interest or bonus accrued or credited to the employee’s account, if any) not exceeding Rs. 1,50,000 in the previous year.

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Other points - One should keep in view the following points -

1. Where the employee or his nominee surrenders the annuity before maturity date of such annuity, the surrender value shall be taxable in the hands of the employee or his nominee, as the case may be, in the year of the receipt.

2. The amount received by the employee or his nominee as pension will be taxable, in the hands of the employee or the nominee, as the case may be in the year of the receipt.

3. Deduction (with reference to the amount paid under section 80CCC) will not be available under section 80C to persons to whom deduction under this section has been allowed.

8.1 Deduction under section 80CCD in respect of contribution to pension scheme of Central Government

a. Employee Contribution: A deduction not exceeding ten per cent of his salary

b. W.e.f 01.04.2015 , an assessee referred above shall be allowed an additional deduction of Rs. 50000/- for any additional contribution under NPS in computation of his total income The ceiling of Rs. 1,50,000 as prescribed under section 80CCE does not apply for the said additional contribution of Rs. 50,000/-.

c. Employer Contribution: The amount contributed not exceeding ten per cent of the

salary by the employer to the account of the employee shall be allowed a deduction in the computation of his total income.

d. The amount standing to the credit of the employee in the pension account, for which

a deduction has already been allowed to him and accretions to such account shall be taxed as income in the year in which such amounts are received by the employee or his nominee on closure of account or his opting out of the said scheme or on receipt of pension from the annuity plan. If, however, the amount of pension received from the pension account is used for purchasing an annuity plan in the same year, then, it will be exempt from tax.

e. No rebate shall be allowed under section 88 or deduction under section 80C, if the deduction has already been allowed in respect of any amount paid or deposited by the employee in the aforesaid pension scheme.

f. W.e.f. AY 2017-18, the whole amount received by the nominee from the NPS is exempt from tax.

g. Tax exemption to partial withdrawal from NPS by an employee Sec 10(12B) inserted W.e.f AY18-19

h. The existing provision of section 10(12A)) provides that payment from NPS trust to an employee on closure of his account or opting out shall be exempt upto 40% of total amount payable to him. This limit of 40% has been revised to 60% w.e.f AY 2020-21 (FY 2019-20).

i. In order to provide further relief to an employee subscriber of NPS, the Bill has inserted new clause (12B) in section 10: Any payment from NPS to an employee under the pension scheme referred to in section 80 CCD on partial withdrawal made out of his account in accordance with the terms and condition specified under the Pension Fund Regulatory and Development authority act 2013 and the regulation made there under, to the extend it does not exceeds twenty five percent of the contribution made by him.

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Explanation:- For the purposes of this section, “salary” includes dearness allowance, if the terms of eemployment so provide, but excludes all other allowances and perquisites.

Note: The aggregate amount of deduction under Section 80C,, 80CCC and 80CCD(1) cannot exceed Rs 1,50,000/-.

8.2 Deduction for Premium Paid - Medical Insurance (Section 80-D)

Section 80 D provides deduction for medi-claim premium/ preventive health check up paid of Rs.50,000/- in the case of senior citizen and of Rs.25,000/- for other than senior citizen. An additional deduction of up to Rs. 25,000 will be allowed to an individual assesse on any payment made to effect or keep in force an insurance on the health/ preventive health check up of his parent or parents, whether dependent on him or not. In case either parent of assesse, who has been medically insured, is a senior citizen, then the deduction would be allowed up to Rs. 50,000. Further, no deduction under this section will be available in case the medi-claim premium is paid in cash. Further the whole of the amount paid on account of medical expenditure incurred on the health of person or his/her parent(s), who is senior citizen and mediclaim insurance is not paid on the health of such person(s), the maximum eligible amount of deduction is of Rs. 50,000/-.

A deduction upto Rs.5,000/- is allowable on account of preventive “Health Check-up” of self, spouse, parents or dependent children within the overall limits under this section. Moreover payment on account of preventive health check up can be made by any mode including cash. W.e.f. FY 2018-19, a new sub section 4A has been inserted as under: Where the amount mediclaim for a person other than senior citizen is paid in lump sum in the previous year to effect or to keep in force an insurance on the health of any person specified therein for more than a year, then, subject to the provisions of this section, there shall be allowed for each of the relevant previous year, a deduction equal to the appropriate fraction of the amount. Explanation.—For the purposes of this sub-section,—

(i) "appropriate fraction" means the fraction, the numerator of which is one and the denominator of which is the total number of relevant previous years;

(ii) "relevant previous year" means the previous year beginning with the previous year in which such amount is paid and the subsequent previous year or years during which the insurance shall have effect or be in force.

For self and family, the nature of payment can also be for any contribution made to Central Govt Health Scheme (CGHS) or any scheme notified by the Central Govt. The summarized position of deduction depending upon the policy of insurance u/s 80D is as under:

Individual, his or her spouse, his or her dependent children

Additional deduction for parents of the taxpayer whether dependent or not

Total Other than senior citizen

With any Senior citizen

Other than senior citizen

With any Senior citizen

25000 -- -- -- 25000

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25000 25000 -- -- 50000

25000 -- 25000 -- 50000

25000 -- 25000 25000 75000

25000 25000 25000 25000 100000

8.3 Deduction in respect of maintenance including medical treatment of a dependant

who is a person with disability (Section 80DD)

Where an employee who is a resident in India during the year:

1. has incurred an expenditure for the medical treatment (including nursing), training and rehabilitation of a dependent (being a person with disability) :or

2. has paid or deposited under any scheme framed in this behalf by the Life Insurance Corporation or any other insurer, or the administrator or specified company and approved by the Board in this behalf, for maintenance of dependent (being a person with disability)

The employee shall be allowed a fixed deduction of Rs.75000/- whenever the conditions specified above are satisfied, A higher deduction of Rs.1,25,000/- shall be allowed, where such dependent is a person with severe disability having any disability of 80% and above . Under condition (2) the scheme provides for payment of an annuity or a lump sum amount for the benefit of dependent, being a person with disability, in the event of the death of the individual or the member of the Hindu undivided family in whose name subscription to the scheme has been made. The employee nominates either the dependent being a person with disability or any other person or a trust to receive the payment on his behalf, for the benefit of such dependent.

For the above purpose, a "dependent being a person with disability" is a person who satisfies the following points –

1. in the case of an individual, dependent means the spouse, children, parents, brothers and sisters of the individual or any of them;

2. such person is wholly or mainly dependent upon such individual or HUF for support and maintenance; .

3. such person has not claimed any deduction under section 80U in computing his total income for the Assessment Year relating to the previous year;

4. "disability" shall have the meaning assigned to it in section 2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995

5. "person with disability" means a person having any "disability" stated above and not less than 40 per cent.

For claiming the deduction, the employee shall have to furnish a copy of the certificate issued by the medical authority in prescribed form Form No.10-I A . The certificate has to be submitted along with the return of income. Where condition of disability requires reassessment, a fresh certificate from the medical authority shall have to be obtained after the expiry of the period mentioned on the original certificate in order to continue to claim the deduction.

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If dependent predeceases the taxpayer - If the dependent with disability predeceases the individual or the member of the Hindu undivided family referred to above, an amount equal to the amount paid or deposited as stated above shall be deemed to be the income of the employee of the previous year in which such amount is received by the employee and shall accordingly be chargeable to tax as the income of that previous year.

Person with disability - The taxpayer is suffering from not less than 40 per cent of any disability given below –

1. blindness; 2. low vision; 3. leprosy-cured; 4. hearing impairment; 5. locomotive disability; 6. mental retardation; 7. mental illness.

Blindness - "Blindness" refers to a condition where a person suffers from any of the following conditions, namely:-

1. total absence of sight; or 2. visual acuity not exceeding 6/60 or 20/200 (snellen) in the better eye with

correcting lenses; or 3. limitation of the field of vision subtending an angle of 20 degree or worse.

Low vision - "Person with low vision" means a person with impairment of visual functioning even after treatment or standard refractive correction but who uses or is potentially capable of using vision for the planning or execution of a task with appropriate assistive device.

Leprosy cured person - "Leprosy cured person" means any person who has been cured of leprosy but is suffering from -

1. Loss of sensation in hands or feet as well as loss of sensation and paresis in the eye and eye-lid but with no manifest deformity;

2. Manifest deformity and paresis but having sufficient mobility in their hands and feet to enable them to engage in normal economic activity;

3. Extreme physical deformity as well as advanced age which prevents him from undertaking any gainful occupation.

Hearing impairment - "Hearing impairment" means loss of sixty decibels or more in the better ear in the conversational range of frequencies.

Locomotive disability - "Locomotive disability" means disability of the bones, joints or muscles leading to substantial restriction of the movement of the limbs or any form of cerebral palsy. Mental illness - "Mental illness" any mental disorder other than mental retardation.

“Person with severe disability” means—

(i) a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or

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(ii) a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);

"Medical authority" for this purpose means any hospital or institution specified by notification by the appropriate Government for the purpose of the Persons with Disabilities (Equal Opportunities, Protections of Rights and Full Participation) Act, 1995. As per CBDT circular 775 dated 26.03.1999, it was clarified that it would be sufficient if the employee furnishes a medical certificate from a Government hospital and a declaration in writing duly signed by the claimant certifying the actual amount of expenditure on account of medical treatment (including nursing), training and rehabilitation of the handicapped dependant and receipt/acknowledgment for the amount paid or deposited in the specified schemes of LIC or UTI. Therefore, DDOs may not insist upon production of vouchers/bills by the employees for having incurred, expenditure on medical treatment of their handicapped dependants for allowing the deduction under section 80DD for the purpose of computing tax deductible at source. This clarification is applicable for the purpose of tax deduction at source from salaries under section 192 of the Income-tax Act, 1961.

8.4 Deduction in respect of Medical Treatment for specified diseases (SECTION 80DDB)

1. The employee shall be allowed a deduction of Rs.40,000/- or actually incurred, whichever is lower, on any expenditure for the medical treatment of specified diseases or ailment as prescribed in Rule 11DD during the previous year. However in case of dependent being a senior citizen (age above 60 years and less than 80 years) or a super senior citizen (at least 80 years of age), deduction of Rs. 1,00,000/- or amount actually incurred, whichever is lower will be available.

2. Deduction under this section shall be reduced by the amount received, if any,

under insurance from an insurer, or reimbursed by an employer. 3. For the purposes of section 80DDB, the following shall be the eligible diseases

or ailments:

(i) Neurological Diseases where the disability level has been certified to be of 40% and above,—

(a) Dementia ; (b) Dystonia Musculorum Deformans ; (c) Motor Neuron Disease ; (d) Ataxia ; (e) Chorea ; (f) Hemiballismus ; (g) Aphasia ; (h) Parkinsons Disease ; (ii) Malignant Cancers ; (iii) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ; (iv) Chronic Renal failure ; (v) Hematological disorders : (i) Hemophilia ; (ii) Thalassaemia.

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4. The CBDT, vide its Notification No.78 /2015 dated 12.10.2015, has amended the rule 11DD in respect of certificate to be obtained for claiming deduction under section 80DDB. Now, the prescription in respect of aforesaid diseases or ailments issued by the following specialists will be sufficient to claim the deduction as against the requirement of certificate earlier.

i. for diseases or ailments mentioned in clause 3(i) above - a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India;

ii. for diseases or ailments mentioned in clause 3(ii) above- an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India;

iii. for diseases or ailments mentioned in clause 3(iii) above- any specialist having a post-graduate degree in General or Internal Medicine, or any equivalent degree which is recognised by the Medical Council of India;

iv. for diseases or ailments mentioned in clause 3(iv) above - a Nephrologist having a Doctorate of Medicine(D.M.) degree in Nephrology or a Urologist having a Master of Chirurgiae(M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;

v. for diseases or ailments mentioned in clause 3(v) above – a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India:

However, where in respect of any of the aforesaid diseases or ailments, the patient is receiving the treatment in a Government hospital, the prescription may be issued by any specialist working full-time in that hospital and having a post-graduate degree in General or Internal Medicine or any equivalent degree, which is recognised by the Medical Council of India. The prescription referred to in point (4) above shall contain the name and age of the patient, name of the disease or ailment along with the name, address, registration number and the qualification of the specialist issuing the prescription. However, where the patient is receiving the treatment in a Government hospital, such prescription shall also contain the name and address of the Government hospital.

5. Form No. 10-I stands omitted. Henceforth, it is not required to furnish the Form 10-I with the return of income.

8.5 Deduction in Respect of Interest on Loan Taken For Higher Education –(Section 80E)

In computing the total income of an employee, there shall be allowed a deduction under section 80E of the Income Tax Act in respect of interest on loan taken for higher education of himself or his relative subject to fulfilling the following provisions. Loan taken for all fields including vocational studies after completion of S.S.E. comes under the scope of this section.

For the purpose of this section, relative means spouse & children of individual and student for whom the tax payer is the legal guardian. Conditions - The following conditions should be satisfied-

1. The taxpayer is an individual.

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2. The loan has been taken for the purpose of pursuing his higher education or for the purpose of higher education of his relatives.

3. The aforesaid loan was taken from any bank, an approved charitable institution or a financial institution notified by the Government.

4. During the previous year, the taxpayer has paid interest on such loan.

5. Such interest is paid out of his income chargeable to tax.

If the above conditions are satisfied, the entire amount paid by way of interest is deductible under section 80E. However, the noted deduction is allowed in computing the taxable income of the initial assessment year (i.e. the assessment year relevant to the previous year in which the employee starts paying the interest on the loan) and 7 immediately succeeding assessment years (or until the above interest is paid in full, whichever is earlier).

No deduction will be available under section 80E in respect of repayment of the principal amount.

8.6 Deduction in Respect of interest on loan taken for residential house property

[Sec- 80EE]

Deduction under this new section is available subject to following conditions:

a) The assessee is an individual and does not own any residential house property on the date of sanction of loan.

b) He has taken a Loan from a financial institution being a Bank, Housing Finance Co. (i.e. an Indian public limited company formed with the main object of carrying on the business of providing Long term finance for construction or purchase of residential houses in India)

c) Loan has been sanctioned during the period beginning on FY 01.04.2016 and ending on 31.03.2017

d) The amount of loan sanctioned for acquisition of a residential housing property does not exceed Rs 35 Lakhs and the value of the residential house property does not exceed Rs 50 lakh.

e) If the above conditions are satisfied, the deduction under Section 80EE(1) shall not exceed Rs 50,000 and shall be allowed in computing the total income of the individual for the assessment year beginning on 01.04.2017 and subsequent Assessment Years.

NOTE: If the interest amount is claimed under section 80EE then the same cannot be claimed under any other section of the of the Act for the same or any other Assessment year.

8.7 Deduction in respect of interest on loan taken for certain Residential house

property (Section 80EEA) (inserted wef AY 2020-21) Deduction is available under this section if the following conditions are satisfied:

a) The assessee is an individual and is not eligible to claim any deduction under Section 80EE.

b) He has taken a loan for the purpose of acquisition of residential house property.

c) The loan is sanctioned by a financial institution during April 1, 2019 and March 31, 2021.

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d) The stamp duty value of residential house property does not exceed Rs 45 Lakh.

e) The assessee does not own any residential house property on the date of sanction of loan.

If the above conditions are satisfied the assessee can clain deduction in respect of interest payable on above loan or Rs 1,50,000/- whichever is less. Note: If the interest is claimed as deduction under Section 80EEA, such interest is not again deductible under Section 24(b) or under any other provision of the Act for the same or any other Assessment Year.

8.8 Deduction in respect of interest on loan taken for purchase of electric vehicles (Section 80EEB) Deduction is available if the following conditions are satisfied: a) The assessee is an individual and has taken a loan for the purpose of purchase

of an electric vehicle. For this purpose, electric vehicle means:

• A vehicle which is powered “exclusively” by an electric motor whose traction energy is supplied exclusively by traction battery installed in the vehicle

• It has such electric regenerative braking system, which during braking provides for the conversion of vehicle kinetic energy into electrical energy.

Loan taken for purchase of hybrid car is not eligible for deduction.

b) Loan is taken from a financial institution and is sanctioned during April 1, 2019

and March 31, 2023. If the above conditions are satisfied, the assessee can claim deduction under this section. Deduction is available in respect of interest payable on above loan or Rs 1,50,000/- whichever is less. Note: Where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provision of this Act for the same or any other assessment year.

8.9 Donations (Section 80G)

No deduction should be allowed from the salary income in respect of any donation made for charitable purposes. The tax relief on such donations will have to be claimed by the tax payer in the return of income. However, in cases where employee makes donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund through the employer, the deduction may be given to employee for making donation while calculating tax deductible under section 192.

In order to provide cash less economy and transparency, the Finance Act has amended section 80G so as to provide that no deduction shall be allowed under section 80G in respect of donation of any sum exceeding Rs 2,000 unless such sum is paid by any mode other than cash.

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8.10 Deduction under section 80GG in respect of rent paid An employee is allowed a deduction in respect of expenditure towards payment of rent for any furnished or unfurnished accommodation occupied by him for the purpose of his own residence if the following conditions are satisfied:

1. He should be self employed and /or a salaried employee who is not in receipt of House Rent Allowance (H.R.A.) at any time during the previous year.

2. He, his spouse or minor child, or the Hindu undivided family of which he is a member, does not own any residential house at the place where he resides, performs the duties of his office, or employment or carries on his business or profession.

3. The tax payer does not own a residential house at any other place and concession in respect of self-occupied property under section 23(2)(a) or 23(4)(a) is not claimed by him in respect of such house.

4. He should file a declaration in Form No.10BA regarding the expenditure incurred by him towards payment of rent.

Amount of deduction The amount deductible under this section is the least of the following amounts:

1. Rs. 5,000 per month

2. 25% of total income before allowing deduction for any expenditure under this section.; or

3. Excess of actual rent paid over 10% of total income before allowing deduction for any expenditure under this section.

Other important points

1. Deduction would be available even if rent is paid by the employee to the Bank, provided all the conditions of this section are satisfied.

2. The person paying salary should, therefore, satisfy himself that all the conditions mentioned above are satisfied. He should also satisfy himself in this regard by insisting on production of evidence on actual payment of rent.

Action Points

- The deduction will be allowed only if Form 10 BA is filled up.

- The declaration in this Form contemplates payment of rent for the accommodation occupied for residential purposes only. Documents evidencing such payment may be preserved, since they may be demanded by the Assessing Officer for verification of the truth of the declaration.

- It may also be noted that if rent is paid in respect of any accommodation used for purposes other than that of the residence of the employee, the deduction will not be admissible.

8.12 Deduction In Respect of interest on deposits in savings account (Section 80TTA)

Where the income of the employee includes any income by way of interest on deposits (not being time deposit) in a saving account with a banking company, Co - operative society or a post office, a deduction of such interest shall be allowed to the maximum extent of Rs. 10,000/-.

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With effect from the Assessment Year 2019-20, senior citizen who can avail deduction under section 80 TTB shall not be eligible for deduction under section 80 TTA.

8.13 Deduction in respect of interest on deposits in case of senior citizens (Section 80 TTB)

Deduction upto Rs 50,000/- is available to senior citizens towards interest on deposits with bank/ co-operative bank/ post office (it may be interest on fixed deposits, interest on savings account or any other interest).

8.14 Deduction In Respect of Physically Handicapped Persons (including blindness) (Section 80 U)

The claim under this Section can be allowed in case of those employees, who are having a permanent physical disability including blindness, of more than certain percentage or subject to mental retardation referred to in Rule11D of the Income Tax Rules. The amount of deduction to be allowed is Rs.75,000/-. Higher deduction of Rs. 1,25,000/- is allowed in respect of a person with severe disability (disability over 80%). For claiming this deduction, the disability should be certified by a physician, a surgeon, an oculist or a psychiatrist, as the case may be, working in a Government Hospital. In cases where the condition of disability requires re-assessment of its extent after a period stated in the aforesaid certificate, no deduction under this section should be allowed for any subsequent period unless a new certificate is obtained from the medical authority and furnished along with the return of income.

NOTE: The Government Hospital shall have the same meaning as explained in section

80DD above. 9 Furnishing of Evidence of claim by employee for deduction of tax under section

192. W.E.F 01.06.2016 a new Rule 26C has been inserted for furnishing of evidence of claims by employee for deduction of tax under section 192. Employees have to furnish the evidence or the particulars of the claims, in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source. The assessee shall furnish the evidence or the particulars specified in column (3), of the Table below, of the claim specified in the corresponding entry in column(2) of the said Table:—

Sl. No Nature of claims Evidence or particulars

1 House Rent Allowance. Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previous year exceeds rupees one lakh

2 Leave travel concession or assistance

Evidence of expenditure

3 Deduction of interest under the head “Income from house property”

Name, address and permanent account number of the lender

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4 Deduction under Chapter VI-A. Evidence of investment or expenditure.”

10 Calculation of Income Tax to be deducted:

A. Tax liability should be calculated as under:

Step 1: First compute the gross salary taking into consideration the perquisites & exemptions.

Step 2: Allow deductions of Professional tax paid (if any) and Standard Deduction.

Step 3: Add any other income declared by the employee chargeable under any other head of income other than “Salaries” (not being a loss under any such head other than loss under the head “Income from house property) received by the employee for the same financial year.

Step 4: Allow deduction prescribed under chapter VI-A ensuring that aggregate of the deductions does not exceed gross taxable income.

Step 5: The amount so computed under step 4 should be rounded off to the nearest multiple of ten rupees.

Step 6: Income tax on amount of Step 5 shall be calculated keeping in view the age and gender of the employee as per the slab applicable in each case. (Tax should be rounded off to the nearest multiple of rupee).

Step 7: Reduce the rebate u/s 87A in the case of a resident individual whose total income does not exceed Rs 5.00 Lakhs. The total amount of rebate under this Section 87A is income tax on total income or Rs 12,500/- whichever is lower.

Step 8: The amount of tax payable arrived under step 7 should be increased by Health and Education Cess (total tax payable should be rounded off to the nearest multiple of ten rupees)

Step 9: Reduce TDS deducted by any other person/ institute for the same FY, where the proof of deduction of tax is furnished by the individual. Before reducing the TDS, ensure that the income on which TDS has been deducted by any other person/institute has been included in step 3.

Step 10: The amount so arrived under step 9 should be deducted every month in equal installments. Any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deduction during the same financial year.

B. Tax liability should be calculated as under for Individual opting alternative tax regime :

Step 1: First compute the gross salary taking into consideration the perquisites & exemptions.

Step 2: Add any other income declared by the employee chargeable under any other head of income other than “Salaries” (not being a loss under any such head including loss because of interest on housing loan (sec 24(b) under the head “Income from house property in case of self occupied property) received by the employee for the same financial year.

Step 3: The amount so computed under step 2 should be rounded off to the nearest multiple of ten rupees.

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Step 4: Income tax on amount of Step 3 shall be calculated keeping in view the slab applicable in each case. (Tax should be rounded off to the nearest multiple of rupee).

Step 5: Reduce the rebate u/s 87A in the case of a resident individual whose total income does not exceed Rs 5.00 Lakhs. The total amount of rebate under this Section 87A is income tax on total income or Rs 12,500/- whichever is lower.

Step 6: The amount of tax payable arrived under step 5 should be increased by Health and Education Cess (total tax payable should be rounded off to the nearest multiple of ten rupees)

Step 7: Reduce TDS deducted by any other person/ institute for the same FY, where the proof of deduction of tax is furnished by the individual. Before reducing the TDS, ensure that the income on which TDS has been deducted by any other person/institute has been included in step 3.

Step 8: The amount so arrived under step 7 should be deducted every month in equal installments. Any excess or deficit arising out of any previous deduction can be adjusted by increasing or decreasing the amount of subsequent deduction during the same financial year.

Miscellaneous 11.1 Relief under Section 89

If an employee receives any portion of his salary in arrears or in advance, he can claim relief in terms of section 89 read with rule 21A by furnishing such particulars in Form No. 10E duly verified by him. The relief is also available in respect of family pension received in arrears.

Computation of relief when salary/family pension has been received in arrears or in advance [Rule 21A(2)]

The relief on salary received in arrears or in advance (hereinafter to be referred as "the additional salary") is computed in the manner laid down in Rule 21A(2) as under:

a) Calculate the tax payable on the total income, including the additional salary of the relevant previous year in which the same is received.

b) Calculate the tax payable on the total income, excluding the additional salary of the relevant previous year in which the same is received.

c) Find out the difference between the tax at (a) and (b).

d) Compute the tax on the total income after excluding the additional salary in the previous year to which such salary relates

e) Compute the tax on the total income after including the additional salary in the previous year to which such salary relates.

f) Find out the difference between the tax at (d) and (e).

g) The excess of tax computed at (c) over the tax computed at (f) is the amount of relief admissible under section 89(1). No relief is, however, admissible if the tax computed at (c) is less than the tax computed at (f). In such a case, the employee need not apply for relief.

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11.2 Compulsory PAN Section 206AA of the Income-tax Act, 1961, makes furnishing of PAN by the employee compulsory in case of payments liable to TDS. If employee fails to furnish his/her PAN, Tax will be deducted at a higher of the following rates

i. at the rate specified in the relevant provision of this Act; or

ii. at the rate or rates in force; or

iii. at the rate of twenty per cent. In case of salaries, there can be following situations:

a) Where the income of the employee computed for TDS u/s 192 is below taxable limit.

b) Where the income of the employee computed for TDS u/s 192 is above taxable limit.

In first situation, as the tax is not liable to be deducted no tax will be deducted. In the second case, if PAN is not furnished by the employee, tax will be calculated at the average rate of income-tax based on rates in force. If the tax so calculated is below 20%, deduction of tax will be made at the rate of 20% and in case the average rate exceeds 20%, tax is to deducted at the average rate. Health and Education Cess @ 4% is not to be deducted, in case the TDS is deducted at 20% u/s 206AA of the Income-tax Act.

11.3 Other Important Points

11.3.1 Pensioners Pension has been defined as salary and is liable to TDS subject to above said additions, exemptions and disallowances. The pension-disbursing branch has all the right and obligation of the Bank and tax should be deducted as in the case of salary payment after allowing all the deductions and exemptions as provided.

In case of PNB’s retiring employee, the salary and other taxable payments should be added to the pension drawn during the financial year and tax should be deducted at source. If the employee opts to draw pension from another office, then, full details of salary and other taxable income should be advised to that office for deciding TDS to be deducted from pension. However, all tax dues on the date of retirement must be deducted from the salary and other retirement benefits.

11.3.2 Time Limit for Depositing of TDS, Issuing TDS Certificates and Filing of Annual / Quarterly Return under section 192 (Salary):

From 1st of July 2017 work of depositing of TDS & filing of TDS returns has been centralized at HO & now branches are not required to deposit TDS or file TDS returns.

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Time of deposit of tax

Certificate of Tax deduction

Returns of tax deduction

Particulars

Form No.

Time Limit

Salary Sec. 192

Tax should be deposited within 7 days from the end of the month in which tax is deducted except for the month of March when tax is to be deposited by 30

thApril of

immediately next FY.

Issue certificate in Revised Form No. 16 and 12BA by 15

th

day of June immediately following the financial year in which tax deducted.

Qtly. Return Revised 24Q

Within 31 days from the end of quarter i.e. 31

st

July, 31st

Oct, 31st

Jan & 61 days in the case of the last quarter i.e. 31

st

May of the immediately following the FY in which tax was deducted.

While making of payment of tax deducted at source to the credit of the Central Government it may be ensured that the correct amount of income tax is reported in relevant challan. It may also be ensured that the right type of challan is used. The relevant challan for making payment of tax deducted at source from salaries is challan no. ITNS 281. TDS must be deposited electronically by way of internet banking facility. Please refer to Para 14 for non deduction of TDS on the amount appropriated to the corpus of Pension Fund, from the arrears of salary of the employees of the Bank.

TDS CERTIFICATE: 11.4 Procedure for issuance of Salary TDS certificate in New FORM 16

a) The revised form 16 is applicable for the TDS deducted on salary on or after 01

April 2012.

b) The revised TDS Certificate in Form No 16 has two parts viz Part A and Part B . Part A contains details of tax deduction and deposit and Part B contains details of income.

c) “Part A” of Form No. 16 is to be generated and subsequently downloaded

through TRACES Portal, in respect of all sums deducted under the provisions of section 192 of Chapter XVII-B of the Act. This Part A of Form No 16 shall have a unique TDS certificate number.

d) “Part B” of Form No. 16 shall be issued by the deductor by generating and downloading through TRACES Portal in respect of all sums deducted on or after April 1, 2018 under Section 192. The TRACES generated Form 16 shall have a unique TDS Certificate Number.

e) The deductors, issuing the Part A and Part B of Form No. 16 by downloading it

from the TRACES Portal, shall, before issuing to the deductee authenticate the correctness of contents mentioned therein and verify the same either by using manual signature or by using digital signature

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f) The Link for generating Form 16/16A have been made available on Non CBS page at below mentioned eTDS Server Address http://10.192.11.164:8888/taxcpc. For detail procedural guidelines and work flow please refer to Finance Division Circular 18/2017

Information regarding the nature and value of perquisites shall be provided by the employer in Form 12BA in case salary paid or payable is more than Rs 2,00,000. In other cases information would have to be provided in Form No. 16 itself. Such certificate (Revised Form no 16) is also required to be issued to the pensioner if branches are deducting tax at source at the time of payment of pension. In a case where an employee joins the office during the year, it is mandatory for him to fill Form 12B furnishing the details of income under section 192(2) from his previous employer, if any.

12 Filing of e-TDS Return [Sec 200(3)]: (Furnishing of Return has been Centralized at HO)

In respect of Tax Deducted at Source it is mandatory to file Quarterly TDS Return in electronic form Form 24Q.

Form 27A (Now Furnishing of Return has been Centralized at HO) a) With effect from 19 February 2013, Form No.27A can also be furnished in electronic

form by deductor along with the e-TDS Return (earlier only the paper form was prescribed).

b) Form 27A is a summary of e-TDS Returns which contains control totals of ‘amount paid’ and ‘Income Tax deducted at source’. Control totals of ‘amount paid’ and ‘Income Tax deducted at source’ mentioned in Form No.27A should match with the corresponding control totals in e-TDS Return.

c) A separate Form No. 27A is to be furnished for each e-TDS Return i.e. one each for Form Nos.24Q, 26Q and 27Q. (Now Furnishing of Return have been Centralized at HO) The e-Return in computer media shall be submitted to agency authorized by Director General of Income Tax (Systems) i.e. NSDL according to prescribed data structure provided by the Income Tax Department. The following points should be noted –

- Quarterly return cannot be submitted before deposit of TDS and before deposit of interest (for late deposit) under section 201.

- A deductee should intimate his PAN to the deductor. Failure to do so may attract penalty of Rs. 10,000/- and deduction of TDS at a higher rate of 20%.

- The deductor should correctly quote PAN of deductees in quarterly returns/TDS certificates (if intimated by the deductees). Otherwise penalty of Rs. 10,000/- can be imposed on the deductor.

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13 Consequences of failure to deduct or pay tax, furnish return etc (Furnishing of return has been Centralized at HO) Failure to deduct and/or pay tax (Now amount of TDS is being deposited centrally at HO) If a person responsible for deduction of tax out of salary fails to deduct the appropriate tax (either wholly or partly) or, after making the due deductions, fails to deposit it with the Government, he is deemed to be an employee in default in respect of such tax unless such tax has been directly paid by the recipient himself. The liability of such person shall be as follows:

• Liable for tax - He is liable to make payment of tax which he has deducted from salary of the employees.

• Liable for interest - Section 201(1A) provides that such a defaulter is liable to pay simple interest;

i. at one per cent. for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

ii. at one and one-half per cent. for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200”.

With effect from 01.10.2014, as per section 201(3), no order shall be made deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given.

SECTION 40 (a) (ia)

With effect from 01.04.2015, 30% of any sum payable to a resident (including salary) on which tax is deductible at source and such tax has not been deducted or, after deduction, has not been paid on or before due date for filing of return of income u/s 139 (1) of the Income Tax Act will not be allowed as deduction to bank.

However, where in respect of any such sum, tax has been deducted in any subsequent year or has been deducted during the concerned financial year but paid after due date specified in section 139(1), such sum shall be allowed as deduction in computing the income of the year in which such tax has been paid.

Fee for default in furnishing quarterly TDS returns [section 234E]– (Furnishing of return has been Centralized at HO)

If the branches/ offices fails to submit quarterly TDS / TCS returns within prescribed

time, they shall be liable to pay, by way of fee, a sum of Rs.200/- per day during which the failure continues. This fee will be in addition to other consequences of the said default. However, the fee shall not exceed the amount tax deductible / collectible.

Penalty for failure to deduct tax at source under section 271C – If any person fails to deduct the whole or any part of the tax as required by or under the provisions of Chapter XVII-B (Deduction at Source), then, such person shall be liable to

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pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay. Any penalty imposable under section 271C shall be imposed by the Joint Commissioner.

Penalty for failure to submit / furnishing incorrect information in quarterly TDS/TCS return [section 271H]

In respect of TDS / TCS returns to be submitted on or after July 1, 2012, a deductor has to pay minimum penalty of Rs.10,000/- and maximum of Rs.1,00,000/- in addition to fee payable under section 234E. This penalty will be applicable in the following cases: 1. If a person fails to submit quarterly TDS /TCS returns on or before due date. 2. If a person furnishes incorrect information in quarterly TDS/TCS returns. However, no penalty shall be levied for delay in furnishing of quarterly TDS/ TCS returns, if such return is submitted within one year of the due date after payment of tax deducted / collected along with applicable interest and fee. This relaxation is not available in the case of incorrect furnishing of quarterly TDS / TCS returns.

Penalty u/s 272BB for failure to comply with the provisions of section 203A in respect of quoting of tax deduction / collection account number

If a person fails to comply with the provisions of section 203A, he shall, on an order

passed by the Assessing Officer, pay, by way of penalty, a sum of Rs.10,000/-. If a person who is required to quote his “tax deduction / collection account number” or,

as the case may be, “tax deduction account number” in the challans or certificates or statements or other documents referred to in section 203A (2) quotes a number which is false, and which he either knows or believes to be false or does not believe to be true, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of Rs.10,000/-.

Liable for prosecution

If a person fails to pay to the credit of the Central Government the tax deducted at source by him, he will be punishable with rigorous imprisonment for a term not less than 3 months but which may extend to seven years with fine.

Mandatory quoting of PAN and TAN (Sec 203A)

It is obligatory for all persons responsible for deducting tax at source to obtain and quote TAN in all challan /TDS certificates, statement and other documents. Failure to comply with these provisions will attract penalty of Rs.10,000/ under section 272BB. Similarly, as per Section 139(5B) it is obligatory for the person deducting tax at source to quote PAN of the person from whose income tax has been deducted in the statement, certificate and all other returns under the Income Tax Act. The e-TDS returns for salary i.e. Form 24Q with less than 100% of PAN data are not being accepted by the Income Tax department. It is therefore advised to quote correct PAN details of all deductees in the e-TDS return to avoid penal consequences. Penalty of Rs. 10,000/- is leviable for non-furnishing/false furnishing the PAN/ Adhaar Number under section 272B.

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Failure to comply with provision of section 203A regarding tax deduction account number

If a person fails to apply for tax deduction account number (TAN) or after allotment of such number fails to quote such number in challan forms for payment of tax under section 200, certificate under section 203 and returns under section 206, then he shall be liable for penalty of a sum which may extend to Rs.10,000/-. The person on whom penalty is proposed to be imposed should be given an opportunity of being heard. No penalty is, however, liable if the person proves that there was reasonable cause for the default. Under Section 192(2C) the obligation is cast on the Bank for furnishing statement showing the value of perquisites provided to employees. Any false information, fabricating documentation or suppression of requisite information will entail penal consequences thereof provided under the law.

Failure to issue certificate

If any person fails to furnish certificate of tax deducted at source, under section 203, he shall be liable for penalty under section 272A. Such penalty shall be Rs.100 for every day during which the failure continues. However, the amount of penalty for failure in relation to return under section 203 and section 206 shall not exceed the amount of tax deductible. In view of the stringent penalty and prosecution provisions contained under the Income Tax Act, it is imperative that the tax is deducted correctly by the Bank and paid to the Central Government, strictly in accordance with the provisions of law. The Incumbents Incharge should personally ensure strict compliance of the provisions of the Income Tax Act, failing which, they will be held personally responsible for the consequences arising out of non-compliance of these instructions.

Permanent Account Number Many offices require the Bank’s Permanent Account Number and the Bank’s Assessment Range. The relevant details are as under: Permanent Account Number: AAACP0165G, Assessment Range- SPLR 7, Central Revenue Building, ITO, New Delhi

14 HON’BLE HIGH COURT OF KERALA/ MADRAS – INTERIM ODERS ON

CONTRIBUTION TO PENSION FUND

14.1 Guidelines were issued vide our circular Nos. FD/HO/04/2011 dated March 25, 2011 and FD/HO /09/2011 dated June 25, 2011 for non deduction of TDS on the amount appropriated to the corpus of Pension Fund, from the arrears of salary of the employees of the Bank but to keep the amount equivalent to tax element in Sundries in terms of Interim stay orders dated 23.03.2011 and 08.06.2011 of Hon'ble High Court of Kerala on the writ petition No. 9162/2011 filed by All India Punjab National Bank Officers' Association (Affiliated to AIBOC).

14.2 All India Bank Officers' Association (AIBOA) also filed petition in the Hon'ble High Court of Madras in relation to the deduction of tax on contribution to Pension Fund

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vide writ petition number 8102/2011. The Hon'ble High Court of Madras vide its order dated 29.03.2011 issued interim injunction restraining the respondents from deducting tax at source for a period of eight weeks; but the amount equivalent to the tax element not to be disbursed to such optees of the pension scheme, until further orders. Further, the Hon'ble High Court of Madras vide its order dated 13.06.2011 continued the interim injunction passed on 29.03.2011 until further orders.

14.3 As informed by Circle Office Ernakulum, the Hon. Kerala High Court as per the orders dated 28.01.2016, while dismissing the Writ Petition No 9162/2011 has held that payment of arrears and contribution to Pension fund are two independent transactions. The notional payment being a payment of arrears of salary by the employer to the employee will attract the provisions of Section 192(1) of the Income Tax Act.

The matter was referred to Law Division and as per their opinion the stay granted by Madras High Court is in force, further steps be taken in view of Madras High Court Order. In view of this, the amount kept in Sundries in terms of Hon'ble High Court of Kerala be continued to be kept as it is until further orders of Hon'ble High Court of Madras in WP number 8102/2011 which is also applicable on Bank.

The above guidelines are only indicative and not exhaustive. For any further clarification, Income Tax Act, 1961 as amended till date may be referred. Alternatively, the site of Income Tax Deptt. i.e. www.incometaxindia.gov.in may be visited or matter be referred to HO Finance Division ([email protected]). Please bring the contents of this circular to the notice of all the staff members at your branch/ office and ensure its meticulous compliance. GENERAL MANAGER (MAHESH DHAWAN) Enclosures: Annexure I Changes in guidelines on deduction of tax at source from Salaries Annexure II Letter of Undertaking with regard to Tax on perquisite value of rent free/

concessional accommodation Annexure III Letter of Undertaking with regard to Tax on perquisite in respect of Interest

Free or concessional loans Annexure IV Letter of Undertaking with regard to Tax on perquisite value of car facility

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ANNEXURE I

Changes in Guidelines for Deduction of Income Tax at source from Salaries as Ammended by Finance Act, 2020: A. Alternative taxation regime in the case of Individual or HUF under section 115BAC of IT

Act (incorporated in point no 3.4)

On satisfaction of conditions specified in point no (2), an individual or HUF shall, from assessment year 2021-22 onwards, have the option to pay tax in respect of the total income at following rates:

Total Income (Rs.) Rate

Upto Rs 2,50,000 Nil

From Rs. 2,50,001/- to Rs. 5,00,000/- 5 percent

From Rs.5,00,001/- to Rs.7,50,000/- 10 percent




Above Rs 15,00,000/- 30 percent Note:

a. Section 87A Rebate on salary upto Rs.5 lacs allowed maximum of Rs.12500/-

b. Surcharge at applicable rate(s) and Health & Education cess @ 4% will also be levied.

The option shall be exercised for every year where the individual has no business income.

2. The condition for concessional rate shall be that the total income of the individual or HUF is computed without any exemption or deduction under the provisions —

a) Leave travel concession as contained in clause (5) of section 10;

b) House rent allowance as contained in clause (13A) of section 10;

c) Allowances as prescribed in clause (14) of section 10 (Other than those as may be prescribed for this purpose.

d) Allowance for income of minor as contained in clause (32) of section 10;

e) Standard deduction, deduction for entertainment allowance and employment/professional tax as contained in section 16;

f) Interest under section 24 in respect of self-occupied or vacant property referred to in sub-section (2) of section 23. (Loss under the head income from house property for rented house shall not be allowed to be set off under any other head and would be allowed to be carried forward as per extant law);

g) Deduction under section 57(iia) in the case of family pension.

h) Any deduction under chapter VIA (like section 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, etc). However, deduction under sub-section (2) of section 80CCD (employer contribution on account of employee in notified pension scheme) and section 80JJAA (for new employment) can be claimed.

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i) without set off of any loss,-

(i) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in (a) above; or

(ii) under the head house property with any other head of income;

j) by claiming the depreciation, if any, under section 32, except clause (iia) of sub-section (1) thereof, determined in such manner as may be prescribed; and

k) Without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force.

The under mentioned Allowances u/s 10(14) of the Income Tax Act, will continue to remain allowable even under the New Regime of Personal Taxation.

ii) Transport Allowance granted to a divyang employee to meet expenditure for the purpose of commuting between place of residence and place of duty

ii) Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office;

iii) Any Allowance granted to meet the cost of travel on tour or on transfer;

iv) Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty.

Rule 3 of the Income Tax Rules has been amended subsequently, so as to remove exemption in respect of free food and beverage through vouchers provided to the employee, being the person exercising option under the above section.

3. An employee, having income other than the income under the head "profit and gains of business or profession" and intending to opt for the concessional rate under section 115BAC of the Act, may intimate the employer of such intention for each previous year and upon such intimation, the employer shall compute employee total income, and make TDS thereon in accordance with the provisions of section 115BAC of the Act. If such intimation is not made by the employee, the employer shall make TDS without considering the provision of section 115BAC of the Act.

4. It is also clarified that the intimation so made to the deductor shall be only for the purposes of TDS during the previous year and cannot be modified during that year. However, the intimation would not amount to exercising option in terms of sub-section (5) of section 115BAC of the Act and the person shall be required to do so alongwith the return to be furnished under sub-section (1) of section 139 of the Act for that previous year. Employees or Pensioners have to adopt any one regime i.e. existing or new regime under section 115BAC as explained above and TDS deduction needs to be made accordingly by Employer.

B. Widening of Definition of Perquisite under section 17(2)(vii) of IT Act (AY 2021-22) (

incorporated in point no 1.14)

The term perquisite is widened by including the amount or the aggregate of amounts of any contribution made to the account of the assessee by the employer––

(a) in a recognized provident fund;

(b) in the scheme referred to in sub-section (1) of section 80CCD; and

(c) in an approved superannuation fund,

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to the extent it exceeds seven lakh and fifty thousand rupees in a previous year; The annual accretion by way of interest, dividend or any other amount of similar nature during the previous year to the balance at the credit of the fund or scheme referred above in any previous year computed in such manner as may be prescribed.

C. Cumulative rate of interest applicable on National Savings Certificate VIII Issue (Incorporated at point no 8.1 G in consolidated circular)

The year for which interest

accrues


During April 1, 2020 and June 30, 2020

First Year 6.80

Second Year 7.26

Third Year 7.76

Fourth Year 8.28

Fifth Year 8.85

Sixth Year Not applicable

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Annexure II Letter of Undertaking The Branch Manager/ Head of Department. Punjab National Bank _____________Branch/Office Reg: Tax on perquisite value of rent free/concessional accommodation– interim injunction from High Court of Madras in W.P.No.14126/2008- In view of the interim injunction order by Hon’ble High Court of Madras in W.P.No.14126 of 2008, I hereby request you not to deduct and remit Income Tax on perquisite value of accommodation provided to me by the Bank. I hereby undertake that on account of non deduction of TDS as above, in case, any loss of any kind is incurred by the Bank by way of tax, penalty, interest, charges, expenses etc. in acceding to my request as above, you may recover the same in full without any further notice. The authority for recovery from me extends, inter alia to my salary, terminal benefits including pension in the event of my retirement/ cessation of service. I further agree to undertake that in case the above interim injunction order is not confirmed in the judgement by the Hon’ble High Court of Madras, or overturned by the Appellate Courts/Hon’ble Supreme Court and as a result loss of any kind incurred by the Bank by way of tax, penalty, interest, charges, expenses etc. by acceding to my request as above, you may recover the same in full as above without any further notice to me. SIGNATURE OF THE EMPLOYEE Name of the Employee: PF No: Designation: Branch/Office:

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Annexure III

Letter of Undertaking The Branch Manager/ Head of Department. Punjab National Bank _____________Branch/Office Reg: Tax on perquisite in respect of provision of Interest Free or concessional loans: interim protection from High Court of Madras in WP No 7816/2013 / SLP filed in Supreme Court. This is to inform that in view of FD Circular no dated , I hereby request you not to deduct and remit Income Tax on value of perquisites in respect of interest free or concessional loans provided to me by the Bank. I hereby agree and undertake that on account of non deduction of TDS as above, in case, any loss of any kind is incurred by the Bank by way of tax, penalty, interest, charges, expenses etc. in acceding to my request as above, you may recover the same in full without any further notice. The authority for recovery from me extends, inter alia to my salary, terminal benefits including pension in the event of my retirement/ cessation of service. I further agree to undertake that in case the interim injunction order is not confirmed in the judgement by the Hon’ble High Court, or overturned by the Appellate Courts/Hon’ble Supreme Court and as a result loss of any kind incurred by the Bank by way of tax, penalty, interest, charges, expenses etc. by acceding to my request as above, you may recover the same in full as above without any further notice to me. SIGNATURE OF THE EMPLOYEE Name of the Employee: PF No : Designation: Branch/Office:

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Annexure IV Letter of Undertaking The Branch Manager/ Head of Department. Punjab National Bank _____________Branch/Office

Reg: Tax on perquisite value of car facility – interim injunction from High Court of Madras in W.P.No. 8564/2011- HO Circular No. FD/ /2020

In view of the interim injunction ordered by Hon’ble High Court of Madras in W.P.No. 8564 of 2011, I hereby request you not to deduct and remit Income Tax on perquisite value of car facility provided to me by the Bank.

I hereby undertake that on account of non deduction of TDS as above, in case, any loss of any kind is incurred by the Bank by way of tax, penalty, interest, charges, expenses etc. in acceding to my request as above, you may recover the same in full without any further notice. The authority for recovery from me extends, inter alia to my salary, terminal benefits including pension in the event of my retirement/ cessation of service.

I further agree to undertake that in case the above interim injunction order is not confirmed in the judgment by the Hon’ble High Court of Madras, or overturned by the Appellate Courts/Hon’ble Supreme Court and as a result loss of any kind incurred by the Bank by way of tax, penalty, interest, charges, expenses etc. by acceding to my request as above, you may recover the same in full as above without any further notice to me. SIGNATURE OF THE EMPLOYEE Name of the Employee: PF No : Designation: Branch/Office

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Date post:	08-Feb-2023
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