Acche Din - Are you a salaried employee??- Save Rs.10,000 of your income taxes

Budget this year popped late. However the slab rate changes apply to who of year's salary for you.

Read on to save. Share with your HR department and teams to take the benefits. I am sure many have missed out on this even at this juncture and you can save for many along with you. 

An official circular is issued now dt. 10th Dec. Better late than never.

Amendment was in the tax slab.

Although there is no change in the existing tax rate yet new Government had increased the minimum limit from Rs. 2,00,000 to Rs. 2,50,000. There were no changes in the tax slab from last 2 years.

So definitely, this is one of the very important announcements in new finance bill. Following are the tax slabs of Assessment Year 2014-15 & 2015-16.

Table 1: Tax Slabs

Tax Slabs 2014-15		Tax Slabs 2015-16
Income	Tax Rate	Income	Tax Rate
Upto Rs. 2 Lacs	0	Upto Rs. 2.5 Lacs	0
Rs. 2 Lacs to Rs. 5 Lacs	10%	Rs. 2.5 Lacs to Rs. 5 Lacs	10%
Rs. 5 Lacs to Rs. 10 lacs	20%	Rs. 5 Lacs to Rs. 10 lacs	20%
Above Rs. 10 Lacs	30%	Above Rs. 10 Lacs	30%

For senior citizen with Age group of 60 years or above but less than 80 years than their minimum tax limit is Rs. 300,000 instead of Rs. 250,000.

 On the other hand, senior citizen with age of 80 years or more than they do not need to pay tax of initial income of Rs. 500,000.

 Amendment is under section 80C and 80CCC.

Earlier, the maximum qualifying investments for deduction from total income was Rs. 1, 00,000 (even more amount was investment in specified schemes) which was raised to Rs. 1, 50,000. 

 So if no loan is taken by the employee to construct or renovate the house & having total salary income Rs. 5 lacs  than his total taxable income will decline by Rs. 50,000 (after availing this deduction) which is 12.5 % of earlier base income.

 The above conclusion can be examined with below table:-

(A) Person Having Income Rs. 5 lacs with no house loan

Table 2 Before Budget 2014 ( NO House loan is there)		Table 3 After Budget 2014 ( NO House loan is there)
Gross Salary	Rs. 500000	Gross Salary	Rs. 500000
less deduction U/S 80C +80CCC	Rs. -100000	less deduction U/S 80 + 80CCC	Rs.-150000
Taxable salary	Rs. 400000	Taxable salary	Rs. 350000
Loss from HP (due to interest on loan   taken for construction or renovation of house)	0	Loss from HP (due to interest on loan   taken for construction or renovation of house)	0
Net Taxable income	Rs. 400000	Net Taxable income	Rs. 350000

Now tax liability can be calculated as below:-

Table 4 Tax Liability before Budget 2014 ( NO House loan is there)			Table 5 Tax Liability before Budget 2014 ( NO House loan is there)
	Tax Rate	Tax		Tax Rate	Tax
Upto 2 lacs	0	0	Upto 2.5 lacs	0	0
Next 2 Lacs	10%	Rs. 20000	Next 1 Lac	10%	Rs. 10000
Total Tax before surcharge		Rs. 20000	Total Tax before surcharge		Rs.10000
Surcharge	3%	Rs. 600	Surcharge	3%	Rs. 300
Total Tax		Rs. 20600	Total Tax		Rs.10300
			Less: Rebate **		Rs. 2000
			Net Tax		Rs. 8300

  Table 6 Net change in Total tax Structure having gross income Rs. 5 lacs.

Total Tax liability before budget	Rs. 20600
Total Tax liability after budget	Rs.-10300
Net Benefit	Rs. 10300

Rebate u/s 87A of Rs 2000 will also be admissible if the person income does not exceed Rs. 500000.

Form 16 - TRACES (CIRCULAR NO. 04/2013)

CIRCULAR NO. 04/2013

F.No 275/34/2011-IT(B)

Government of India

Ministry of Finance

Department of Revenue

Central Board of Direct Taxes

New Delhi, the 17th April, 2013

Sub: Issuance of certificate for tax deducted at source in Form No. 16 in accordance with the provisions of section 203 of the Income-tax Act, 1961 read with the Rule 31 of the Income-tax Rules 1962 – regarding

1. Section 203 of the Income-tax Act 1961 (“the Act”) read with the Rule 31 of the Income-tax Rules 1962 (“the Rules”) stipulates furnishing of certificate of tax deduction at source (TDS) by the deductor to the deductee specifying therein the prescribed particulars such as amount of TDS, valid permanent account number (PAN) of the deductee, tax deduction and collection account number (TAN) of the deductor, etc. The relevant form for such TDS certificate is Form No. 16 in case of deduction under section 192 and Form No. 16A for deduction under any other provision of Chapter XVII-B of the Act. TDS certificate in Form No. 16 is to be issued annually whereas TDS certificate in Form No. 16A is to be issued quarterly. TDS Certificate in Form No 16 as notified vide Notification No. 11/2013 dated 19.02.2013 has two parts viz Part A and Part B (Annexure). Part A contains details of tax deduction and deposit and Part B (Annexure) contains details of income.

2. With a view to streamline the TDS procedures, including proper administration of the Act, the Board had issued Circular No. 03/2011 dated 13.05.2011 and Circular No. 01/2012 dated 09.04.2012 making it mandatory for all deductors to issue TDS certificate in Form No. 16A after generating and downloading the same from “TDS Reconciliation Analysis and Correction Enabling System” or (https://www.tdscpc.gov.in) (hereinafter called TRACES Portal) previously called TIN website. In exercise of powers under section 119 of the Act, the Board has now decided as following:-

2.1 ISSUE OF PART A OF FORM NO. 16 FOR DEDUCTION OF TAX AT SOURCE MADE ON OR AFTER 01.04.2012:

All deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall issue the Part A of Form No. 16, by generating and subsequently downloading through TRACES Portal, in respect of all sums deducted on or after the 1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of Form No 16 shall have a unique TDS certificate number.

2.2 AUTHENTICATION OF TDS CERTIFICATE IN FORM NO. 16 :

The deductor, issuing the Part A 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 in accordance with sub-rule (6) of Rule 31.

2.3 In other words, Part A of Form No. 16 shall be issued by all the deductors, only by generating it through TRACES Portal and after duly authenticating and verifying it.

 

2.4 ‘Part B (Annexure)’ of Form No. 16 shall be prepared by the deductor manually and issued to the deductee after due authentication and verification alongwith the Part A of the Form No. 16 stated above.

2.5 Sub rule (3) of rule 31of the Rules sets the time limit for issuance of Form 16 by the deductor to the employee. Currently, Form 16 should be issued by 31st May of the financial Year immediately following the financial year in which income was paid and tax deducted.

3.1 The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purpose of download of Part A of Form No.16 from the TRACES Portal and shall be responsible for the day-to-day administration in relation to the procedure, formats and standards for download of Part A of Form No.16 in electronic form.

3.2 It is further clarified that Part A of Form No. 16 issued by the deductors in accordance with this circular and as per the procedure, formats and standards specified by the Director General of Income-tax (Systems) and containing Unique Identification Number shall only be treated as a valid compliance to the issue of Part A of Form No. 16 for the purpose of section 203 of the Act read with rule 31 of the Rules.

4. Hindi version shall follow.

-sd-

(Anshu Prakash)

Director (Budget)

Central Board of Direct Taxes