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______ RESERVE BANK OF INDIA _

www.rbi.org.in

CO CSBD No. 3382 107.06.10/2014-15

November 20, 2014

The Regional Directorl

Principal Chief General Manager/

Chief General Manager- in-

Chargel

Chief General Manager

General Manager- in- Charge/

Principals of Training Establishments

Reserve Bank of India

Madam IDear Sir

Quick Ins ights o f Income Tax Changes

Imp lications FY: 2014 - 15

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8/10/2019 tax 2014-15.pdf


1

Quick Insight of Income Tax Changes Implications

Financial Year 2014-15)

Reserve Bank of India

Corporate Strategy and Budget Department

Central Office - Salary Section

Mumbai

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INCOME TAX CHANGES YEAR 2014-15

INDEX

Sr. No. Particulars Page no.

1) Income Tax rates 3

2)

Deductions under Chapter VI A 4-6

3) Exempt Incomes 6-7

4)

Deductions under house property 8

5)

Collection and Recovery of Tax 8-15

6)

Illustrations

16

7)

Annexure - Form 16A

17-18

2

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Finance Bill, 2014

The Honorable Finance Minister of India, Mr. Arun Jaitley, delivered the Union

Budget 2014-2015 - his first in the term of the NDA Government on the July 10,

2014, and thereafter presented the Finance Bill, 2014 before the Parliament

which was passed on July 25, 2014.

The Amendments prescribed in the said budget are incorporated in the booklet.

INCOME·TAX RATES

1. Rates for Individuals including Women (below age of 60 years at any time

during the year), HUF, AOP, BOI:

Total Income F.Y. Total Income

F.Y.

(MenlWomen) 2013·14

(MenlWomen)

2014·15

Upto ~ 200000

Nil

Up to ~ 250000

Nil

~ 200001- ~ 500000

10%

~ 250001 to ~ 500000

10%

~ 50000 1- ~ 1000000

20%

~ 500001 to ~1000000

20%

Above ~ 1000000

30%

Above ~ 1000000

30%

Add: Secondary & 3% of tax Add: Secondary 3% of tax

Higher Education

Higher Education Cess

Cess

-+

Surcharge

@

10% of above tax if total income exceeds ~ 10000000/-

-+

Tax Rebate of maximum Rs. 2000/- u/s 87A for individuals having income upto

~500000/-

Rates for Senior citizen (Between the Age 60 and 80 years at any time during the

year):

Basic exemption is ~ 300000/·. (Last year ~ 250000/·)

Rates for Very Senior citizen Aged 80 and above at any time during the

Year):

Basic exemption ~ 500000/- (same as last year)

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2. Deductions under CHAPTER VIA of Income tax act 1961.

Deductions from Gross Total Income

Comb ined limit

u ls

aoc, aoccc aOCCD of ~

150000 ·

Section Section Reference Eligible

Assesses

Amount

of

deduction

Special Remarks

80 C

or Max. Condition: LlC

150000 Premium Deduction is

Subject to max. 20% of

capital sum assured.

Amendment:

Income received by a

resident under a life

insurance policy,

including bonus

thereon shall be

subject to deduction of

tax at source at 2 per

cent unless such

income is exempt

under Section 10(100)

of the Act or if the

aggregate sum paid to

an assessee in a

financial year is less

than < 100000. This

amendment shall take

effect from 1 October

2014.

Deduction in Respect Individual

of LlC Premium, HUF

contributions to PF,

PPF, and Tuition

fees paid at the time

of admission

available in respect

of any two children,

Home loan Principal

repayment, ULIP,

NSC, Stamp duty on

Residential Housing

loan subject to

conditions specified.

80 CCC Deductions in Individual

respect of

contribution to certain

pension funds.

Whole

amount

deposited

or paid but

subject to

max. of ~

100000/-

80 CCD Deduction in respect Any employee Amount

of contribution to (individual) of not

pension scheme of any employer exceeding

central government 10% of

salary

Where an assessee,

being an individual

employed by the

Central Government

or any other employer

on or after 1.1.2004 or

any other assessee

being an individual

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Section

0: - Deduction in respect of health insurance premium (Mediclaim)

Particulars Deduction(Rs.) Particulars Additional

Overall

Deduction Deduction

Mediclaim Maximum ~ 15000. Mediclaim Maximum ~ 15000. ~ 30000

Premium for

Includes ~ 5000 for

Premium for

Includes ~ 5000 for

individuals,

medical health

Parents

medical health

Spouse and

check ups check ups.

Children

./ Available to assessee, spouse, dependent children and parents .

./ For HUF it is available for any member of HUF .

./ Aggregate limit for Senior citizen is ~ 20000/ to avail benefit u/s. 80 0

./ Qualifying age for senior citizen is 60 years .

./ Payments for Preventive Health checkups can be paid in any mode

including cash .

./ Mediclaim Premium

IS

no

allowed if paid in cash

Section Section Reference

Deduction in Respect of

Maintenance, Medical

treatment of dependant

person with disability

such as Blindness &

Vision problems,

Leprosy-cured, Hearing

impairment, Locomotor

disability, Mental

retardation or illness .

DD

other disability

(40%-80%)

Copy of medical

certificate to be

issued by

medical

authority to be

submitted along

with return.

Eligible Amount of

Assesses deduction

Resident For severe

individual or disability ~

HUF (any 100000 (80 %

Member of or more) and

that HUF) ~50000 for

Resident

individual or

HUF (any

Member of

that HUF)

Persons

Special

Remarks

./ Disabled dependent means spouse, any child, parents, brother and sister .

./ For HUF, any member of HUF can be a disabled dependent.

../ No deduction is claimed u/s eou.

or

by

DDS

Deduction in respect of

medical treatment of

Serious ailments such

as Neurological

diseases, Parkinson's

diseases, Malignant

cancers, AIDS, Chronic

renal failure,

Hemophilia,

Thalasaemia.

After reducing Form

1 0 -1

insurance claim, Certificate from

amount actually Specialist

paid or

<40000/-

submitted along

whichever is with return.

less.

< 60000/-

in Deduction to be

case of such received from

Senior citizen.

covered are Assessee has to insurer

same as u/s file income tax reimburse

8000

return to claim employer.

and it will not be

considered by

employer.

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*80 E

Deduction in respect of

interest on loan taken

for higher education

after SSC for self,

spouse, children in

India or abroad.

Individual

only who has

taken loan

Interest paid

to financial

institution or

approved

Charitable

Institution

Payment of Deduction for 8

interest on loan assessment

taken for higher years.

education, any

amount

actually paid

out of income

chargeable to

tax.

80 U

Deduction in case of a

person with disability

(Not dependent)

irrespective of amount

spent.

Resident

individual

Himself.

In case

shall

f Assesses

furnish

certificate

medical

authority

ROI

renewed

expired.

Separate forms

for separate

disability

required.

a

from

with

get

when

80 G

Deduction in case of

donations made to

Specified/ approved

trusts/ institutions etc.

Resident

individual

severe

disability

~100000/-

(w.e.f.

assessment

year 2010-

2011 or in any

other cases

~50000/-.

Any Donation

exceeding

~10000 shall

be allowed as a

deduction only

if such sum is

paid in any

mode other

than cash

100% deduction

for Prime

Minister

National Relief

fundi family

planning

institution

Balance 50%

deductible

qualifying

amount

of

donation is upto

10% of taxable

income before

80G deduction.

*Higher Education means any course of study after passing senior secondary

examination.

3. Incomes which do not form part of total income (Exempt income)

• House Rent allowance(HRA) [Section 10 (13A)]

Exemption is limited to least of following:-

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Metro Cities ( ) Other Cities

Special remarks

HRA actual Received

HRA actual Received Salary = Basic (+)

Rent Paid (-) 10% 'of

Rent paid (-) 10% of

DA (if provided in

salary for relevant salary for relevant

terms of

period period

employment)

50 % of salary for the

40 % of salary for the

relevant period

relevant period

( ) Metro Cities includes Kolkata, Delhi, Mumbai & Chennai.

• leave Travel Concession or Assistance L

T l

TA) Sec tion 10(5)

The exemption shall be allowed subject to following:

./ Where journey is performed by air- Maximum upto air economy fare of

the national carrier by the shortest route (in India) .

./ Where places of origin of journey and destination are connected by rail

and the journey is performed by any mode of transport other than air -

maximum upto air-conditioned first class rail fare by the shortest route .

./ Where the places of origin of journey and destination or part thereof

are not connected by rail and the Journey is performed between such

places:

i.

Where a recognized public transport system exists - Maximum.

Upto 1

st

Class or deluxe class fare by the shortest route.

ii . Where no recognized public transport system exists - Maximum.

Upto air conditioned first class rail fare by shortest route.

Special Remarks:-

• Exemption can be availed only in respect of two journeys performed in a

block. of four calendar years.

• If LTC not availed in four year block period Carry over Concession is

allowed in calendar year subsequent to that four year block period.

• Quantum of Exemption is limited to actual expenses incurred.

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4. Deductions Under House property.

• Interest on borrowed capital u/s24 (b) - Deduction is available on accrual

basis.

• Interest payment for self occupied house for acquisition or

construction upto ~

2 00 000 ·

• Interest payment for re-construction, repairs or renewals upto ~ 30 0001.

5. Collection and recovery of TAX TDS)

• Deduction at source and advance payment.[Section 190]

The income of previous year is taxable in assessment year. For example

Income earned during previous year 2014-15 is taxable in assessment

year 2015-16. However, income tax is recovered from assessee in

previous year itself through-

i) Tax deducted at source.(TDS)

ii) Tax collection at source.(TCS)

iii) Advance payment of tax.

Senior citizen and very senior citizen are exempt from payment of advance

tax. They can pay self-assessment tax with return in due date without

interest. They should not have business income.

Deduction at source

• Salary [Section 192]

Every person who is responsible for paying any income chargeable under the

head Salaries shall deduct income-tax on the estimated income of the assessee

under the head Salaries for the financial year 2014-2015. The income-tax is

required to be calculated on basis of Slab Rates given above and shall be

deducted at the time of each payment. No tax will, however, be required to be

deducted at source in any case unless the estimated salary income including the

value of perquisites, for the financial year exceeds ~ 250000 for male and female

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individual below 60 years of age, ~ 300000 for individuals having age 60 years to

80 years or ~ 500000/- for individuals having age above 80 years.

Such Tax will be deducted at an average rate of tax.

Average rate of tax

=

income tax calculated on total income/total income.

Total income includes salary, allowances, perquisites, taxable portion of LFC,

LFC on declaration, taxable portion of encashment of ordinary leave and gratuity

at the time of retirement, arrears, advance of salary, encashment of salary during

service, overtime, bonus, etc. and any other income declared by the employee.

A taxpayer can furnish particulars of income under any head other than Salaries

and any tax deducted at source thereon. However, such income should not be a

loss under any such head other than the loss under the head Income from house

property for the same financial year.

• Payments to contractors and sub contractors [Section 194 C]

Deduction at Source from Payments made to Resident contractors and sub-

contractors.

Payee TDS rate

IndividuallHUF contractor or Sub contractor/Contractors or

1%

subcontractors for Advertising.

Other than individuallHUF Contractor or subcontractor/

2%

Contractors or subcontractors for Advertising.

Contractor in Transport business/Subcontractor in transport

Nil

business.(lf PAN quoted)

IndividuallHUF transport business (if PAN not quoted).

20%

Other than individual/HUF transport business (if PAN not quoted) 20%

No deduction if Single payment is less than ~ 30000 and Aggregate Payments is less

than ~ 75000 in a financial year.

Both the conditions should satisfy at a time.

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Some of the contractors or sub-contractors are below

./ advertising;

./ Broadcasting and telecasting including production of programmes for such

broadcasting or telecasting;

./ carriage of goods or passengers by any mode of transport other than by

railways;

./ catering;

./ AMC for air conditioners, computers .

./ Housekeeping contracts

./ Security Guard agencies .

./ Manufacturing or supplying a product according to the requirement

or specification of a customer by using material purchased from such

customer,

./ But does not include manufacturing or supplying a product according to the

requirement or specification of a customer by using material purchased from a

person, other than such customer.

• Deduction of tax at source for Fees for professional and technical

services. [Section 194 J]

TDS deduction while payment to resident any sum by way of fees for

professional services or fees for technical services or royalty or non compete

fees.

The rate of tax to be deducted is 10 .

No deduction if aggregate fee is less than 30000, in each case.

Explanation - for the purposes of this section,

Professional services means services rendered by a person in the course of

carrying on legal, medical, engineering or architectural profession or the

profession of accountancy or technical consultancy or interior decoration or

advertising or such other profession as is notified by the Board for the

purposes of section 44AA or of this section;

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Fees for technical services means managerial, technical and consultancy

services.

We further advise that, AMCs for maintenance of computers and peripherals

and services of resident engineers are to be treated as 'technical' in nature,

and accordingly, the rate of TDS applicable would be 10% (please refer

circular DEBC. No. 5258/ 07.01.001/ 2013 - 14 dated January 23, 2014

available on EKP).

Note: In respect of AMCs, if the vendor is appointing full time employee(s) or

a dedicated person for maintenance, then the rate u/s. 194J would be

applicable else rate u/s. 194C would apply.

Special Remarks:

• Vide Income Tax circular no. 1/2014 dated January 13, 2014 on TDS on

Service Tax it is clarified that wherever in terms of the agreement/contract

between the payer and the payee, the service tax component comprised in

the amount payable to a resident is indicated separately, tax shall be

deducted at source under Chapter XVII-B of the Act on the amount

paid/payable without including such service tax component.

During the 100th Executive Directors' Committee meeting for compliance

held on August 12, 2014 i t was agreed that-

• Where general provisions have been made without payee being known

there is no obligation to deduct TDS

• If the creditor is known, tax needs to be deducted from the provisions

made.

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Section 193 TDS on interest on Securities

./ Every person responsible for paying to a resident any income by

way of interest on securities .

./ Has to deduct TOS at rates in force from amount payable.

./ Rate at which TOS is to be deducted is 10% in case of domestic

companies and resident corporate assesses.

./ It should be deducted at the time of credit or payment thereof in

cash or cheque or draft or in any mode.

./ Interest on some securities does not attract deduction of TOS.

However, if RBI issues securities other than tax free securities, the

interest paid on such securities attracts to deduction of TOS.

Section 193 providing for TOS on interest on Securities is amended to

allow exemption from TDS from interest on debentures upto

~5 O O O / payable by way of account payee cheque by companies in

which public are substantially interested to individuals and HUFs.

• Time of deduction of tax:-

Tax shall be deducted at the time of credit of such sum to the account of the

payee or at the time of payment thereof in cash or by issue of a cheque or a

draft or by any other mode, whichever is earlier. It may be noted that where

any such sum is credited to any account, whether called Suspense

account or by any other name in the books of account of the person

liable to pay such amount, such crediting shall be deemed to be credit

of such sum to the account of the payee, hence liable to TDS.

• Certificate for deduction of tax at lower rate [section 197] Exemption

certificate or Lower TOS deduction certificate to be obtained from

assessees for deductions of TOS at lower rate or where no deduction is to

be made.

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• Duty of Persons deducting tax [section 200]

./ TDS deposited to the credit of Central government in prescribed time [Time

limit is given below]

./ Deductor has to submit TDS Returns or statements in prescribed form (All in

electronic form) after payment of tax deducted at source within prescribed

time [ Form and Time limit is mentioned below] .

./ Challan for Payment of TDS - Challan no. 281

• Compliance Calendar [Time limit for TDS Return and payment]

Particulars

Date

TDS payment for preceding month

in

of Every succeeding month (30

1n

April

with respect to TDS for month of

March.)

TDS quarterly return [April-June] in 24 Q - U/s.

is

of July

192.

26 Q - U/s. 193 to 196 D, for all deductees except

Non-resident and Resident but not ordinarily

resident

TDS quarterly return [July-September] in 24 Q - 15

tn

of October

U/s. 192.



resident

TDS quarterly return [October-December] in 24 Q 15

tn

of January

- U/s. 192.



resident

TDS quarterly return [January-March] in 24 Q - 15

tn

of May

U/s. 192.



resident

13

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• INTEREST ON FAILURE TO DEDUCT OR PAY TAX AT SOURCE U/S

201 (1A)

Rate of interest

Period of which interest payable (per month or part thereof)

per month

1% From the date on which tax was deductible to the date on which

tax is actually deducted.

1.5% From the date on which tax was actually deducted to the date on

which tax is actually paid.

It is mandatory and must be paid before furnishing quarterly statement of

each quarter. It should be rounded off to nearest 100 rupees.

rosecution proceedings u/s 276-8 may be initiated for failure to deposit

T S without

a

reasonable cause.

Special Remark: - No interest is leviable if following conditions are

fulfilled

./ If the payee has furnished his return of income .

./ Payee has taken into account such income in income tax return filed

and paid the tax due thereon .

./ Payee furnishes an accountant's certificate to the above effect in

prescri bed form.

• Certificate of TDS to be furnished under Section 203 [Rule 31]

./ Form 16 - In case of TDS on Salary[Section 192]

It has to be issued to payee by 31

st

may of the financial year

immediately after the financial year in which the TDS is deducted .

./ Form 16 A - In any other case [193 to 196 D].

It has to be issued to the payee quarterly within 15 days from the due

date of submission of TDS returns.

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• Mandatory Requirement of furnishing PAN in all TDS Statements,

challans and correspondence between deductor and deductee.

[Section 206 AA]

./ Every dedudee has to furnish his PAN to deductor

./ Failing of non furnishing of PAN by the deductee to deductor, the

deductor shall deduct TDS at higher of the following:-

i) Rate Prescribed in the Act

ii) At the rate of 20%.

iii) Only exemption is Non residents whose income is not

chargeable to tax in India are not required to apply and obtain

PAN.

Special remark:-

./ Even if the Payee has filed a declaration in form 15 G or 15 H

(under section 197 A) but not furnished / mentioned PAN the

above mentioned higher rates will apply .

./ If a person fails to furnish e-TDS statements on quarterly basis,

he shall be liable for penalty of Rs.1 00/- per day for each day till

default continues. However, the total amount will not exceed the

TDS amount of such statement.

./ Quote correct year, section code and PAN in TDS returns,

statements etc .

./ Use separate challans for Corporate and Non-corporate

deductees .

./ Each branch/division of an entity will have a separate TAN if it is

filing separate TDSITCS returns. However, there will be only

one PAN for a legal entity. One can apply for a centralized

PAN.

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Illustrations

Example -1

Calculation of income tax in the case of a male/female employee below 60

years having gross salary income of:

i. ~200000/-

ii. ~500000/-

iii. ~800000/- and

iv. ~1200000/-

Computation of Taxable Income and total Tax

Name of Assessee: YZ

F.Y.: 2014-15

A.Y.2015-16

PAN No.: XXXXP OOOOX

Particulars

~ ~

~ ~

Gross salary

200000 500000

800000 1200000

(-) PF deducted

10000

12000 15000

120000

(Max. Deduction u/s 80 C is

Rs. 1.5 Lac)

Taxable income 190000

488000 785000 1080000

Tax Relief u/s 87A NIL 2000

NIL Nil

Income Tax

NIL 21800 82000 149000

Educational Cess

@

3% NIL 654 2460 4470

Total Tax

NIL

22454 84460 153470

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FORM NO.16A

[See rule 31 1) b)]

Annex

Certificate under section 203 of the Income-tax Act, 1961 for Tax deducted at source at source

Certificate No.

Last Updated on

Name and address of Deductor Name and address of Deductee

PAN of the Deductor

TAN of the Deductor

PAN of the Deductee

CIT TDS)

Assessment Year Period with the

Address ...............................................................

From

To

..........................................................................

City ............................. Pin

Summary of payment

Deductee

Reference

Nature of

No

Date of

SI. No.

Amount paid/credited

Provided

payment/credit

payment

by

dd/mm/yyyy)

Deductor

if any)

Total Rs.)

Summary of tax deducted at source in respect of Deductee

Quarter

Receipt Numbers of Original

Amount of tax

Amount of tax

I. DETAILS OF TAX DEDUCTED AND DEPOSITED IN THE CENTRAL GOVERNMENT

Tax

Deposited

SI. No.

in respect

Book Identification Number BIN)

of the

dedudee

Rs.)

Receipt

DDO Date of

Serial

Transfer

Numbers

Number voucher

Status of matching

of Form

with Form No. 24G

No.24G

in Form dd/mm/y

No.24G

yyy)

Total Rs.)

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11.DETAILS OF TAXDEDUCTED AND DEPOSITED IN THE CENTRAL GOVERNMENT

Tax

Deposited

SI. No.

in respect

Challan Identification Number CIN)

of the

deductee

Rs.)

BSR Code

Date on

of the

which tax

Challan

Status of matching

Bank

deposited Serial

with OLTAS

Branch

[dd/mrn/y

Number

yyy)

Total Rs.)

erific tion

I

SOn/daughter of

Place

Date

Signature of person responsible for deduction of tax)

Designation

Full Name:

Note: Form 16 - Part A is to be mandatorily issued as downloaded from TRACES

website.

8

Documents

tax 2014-15.pdf