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Relief u/s 89(1) for arrear salary simplified with Excel Tool !Download it.

July 24, 2010 By taxworry Leave a Comment

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Excerpt: Central and State govt employees pay were revised in recent past on account of Sixth Pay Commission . So all govt. staff received lots of arrear payments for which now they are going to file return of Income . Naturally , one of the central concern among them is whether any  relief  from high tax on account arrear payments they received during FY 2009-10  are available. Yes, they can claim relief from tax on arrears received as per section u/s 89(1)  of the I .T. Act. Read below When Can you claim relief u/s 89  ? In following situation , you can claim relief u/s…

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Is Commuted Value of Pension Tax Free?

July 17, 2010 By taxworry Leave a Comment

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Excerpt: Whether the amount received as commutation of pension is taxable or not , Sardindu Basu, KolkataYes, the commuted value of pension is tax free as per section 10(10A) . However quantum is dependnt on the fact who is the employer who paid pension to you. Section 10(10A) states1. FULL exemption of commuted value of pension received by person getting commutation of pension under Civil Pension (Commutation) Rules or similar rule. This is generally applicable in case of Central Government employee or State Government employee or a local authority or a corporation established under Cetral or State or Provincial2. In case…

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Is Govt. contribution to the Employee by Employer under New Pension Scheme is Taxable?

June 23, 2010 By taxworry 1 Comment

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Excerpt: The New Pension Scheme (NPS) has become operational since 1st January, 2004 and is mandatory for all new recruits to the Central Government Services from 1st January, 2004. Since then it has been opened to employees of State Governments, Private Sector and Self Employed (both organized and unorganized).P.VENKATA SIVA RAO, Banglore asks “Is Govt. contribution to the Employee by Employer under New Pension Scheme is Taxable?” The meaning of salary chargeable to tax is defined under section 17 of the I T Act. Clause(vii) of the said section states 17. For the purposes of sections 15 and 16 and of this section,— (viii) the contribution made…

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Can bank deduct tax on pension disbursed?

June 14, 2010 By taxworry Leave a Comment

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Excerpt: It has been clarified by CBDT vide circular No. 771 dt. 3/11/98 that in the case of pensioners receiving pension through nationalised banks, provisions of TDS are applicable in the same manner as they apply to the salary income. In the case of pensioners who receive their pension from a nationalised bank, the instructions contained in this circular shall apply in the same manner as they apply to salary income. The deduction from the amount of pension on account of standard deduction under section 16 and the tax rebate under section 88B (in the case of pensioners, resident in India, who…

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Whether gratuity received on resignation or termination eligible for exemption

June 13, 2010 By taxworry 1 Comment

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Excerpt: As per Board’s letter F. No. 194/6/73-IT(A 1) Dated 19.06.73 exemption in respect of gratuity is permissible even in cases of termination of employment due to resignation. The taxable portion of gratuity will qualify for relief u/s 89(1). The gratuity payment is a certainty in every case today. However the exemption u/s 10(10) of the income Tax Act provides exemption as under : Any death-cum-retirement gratuity to central and state govt. employees, defence employees and employees in local authority shall be exempt. Any gratuity received by persons covered under the Payment of Gratuity Act, 1972 shall be exempt subject to following limits…

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Are retirement benefits subject to TDS ?

June 13, 2010 By taxworry Leave a Comment

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Excerpt: Retirement benefits are taxable under the head salaries as ‘profits in lieu of salaries’ under section 17(3) of the Income Tax Act. Therefore, retirements benefits  attract tax at source (TDS) prescribed in section 192 and other relevant sections. However some of the  retirement benefits are exempt from taxation u/s 10 either fully or partly. So, no TDS is required on that portion of retirement benefits.The details of these exemption are being given below. 1. Gratuity : exemption under Sec 10(10 ) -maximum Rs 10 lakhs . 2. Commutation of Pension : Section 10(10A ) provides that exemption as under : the entire commuted value of…

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CBDT enhances exemption to Gratuity upto Rs 10 lakh !

June 12, 2010 By taxworry 4 Comments

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Excerpt: CBDT has notified that employees  who  retire,  or become incapacitated before retirement, or expire, or whose services are terminated, on or after the 24th May 2010 will get exemption of ten lakh rupees as the maximum amount of gratuity entitled under sub-clause (iii) of clause (10) of section 10 of the Income Tax Act 1961. Read the press  release by CBDT below No.402/92/2006-MC (30 of 2010) Government of India / Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi the 11th June 2010 PRESS RELEASE The Central Board of Direct Taxes has approved notification of ten lakh rupees as the maximum amount of gratuity entitled…

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Why Is Company Deducting Tax Even Though Salary Payment Is Below Exemption Limit?

June 10, 2010 By taxworry 1 Comment

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Excerpt: TDS under sec 194 J @ 10% is deducted from the salary even though it is below the taxable slab (135000 for women). would that money be refunded when the person files IT Returns at the end of the FY. Her gross anual salary is Rs. 120000. and what actually is this sec 194J. Vivek Agarwal , Bangloare Dear reader, you should know that the company is not treating you an employee but actually as a professional. This is the fashion these days to protect themselves from many labour laws. The youngsters do not understand this when they are…

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Can you claim relief u/s 89 as well as exemption of Rs 5 Lakh from voluntary retirement compensation?

June 6, 2010 By taxworry Leave a Comment

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Excerpt: Under the voluntary retirement scheme, the retiree employee receives lump-sum amount which is tax exempt up to Rs 5 lakhs as per section 10(10C) of the I.T. Act. The lump-sum amount is in respect of his balance period of service. Such amount is in the nature of advance salary. Income tax Act has provision of income tax deduction u/s 89 to provide relief for higher taxation due to salary received in advance or arrear . The provision u/s 89 provides for backward spread of the arrears and forward spread of the advance. It was felt by government that some tax…

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Eight things you must know about (LTC) Leave Travel Concession Exemption

May 18, 2010 By taxworry Leave a Comment

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Excerpt: Exemption of income tax on salary can be claimed u/s 10(5) of the I T Act for the money received on account of Leave Travel Assistance . Therefore, employees receiveing LTC or LTA must know following eight points related to it , take the most benefit out of section 10(15) . 1. The assessee can claim exemption in respect of any two journeys in a block of 4 years. Current block is Calendar years 2010-2013 and previous block was  2006-09. 2. If the assessee has not availed of the exemption of LTC in a particular block, he can claim the exemption of…

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