No deduction of tax in certain cases

NOTIFICATION NO. 56/2012 [F. NO. 275/53/2012-IT(B)], DATED 31-12-2012

In exercise of the powers conferred by sub-section (1F) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, namely:-

(i)  bank guarantee commission;

(ii)  cash management service charges;

(iii)  depository charges on maintenance of DEMAT accounts;

(iv)  charges for warehousing services for commodities;

(v)  underwriting service charges;

(vi)  clearing charges (MICR charges);

(vii)  credit card or debit card commission for transaction between the merchant establishment and acquirer bank.

2. This notification shall come into force from the Ist day of January, 2013.

Correction in TDS Challan

 Correction in TDS Challan

 NSDL receives tax collection data as uploaded by the bank. NSDL is not authorized to carry out any changes in the data sent by the bank to TIN.

The fields that can be corrected by the Taxpayer through Bank are tabulated below:

Sl. No.              Type of Correction on Challan              Period for correction request (in days)

1                        PAN/TAN                                      Within 7 days from challan deposit date

2                        Assessment Year                          Within 7 days from challan deposit date

3                        Total Amount                                 Within 7 days from challan deposit date

4                        Major Head                                      Within 3 months from challan deposit date

5                        Minor Head                                      Within 3 months from challan deposit date

6                        Nature of Payment                         Within 3 months from challan deposit date

 

Note :

1.   Above correction mechanism is applicable only for physical challans with deposit date greater than equal to September 1,2011.

2.   Any correction request initiated by the taxpayer after the time limit specified above shall be rejected by Bank.

3.   For challans with challan deposit date from September 1, 2011 to September 30, 2011, the time limit for correction in TAN/PAN,       Assessment Year and Amount will be within 45 days from challan deposit date.
4.  The fields that can be corrected and the entity authorized to carry out corrections on challan with deposit date less than       September 1, 2011 are as below:

 

Sl. No.              Type of Correction on Challan              Performed By

1                        PAN/TAN                                                          Assessing Officer

2                        Assessment Year                                             Assessing Officer

3                        Major Head                                                       Assessing Officer /Bank

4                        Minor Head                                                       Assessing Officer

5                        Nature of Payment                                          Assessing Officer

6                        Total Amount                                                   Bank

7                        Name                                                                 Bank

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Issuance of TDS Certificates in Form No. 16A downloaded from TIN

As per CBDT circular no. 03/2011 dated May 13, 2011, TDSCertificates in Form No. 16A will be generated from Tax Information Network (TIN).It is mandatory for Companies and Banks to issue Form 16A from TIN to their deductees for deductions made from April 1, 2011 (F.Y.2011-12 onwards).

Deductors other than Company andBanks can also request Form 16A from TIN.

Form 16A is available for F.Y. 2010-11 also on the TINwebsite.

It is available to TANs registered at TIN website (www.tin-nsdl.com).

Register your TANonline at the TIN website now for Form 16A from TIN.

Brief procedure for receiving Form 16A from TIN website:

Login to TAN     Registration Account with user id, password and TAN.
Request Form 16A by carrying out verification by providing details of challan and deductees present in the TDS statement for     which Form 16A is requested.
Form 16A will be provided on successful verification.
Two attempts within a day for successful verification are provided.
On successful  verification, request number is generated and text file containing Form     16A details is e-mailed within 48 hours at the e-mail ID present in the  registered TAN account.
In case of large number of records multiple files of Form 16A are created and will be sent through     multiple emails.
Convert the text file to     Form 16A by passing the text file through the PDF Convertor Utility. The     utility is available to registered TAN post login.

 

CIRCULAR NO. 03 /2011

F. No 275/34/2011-( IT-B)
Government of India
Ministry of Finance

Department of Revenue

Central Board of Direct Taxes
New Delhi,

dated the 13th May, 2011

Subject: Issuance of TDS Certificates in Form No. 16A downloaded from TIN Website and option to authenticate the same by way of digital signature – Circular under section 119 of the Income-tax Act 1961.
Section 203 of the Income-tax Act 1961 (‘the Act’) read
with the Rule 31 of the Income-tax Rules 1962 (‘the IT Rules’) provides for
furnishing of certificate of tax deduction at source (TDS) by the deductor to
the deductee specifying therein the prescribed particulars like amount of TDS,
permanent account number (PAN), tax deduction and collection account number
(TAN), 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
provisions 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.

2. Currently, a deductor has an option to authenticate TDS
certificate in Form No.16 by using a digital signature. However, no such option
of using a digital signature is available to a deductor for issuing TDS
certificate in Form No.16A and it, therefore, needs to be authenticated by a
manual signature. The Central Board of Direct Taxes (the Board) has received
representations to allow the option of using digital signature for
authentication of TDS certificate in Form No.16A as issuance of TDS certificate
in Form No.16A by manual signature is very time consuming, specially for deductors
who are required to issue a large number of TDS certificates.

3. The Department has already enabled the online viewing
of Form No.26AS by deductees which contains TDS details of the deductee
based on the TDS statement (e-TDS statement)filed electronically by the
deductor. Ideally, there should not be any mismatch between the figures
reported in TDS certificate in Form No. 16A issued by the deductor and figures
contained in Form No.26AS which has been generated on the basis of e-TDS
statement filed by the deductor.
However, it has been found that in some cases the figures contained in Form No.26AS are different from the figures reported in Form No.16A. The gaps in Form No.26AS and TDS certificate in Form No. 16A arise mainly on account of wrong data entry by the deductor or non-filing of e-TDS statement by the deductor. As at present, the activity of issuance of Form No.16A is distinct and independent of filing of e-TDS statement, the chances of
mismatch between TDS certificate in Form No.16A and Form No.26AS cannot be
completely ruled out. To overcome the challenge of mismatch a common link has
now been created between the TDS certificate in Form No.16A and Form No.26AS
through a facility in the Tax Information Network website (TIN Website) which
will enable a deductor to download TDS certificate in Form No.16A from the TIN
Website based on the figures reported in e-TDS statement filed by him. As both
Form No.16A and Form No.26AS will be generated on the basis of figures reported
by the deductor in the e-TDS statement filed, the likelihood of mismatch
between Form No.16A and Form No.26AS will be completely eliminated.

4. In view of the above, for proper administration of the Act, the Board have,
in exercise of powers under section 119 of the Act, decided the following :-

4.1 ISSUE OF TDS CERTIFICATE IN FORM NO. 16A

(i) For deduction of tax at source made on or after 01/04/2011:

(a) The deductor, being a company including a banking
company to which the Banking Regulation Act,1949 applies and any bank or
banking institution, referred to in section 51 of that Act or a co-operative
society engaged in carrying the the business of banking, shall issue TDS
certificate in Form No.16A generated through TIN central system and which is
downloaded from the TIN Website with a unique TDS certificate number in respect
of all sums deducted on or after the 1st day of April, 2011 under any of the provisions
of Chapter-XVII-B other than section 192.
(b) The deductor, being a person other than the person referred
to in item (a)above, may, at his option, issue TDS Certificate in Form
No.16A generated through TIN central system and which is downloaded from the
TIN Website with a unique TDS certificate number in respect of all sums
deducted on or after the 1st day of April, 2011 under any provisions of
Chapter-XVII-B other than section 192.

(ii) For deduction of tax at source made during financial year 2010-11:

The deductor, may, at his option, issue the TDS
certificate in Form No.16A generated through TIN central system which is
downloaded from the TIN Website with a unique TDS certificate number in respect
of all sums deducted during the financial year 2010-11 under any of the
provisions of Chapter-XVII-B other than section 192.
4.2 AUTHENTICATION OF TDS CERTIFICATE IN FORM NO.16A

(i) The deductor, issuing the TDS certificate in Form No.16A by downloading from the TIN Website shall authenticate such TDS certificate by either using digital signature or manual signature

(ii) The deductor being a person other than a person referred to in item 4.1(i)(a) above and who do not issue the TDS Certificate in Form No.16A by downloading from the TIN Website shall continue to authenticate TDS certificate in From No.16A by manual signature only.

5. The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purpose of issuance of TDS certificate in Form No.16A which is downloaded from the TIN Website and shall be responsible for the day-to-day administration in relation to the procedure, formats and standards for issuance of TDS certificate in Form No.16A in electronic form.

6. It is further clarified that TDS certificate issued in Form No. 16A by the deductors covered by para 4.1(1)(a) in accordance with this circular and procedure, format and standards specified by the Director General of Income-tax (Systems) shall only be treated as a vilid TDS certificate in Form No. 16A for the purpose of section 203 of the Act read with Rule 31 of the IT Rules,1962.

7. Hindi version shall follow.

(AJAY KUMAR)

Director (Budget)

Tel.No.2309-2641

Copy to all CCsIT/ DsGIT for circulation

Clarification regarding processing of ITR-1 and ITR-2 returns

Section 143 of the Income-tax Act, 1961 – Assessment – General – Clarification regarding processing of ITR-1 and ITR-2 returns – Credit for tax deducted at source for A.Y. 2009-10

INSTRUCTION NO. 9/2010 [F. NO. 225/25/2010/IT (A-II)], DATED 9-12-2010

1. Reference may be made to Board’s Instruction No. 7, dated 16-8-2010 in which it has been stated, inter alia, that in cases where the return is filed in ITR-1 and ITR-2 for the A.Y. 2009-10, and where the TDS claim does not exceed Rs. three lakh and where the refund computed does not exceed Rs. Twenty five thousand, the TDS claim of the taxpayer shall be accepted at the time of processing of the returns provided the TDS payment reported in AS-26 is more than Rs. zero.

2. Board has reconsidered the above instruction and it has been decided to increase the limit of TDS claim from Rs. three lakh to Rs. four lakh as was applicable for the A.Y. 2008-09. It is further clarified that if the limit of Rs. four lakh, or Rs.25,000 is exceeded in case of a return filed in ITR-1 and ITR-2 or there is nil matching with AS-26 statement, the credit should be allowed by the Assessing Officer after make ‘due verification’. This verification may be done in the same manner as was being done in the earlier years.

3. This may be brought to the notice of all the Assessing Officers in your region for immediate compliance.

FORM 15CA & 15CB (REMITTANCES TO NON-RESIDENTS UNDER SECTION 195 OF THE INCOME-TAX ACT)

Section 195 of the Income-tax Act, 1961 mandates deduction of income-tax from payments made or credit given to non-residents at the rates in force. The person making the remittance to a non-resident needs to furnish an undertaking (in Form 15CA) accompanied by a Chartered Accountants Certificate in Form 15CB. The purpose of the undertaking and the certificate is to collect taxes at the stage when the remittance is made as it may not be possible to recover the tax at a later stage from non-residents.

What is Form 15CA?

Form 15CA is an undertaking by the remitter furnished in an electronic mode at the website of the Tax Information Network (http://www.tin-nsdl.com) giving details of the proposed remittance and tax deducted at source in accordance with the provisions of section 195(6) of the Income-tax Act, 1961.
This information should be furnished after obtaining a Certificate in Form 15CB from a Chartered Accountant. The print out of the Form 15CA (furnished online) should be signed by authorized signatory and submitted to the bank prior to remitting the payment along with certificate of a Chartered Accountant in duplicate in Form 15CB.
The fields marked with (*) are mandatory. Select the values from the drop down wherever provided. Each transaction detail should be filled in separately.

Guidelines in filling up form 15CA

The following guidelines may be kept in mind while furnishing Form 15CA

Remitter :

  • Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) allotted by the Income Tax Department should be mentioned. TAN is mandatory in cases where-

– tax has been deducted or will be deducted at source;

– the remitter has obtained an order under section 195(2) of the Income-tax Act from the Assessing Officer.

  • In case an invalid PAN and/or TAN is filled in by the remitter, the Form will not be generated.
  • In case the remitter does not have a TAN, it is mandatory to quote PAN of the remitter.
  • PAN of the remitter should invariably be given. However, the same is mandatory if status of entity is Company or Firm. If PAN is not given in such cases, the remitter will not be allowed to generate the Form.
  • Details in at least two address fields for remitter should be mentioned.
  • Name of the entity should be mentioned in the “Name of remitter” field.
  • No value is to be provided in Area code, AO type, Range code & AO number. The fields will be entered by the system after validating the PAN and/or TAN.
  • Email id and mobile no., if any, should be provided.

Recipient of remittance:

  • Complete address of recipient of remittance, separated by coma, should be provided.
  • PAN, allotted by the Indian Income Tax Department should be mentioned.
  • If status of entity is “company”, then provide type of company i.e., “domestic” or “other than domestic”.
  • In the field “Principal Place of Business”, the country of tax residence of the recipient of the remittance should be mentioned.

Information for accountant :

  • Enter name of the Chartered Accountant in the field “Name of the accountant”.
  • Details in at least two address fields should be mentioned.
  • Date of certificate should not be a future date.
  • Registration no. should be numeric.
  • Details of accountant are not required if point no.15 is selected i.e. any order u/s 195(2)/ 195(3)/ 197 of the Income-tax Act has been obtained from Assessing Officer.
  • Certificate number is an alphanumeric field.

Guidelines for Part B of the Form 15CA (Particulars of remittance and TDS) :

  • Provide the values as per the accountant certificate obtained in Form 15CB.
  • In case name of the country is not available in drop down list, select value “other” from the drop down and provide name of the country.
  • In case currency name is not available in drop down then select value ”other” from the drop down and provide name of the currency.
  • Proposed date of remittance should be current date or a future date.
  • Amount of TDS should be less than amount of remittance.
  • Actual amount of remittance after TDS should be less than amount of remittance.
  • BSR code of the bank through which the remittance is made should be mentioned.
  • Rate of TDS as per DTAA (if applicable) should be mentioned upto two decimal places.
  • Amount should be mentioned upto 2 decimal places.
  • Select any one out of fields 12, 13, 14 and 16. One form is to be filled for one type of remittance.
  • Details of “responsible person” should be mentioned for verification.
  • If no tax has been deducted then value “0.00” should be mentioned in “Amount of TDS” field (foreign currency and Indian Rupees.)
  • Value for “rate of deduction as per the Income-tax Act” should be “0.00” if no tax has been deducted and “amount of TDS in Indian and foreign currency” should be “0.00”.

Generation of Form 15CA :

  • After filling up the information, click “submit”. On submission of details if system shows any errors, rectify and re-submit the form.
  • A confirmation screen with all the data filled by the user will be displayed. The same can be either confirmed or edited.
  • On confirmation, a filled up Form 15CA with an acknowledgement number will be displayed. Print out of the Form should be taken, signed and submitted prior to remitting the payment.
  • Form 15CA can be re-printed by selecting the re-print option. For re-printing, please enter “acknowledgement no.”, “PAN” and/or “TAN” mentioned in the Form.

What is 15CB?

  • The person making the payment (remitter) needs to obtain a certificate from a Chartered Accountant in Form 15CB. The format of Form 15CB has been prescribed by Central Board of Direct Taxes (CBDT).

Common discrepancies noted while submitting Form 15CA and 15CB to the bank :

These are some of the common errors that could be avoided to ensure proper submission of these forms to the bank prior to making the remittance.

  • Form 15CA and/or 15CB is not provided prior to the proposed remittance.
  • Details stated in Form 15CA/ 15CB do not tally with each other or with the details in the A2 form and/or supporting documents.
  • Form 15CB is unsigned/ un-stamped : Form 15CB has to be signed and stamped by the Chartered Accountant clearly mentioning the registration number and certificate number.
  • Unsigned 15CA : The print out of the undertaking Form (i.e. Form 15CA) should be physically signed by the remitter.

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Income Tax refund without matching TDS upto 3 lakh -Fy 2009-10

As per new rule of Income tax ,Tds claimed in the income tax return must be matched with data uploaded by the Deductor and data posted in form 26AS(Pan ledger) .Due to these instruction ,many refund orders are pending without any fault of assessee. Moreover Income tax rule has not empower deductee to enforce deductor to file revised return or upload the original return so that mismatching can be removed. So department has issued a Internal Instruction to their officer to settle the small cases of refunds without matching the 100% tds details. New rules are reproduced hereunder.
Processing of returns of Assessment Year 2009-10 – Steps to clear backlog
Instruction No. 5/2010 [F.No.225/25/2010-ITA-II], dated 21-7-2010
The issue of processing of returns for Asst. year 2009-10 and giving credit for TDS has been considered by the Board. In order to clear the backlog of returns, the following decisions have been taken:

  1. In all the returns filed in ITR-1 and ITR-2, for the Asst. Year 2009-10, where the aggregate TDS claim does not exceed Rs. Three lakh (3 lacs) and where the refund computed does not exceed Rs. 25,000; the TDS claim of the tax payer shall be accepted at the time of processing of the return.
  2. In all the returns filed in forms other than ITR-1 and ITR -2, for the Asst. Year 2009-10, where the aggregate TDS claim does not exceed Rs. Three lakh (3 lacs) and the refund computed does not exceed Rs. 25,000 and there is 10% matching of TDS amount claimed, the TDS claim shall be accepted at the time of processing of the return.
  3. In all remaining cases, TDS credit shall be given after due verification.

CBDT AMENDS RULES RELATING TO TDS

The Central Board of Direct Taxes (CBDT) have amended the Rules relating to TDS provisions date and mode of payment of tax deducted at source (TDS), TDS certificate and filing of ‘statement of TDS’ (TDS return) vide Notification No.41/2010; SO No.1261(E) dated 31.05.2010.

The amended rules will apply only in respect of tax deducted on or after 1st day of April 2010.

Forms for TDS certificate have been revised to include the receipt number of the TDS return filed by the deductor. Now the Tax-deduction Account Number (TAN) of the deductor, Permanent Account Number (PAN) of the deductee, and Receipt number of TDS return filed by the deductor will form the unique identification for allowing tax credit claimed by the taxpayer in his income-tax return.

Government Authorities (Pay and Accounts Officer or Treasury Officer or Cheque Drawing and Disbursing Officer) responsible for crediting tax deducted at source to the credit of the Central Government by book-entry are now required to electronically file a monthly statement in a new Form No. 24G containing details of credit of TDS to the agency authorised by the Director General of Income-tax (Systems).

Due date for furnishing TDS return for the last quarter of the financial year has been modified to 15th May (from earlier 15th June). The revised due dates for furnishing TDS return are

Sl.No. Date of ending of the quarter of the f.y. Due date
1. 30th June 15th July of the financial year
2. 30th September 15th October of the financial year
3. 31st December 15th January of the financial year
4. 31st March 15th May of the financial year Immediately following the financial year in which deduction is made

Due date for furnishing TDS certificate to the employee or deductee or payee is revised as under

Sl.No. Category Periodicity of furnishing TDS certificate Due date
1. Salary (Form

No.16)

Annual By 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted

2. Non-Salary

(Form No.16A)

Quarterly Within fifteen days from the due date for

furnishing the ‘statement of TDS’

DSM/BY/GN

New TDS Rules

NEW TDS RULES NOTIFIED

Income-tax (First Amendment) Rules, 2010

Notification No. 9/2010/F.No. 142/27/2009-SO(TPL), dated 17-2-2010

In exercise of the powers conferred by section 295 of the Income-tax Act, 1961     (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1.                  (1)        These rules may be called Income-tax (First Amendment) Rules, 2010.

(2)   They shall come into force from the 1st day of April, 2009.

2.                  In the Income-tax Rules, 1962, –

(a)                for rules 30, 31 and 31A the following rules shall be substituted, namely:-

“Time and mode of payment to Government account of tax deducted at source or tax paid under sub-section (1A) of section 192.

30. (1) All sums deducted in accordance with the provisions of sections 192 to 194, section 194A, section 194B, section 194BB, section 194C, section 194D, section 194E, section 194EE, section 194F, section 194G, section 194H, section 194-I, section 194J, section 194K, section 194LA, section 195, section 196A, section 196B, section 196C and section 196D shall be paid to the credit of the Central Government—

(a) in the case of deduction by or on behalf of the Government, on the same day;

(b) in the case of deduction by or on behalf of persons other than those mentioned in clause (a),—

(i) in respect of sums deducted in accordance with the provisions of section 193, section 194A, section 194C, section 194D, section 194E, section 194G, section 194H, section 194-I, section 194J, section 195, section 196A, section 196B, section 196C and section 196D—

(1) where the income by way of interest on securities referred to in section 193 or the income by way of interest referred to in section 194A or the sum referred to in section 194C or the income by way of insurance commission referred to in section 194D or the payment to non-resident sportsmen or sports associations referred to in section 194E or the income by way of commission, remuneration or prize on sale of lottery tickets referred to in section 194G or the income by way of commission or brokerage referred to in section 194H or the income by way of rent referred to in section 194-I or the income by way of fees for professional or technical services referred to in section 194J or the interest or any other sum referred to in section 195 or the income of a foreign company referred to in sub-section (2) of section 196A or the income from units referred to in section 196B or the income from foreign currency bonds or shares of an Indian company referred to in section 196C or the income of Foreign Institutional Investors from securities referred to in section 196D is credited by a person to the account of the payee as on the date up to which the accounts of such person are made, within two months of the expiration of the month in which that date falls;

(2) in any other case, within one week from the last day of the month in which the deduction is made; and

(ii) in respect of sums deducted in accordance with the other provisions within one week from the last day of the month in which the deduction is made:

Provided that the Assessing Officer may, in special cases, and with the approval of the Joint Commissioner—

(a) in cases falling under sub-clause (i), permit any person to pay the income-tax deducted from any income by way of interest, other than income by way of interest on securities or any income by way of insurance commission or any income by way of commission or brokerage referred to in section 194H quarterly on July 15, October 15, January 15 and April 15; and

(b) in cases falling under sub-clause (ii), permit an employer to pay income-tax deducted from any income chargeable under the head “Salaries” quarterly on June 15, September 15, December 15 and March 15.

(1A) All sums paid under sub-section (1A) of section 192 shall be paid to the credit of the Central Government—

(a) in the case of payment on behalf of the Government, on the same day;

(b) in all other cases, within one week from the last day of each month on which the income-tax is due under sub-section (1B) of section 192.

(2) The person responsible for making the deduction from any income chargeable under the head “Salaries” or, the person who pays tax, referred to in sub-section (1A) of section 192 or, in cases covered by sub-section (5) of section 192, the trustees shall pay the amount of tax so deducted to the credit of the Central Government by remitting it within the time prescribed in sub-rule (1) into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank accompanied by an income-tax challan  :

Provided that where the deduction or payment, as the case may be, is made by or on behalf of Government, the amounts shall be credited within the time and in the manner aforesaid without the production of a challan.

(3) The person responsible for making deduction under sections 193, 194, 194A, 194B, 194BB, 194C, 194D, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194K, 195, 196A , 196B , 196C and 196D shall pay the amount of tax so deducted to the credit of the Central Government by remitting it within the time prescribed in sub-rule (1) into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank accompanied by an income-tax challan, provided that where the deduction is made by or on behalf of Government the amount shall be credited within the time and in the manner aforesaid without the production of a challan.

Certificate of tax deducted at source or tax paid under sub-section (1A) of section 192.

31. (1) The certificate of deduction of tax at source or, the certificate of payment of tax by the employer on behalf of the employee, under section 203 to be furnished by any person deducting tax in accordance with the provisions of—

(a) section 192 shall be in Form No. 16 :

Provided that in the case of an individual, resident in India, where his income from salaries before allowing deductions under section 16 of the Income-tax Act, 1961 does not exceed rupees one lakh fifty thousand, the certificate of deduction of tax at source shall be in Form No. 16AA;

(b)               section 193, section 194, section 194A, section 194B, section 194BB, section 194C, section 194D, section 194E, section 194EE, section 194F, section 194G, section 194-I, section 194J, section 194K,section 194LA, section 195, section 196A, section 196B, section 196C and section 196D shall be in Form No. 16A.

(2) The certificate mentioned in sub-rule (1) shall be furnished within a period of one month from the end of the month during which the credit has been given or the sums have been paid or, as the case may be, a cheque or warrant for payment of any dividend has been issued to a shareholder:

Provided that where the income by way of interest on securities referred to in section 193 or the income by way of interest referred to in section 194A or the sum referred to in section 194C or the income by way of insurance commission referred to in section 194D or the payment to non-resident sportsmen or sports associations referred to in section 194E or the income by way of commission, remuneration or prize on sale of lottery tickets referred to in section 194G or the income by way of commission or brokerage referred to in section 194H or the income by way of rent referred to in section 194-I or the income by way of fees for professional or technical services referred to in section 194J or the interest or any other sum referred to in section 195 or the income of a foreign company referred to in  sub-section (2) of section 196A or the income from units referred to in section 196B or the income from foreign currency bonds or shares of an Indian company referred to in section 196C or the income of Foreign Institutional Investors from securities referred to in section 196D is credited by a person to the account of the payee as on the date up to which the account of such person are made, the certificate under sub-rule (1) shall be issued within a week after the expiry of two months from the month in which income is so credited :

Provided further that the certificate in the case of deduction of tax under sub-section (1) of section 192  or, payment of tax by the employer on behalf of the employee, under sub-section (1A) of that section or section 194D may be furnished within one month from the close of the financial year in which such deduction was made :

Provided also that the certificate in cases, other than those mentioned in the second proviso, where payment of income-tax deducted is permitted quarterly in accordance with clause (a) of the proviso to clause (b) of sub-rule (1) of rule 30 may be furnished within fourteen days from the date of payment of income- tax:

Provided also that where more than one certificate is required to be furnished to a payee for deductions of income-tax made during a financial year, the person deducting the tax, may on request from such payee, issue within one month from the close of such financial year a consolidated certificate in Form No. 16A for tax deducted during whole of such financial year.

(3) Where in a case, the TDS certificate issued under this rule is lost, the person deducting tax at source may issue a duplicate certificate of deduction of tax at source on a plain paper giving necessary details as contained in Form No. 16 or Form No. 16A , as the case may be.

(4) The Assessing Officer before giving credit for the tax deducted at source on the basis of duplicate certificate referred to in sub-rule (3), shall get the payment certified from the Assessing Officer designated in this behalf by the Chief Commissioner or the Commissioner and shall also obtain an Indemnity Bond from the assessee.

Quarterly statement of deduction of tax under sub-section (3) of section 200.

31A.(1) Every person, being a person responsible for deducting tax under Chapter XVII-B shall, in accordance with the provisions of sub-section (3) of section 200, deliver or cause to be delivered to the Director-General of Income-tax (Systems) or the person authorized by the Director General of Income-tax (Systems), quarterly statement—

(i) in Form No. 24Q in respect of deduction of tax at source under sub-sections (1) and (1A) of section 192; and

(ii) in Form No. 26Q in respect of other cases of deduction of tax at  source,

on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year and on or before the 15th June following the last quarter of the financial year :

Provided that where,—

(a)  the deductor is an office of Government; or

(b) the deductor is a company; or

(c ) the deductor is a person required to get his accounts audited under section 44AB in the immediately preceding financial year; or

(d) the number of deductees’ records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty,

the person responsible for deducting tax at source, and the principal officer in  the case of a company shall deliver or cause to be delivered such quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD-ROM of 650 MB capacity):

Provided further that a person other than a person referred to in the first proviso, responsible for deducting tax at source, may at his option, deliver or cause to be delivered the quarterly statements on computer media (3.5 1.44 MB floppy diskette or CD-ROM of 650 MB capacity):

Provided also that a person responsible for deducting tax at source from the payments referred to in rule 37A shall furnish quarterly statements in accordance with the provisions of rule 37A and rule 37B.

(2) The person responsible for deducting tax at source and preparing quarterly statements shall,—

(i) quote his tax deduction and collection account number (TAN) and permanent account number (PAN) in the quarterly statement:

Provided that the permanent account number shall not be required to be quoted where tax has been deducted by or on behalf of the Government;

(ii) quote the permanent account number of all persons in respect of whose income, tax has been deducted:

Provided that the permanent account number shall not be quoted in respect of the persons to whom the second proviso to sub-section (5B) of section 139A of the Act applies;

(iii) furnish particulars of the tax paid to the Central Government.

(3) The person responsible for deducting tax at source and preparing quarterly statements on computer media shall, in addition to the provisions in sub-rule  (2),—

(i) prepare the quarterly statement as per the data structure provided by the e-filing Administrator designated by the Board for the purposes of administration of Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003 supported by a declaration in Form No. 27A in paper format:

Provided that in case any compression software has been used for preparing the quarterly statement on computer media, such compression software shall be furnished on the same computer media;

(ii) affix a label indicating name, permanent account number, tax deduction and collection account number and address of the person responsible for deduction of tax at source, the period to which the statement pertains and the volume number of the said computer media in case more than one volume of such media is used”.

(b)         after rule 31A the following rule shall be inserted, namely:-

“Quarterly statement of collection of tax under sub-section (3) of section 206C.

31AA. (1) Every person, being a person responsible for collecting tax under section 206C shall, in accordance with the proviso to sub-section (3) of section 206C, deliver or cause to be delivered to the Director-General of Income-tax (Systems) or the person authorized by the Director General of Income-tax (Systems), quarterly statement in Form No. 27EQ on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year and on or before the 30th April following the last quarter of the financial year :

Provided that where,—

(a) the collector is an office of Government; or

(b) the collector is a company; or

(c) the collector is a person required to get his accounts audited under section 44AB in the immediately preceding financial year; or

(d) the number of collectees’ records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty,

the person responsible for collecting tax at source, and the principal officer in the case of a company shall deliver or cause to be delivered such quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD-ROM of 650 MB capacity):

Provided further that a person other than a person referred to in the first proviso, responsible for collecting tax at source, may at his option, deliver or cause to be delivered the quarterly statements on computer media (3.5 1.44 MB floppy diskette or CD-ROM of 650 MB capacity).

(2) The person responsible for collecting tax at source and preparing quarterly statements shall,—

(i) quote his tax deduction and collection account number (TAN) and permanent account number (PAN) in the quarterly statement:

Provided that the permanent account number shall not be required to be quoted where tax has been collected by or on behalf of the Government;

(ii) quote the permanent account number of all persons in respect of whose income, tax has been collected;

(iii) furnish particulars of the tax paid to the Central Government.

(3) The person responsible for collecting tax at source and preparing quarterly statements on computer media shall, in addition to the provisions in sub-rule  (2),—

(i) prepare the quarterly statement as per the data structure provided by the e-filing Administrator designated by the Board for the purposes of administration of Electronic Filing of Returns of Tax Collected at Source Scheme, 2005 supported by a declaration in Form No. 27B in paper format:

Provided that in case any compression software has been used for preparing the quarterly statement on computer media, such compression software shall be furnished on the same computer media;

(ii)                affix a label indicating name, permanent account number, tax deduction and collection account number and address of the person responsible for collection of tax at source, the period to which the statement pertains and the volume number of the said computer media in case more than one volume of such media is used.”

(c)          after rule 37 the following rule shall be inserted, namely:-

“Returns regarding tax deducted at source in the case of non-residents.

37A. The person making deduction of tax in accordance with sections 193, 194, 194E, 195, 196A, 196B, 196C and 196D of the Act from any payment made to—

(i) a person, not being a company, who is a non-resident or a resident but not ordinarily resident, or

(ii) a company which is neither an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India ;

shall send within fourteen days from the end of the quarter a statement in Form No. 27Q to the Director General of Income-tax (Systems) or the person or agency authorized by the Director General of Income-tax (Systems) referred to in rule 36A :

Provided that where the income by way of interest on securities referred to in section 193 or the payment to non-resident sportsmen or sports associations referred to in section 194E or the interest or any other sum referred to in section 195 or the income of a foreign company referred to in sub-section (2) of section 196A or the income from units referred to in section 196B or the income from foreign currency bonds or shares of an Indian company referred to in section 196C or the income of Foreign Institutional Investors from securities referred to in section 196D is credited by a person to the account of the payee as on the date up to which the accounts of such person are made, the statement in Form No. 27Q shall be sent within fourteen days after the expiry of two months from the month in which income is so credited.”

(d) for rules 37CA and 37D the following rules shall be substituted, namely:-

“Time and mode of payment to Government account of tax collected at source under section 206C.

37CA. (1) All sums collected in accordance with the provisions of sub-section (1) or sub-section (1C) of section 206C shall be paid to the credit of the Central Government within one week from the last day of the month in which the collection is made.

(2) The person responsible for making collection under sub-section (1) or sub-section (1C) of section 206C shall pay the amount of tax so collected to the credit of the Central Government by remitting it within the time prescribed in sub-rule (1) into any branch of the Reserve Bank of India or of the State Bank of India or of any authorized bank accompanied by an income-tax challan:

Provided that where the collection is made by or on behalf of the Government, the amount shall be credited within the time and in the manner aforesaid without the production of a challan.

Certificate for collection of tax at source under section 206C (5).

37D. (1) The certificate of collection of tax at source under sub-section (5) of section 206C to be furnished by any person collecting tax at source under sub-section (1) or sub-section (1C) of that section shall be inForm No. 27D.

(2) The certificate referred to in sub-rule (1) shall be furnished within a period of one month from the end of the month during which the amount is debited to the account of the buyer or licensee or lessee or payment is received from the buyer or licensee or lessee, as the case may be:

Provided that where more than one certificate is required to be furnished to a buyer or licensee or lessee for tax collected at source in respect of the period ending on the 30th September and the 31st March in each financial year, the person collecting the tax, may on request from such buyer or licensee or lessee , issue within one month from the end of such period, a consolidated certificate in Form No. 27D for tax collected during whole of such period.

(3) Where in a case, the certificate for tax collected at source issued under this rule is lost, the person collecting tax at source may issue a duplicate certificate of collection of tax at source on a plain paper giving necessary details as contained in Form No. 27D.

(4) The Assessing Officer before giving credit for the tax collected at source on the basis of duplicate certificate referred to in sub-rule (3), shall get the payment certified from the Assessing Officer designated in this behalf by the Chief Commissioner or Commissioner and shall also obtain an Indemnity Bond from the assessee. ”;

(e)        for Form No.16 and Form no. 16A the following forms shall be substituted, namely:-

TDS on Salary during the year 2009-2010 circular

DEDUCTION OF TAX AT SOURCE —INCOME–TAX DEDUCTION FROM SALARIES UNDER SECTION 192 OF THE INCOME–TAX ACT, 1961 DURING THE FINANCIAL YEAR 2009-2010
CIRCULAR NO.1/2010
F.No.275/192/2009IT(B)]
NEW DELHI, dated the 11th January,2010

GOVERNMENT OF INDIA  MINISTRY OF FINANCE  DEPARTMENT OF REVENUE  CENTRAL BOARD OF DIRECT TAXES  DEDUCTION OF TAX AT SOURCE —INCOME–TAX DEDUCTION FROM SALARIESUNDER SECTION 192 OF THEINCOME–TAX ACT, 1961DURING THE FINANCIAL YEAR 2009-2010CIRCULAR NO.1/2010F.No.275/192/2009IT(B)]NEW DELHI, dated the 11th January,2010

Please download circular from below link

Circular on TDS on Salary

CBDT Notification on TDS on perquisites

Notification No. 94/2009

Dated 18-12-2009

In exercise of the powers conferred by section 295 read with sub-section (2) of section 17 of theIncome-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (13th Amendment) Rules, 2009.

(2) They shall be deemed to have come into force on the 1st day of April, 2009.

2. In the Income-tax Rules, 1962, for rule 3, the following shall be substituted, namely:-

3. For the purpose of computing the income chargeable under the head Salaries, the value of perquisites provided by the employer directly or indirectly to the assessee (hereinafter referred to as employee) or to any member of his household by reason of his employment shall be determined in accordance with the following sub-rules, namely:-

(1) The value of residential accommodation provided by the employer during the previous year shall be determined on the basis provided in the Table below:

TABLE I

Sl.

No.

Circumstances Where accommodation is unfurnished Where accommodation is furnished
(1) (2) (3) (4)
(1) Where the accommodation is provided by the Central Government or any State Government to the employees either holding office or post in connection with the affairs of the Union or of such State. License fee determined by the Central Government or any State Government in respect of accommodation in accordance with the rules framed by such Government as reduced by the rent actually paid by the employee. The value of perquisite as determined under column (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 if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for he same by the employee during the previous year.
(2) Where the accommodation is provided by any other employer and

(a) where the accommodation is owned by the employer, or

(i) 15% of salary in cities having population exceeding 25 lakhs as per 2001 census;

(ii) 10% of salary in cities having population exceeding 10 lakhs 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.

The value of perquisites as determined under column (3) and increased by 10% per annum of the cost of furniture (including television 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.
(b) where the accommodation is taken on lease or rent by the employer. Actual amount of lease rental paid or payable by the employer 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 column (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.
(3) Where the accommodation is provided by the employer specified in serial number (1) or (2) in a hotel (except where the employee is provided such accommodation for a period not exceeding in aggregate fifteen days on his transfer from one place to another) Not applicable 24% of salary paid or payable for the previous year or the actual charges paid or payable to such 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:

Provided that nothing contained in this sub-rule shall apply to any accommodation provided to an employee working at a mining site or an on-shore oil exploration site or a project execution site, or a dam site or a power generation site or an off-shore site-

(i) which, being of a temporary nature and having plinth area not exceeding 800 square feet, is located not less than eight kilometers away from the local limits of any municipality or a cantonment board; or

(ii) which is located in a remote area:

Provided further that where on account of his 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 with reference to the Table above for a period not exceeding 90 days and thereafter the value of perquisite shall be charged for both such accommodations in accordance with the Table.

Explanation.- For the purposes of this sub-rule, where the accommodation is provided by the Central Government or any State Government to an employee who is serving on deputation with any body or undertaking under the control of such Government,-

(i) the employer of such an employee shall be deemed to be that body or undertaking where the employee is serving on deputation; and

(ii) the value of perquisite of such an accommodation shall be the amount calculated in accordance with Sl. No. (2)(a) of Table I, as if the accommodation is owned by the employer.

(2) (A) The value of perquisite by way of use of motor car to an employee by an employer shall be determined in accordance with the following Table, namely:-

TABLE II

VALUE OF PERQUISITE PER CALENDAR MONTH

Sl.

No.

Circumstances Where cubic capacity of engine does not exceed 1.6 litres Where cubic capacity of engine exceeds 1.6 litres
(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; No value:

Providedthat the documents specified in clause (B) of this sub-rule are maintained by the employer.

No value:

Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

(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; Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged form the employee for such use. Actual amount of expenditure incurred by the employer on the running and maintenance of motor car during the relevant previous year including remuneration, if any, paid by the employer to the chauffeur as increased by the amount representing normal wear and tear of the motor car and as reduced by any amount charged form the employee for such use.
(c) 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 to run the motor car) Rs. 2,400 (plus Rs. 900, if chauffeur is also provided to run the motor car)
(ii) the expenses on running and maintenance for private or personal use are fully met by the assessee. Rs. 600 (plus Rs.900, if chauffeur is also provided by the employer to run the motor car) Rs. 900 (plus Rs. 900, if chauffeur is also provided to run the motor car)
(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.

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

Provided that the documents specified in clause (B) of this sub-rule are maintained by the employer.

Not applicable.
(ii) such reimbursement is for the use of 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 the amount of Rs. 900.

Provided that where one 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 of 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 in accordance with Sl. No. (1)(c)(i) of Table II 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 II as if he had been provided with such car exclusively for his private or personal purposes.

(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(ii) of Table II, 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 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.

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.

(3) The value of benefit to the employee or any member of his household resulting from the provision by the employer or services of a sweeper, a gardener, a watchman or a personal attendant, shall be the actual cost to the employer. The actual cost in such a case shall be the total amount of salary paid or payable by the employer or any other person on his behalf for such services as reduced by any amount paid by the employee for such services.

(4) The value of the benefit to the employee resulting from the supply of gas, electric energy or water for his household consumption shall be determined as the sum equal to the amount paid on that account by the employer to the agency supplying the gas, electric energy or water. Where such supply is made from resources owned by the employer, without purchasing them from any other outside agency, the value of perquisite would be the manufacturing cost per unit incurred by the employer. Where the employee is paying any amount in respect of such services, the amount so paid shall be deducted from the value so arrived at.

(5) The value of benefit to the employee resulting from the provision of free or concessional educational facilities for any member of his household shall be determined as the sum equal to the amount of expenditure incurred by the employer in that behalf or where the educational institution is itself maintained and owned by the employer or where free educational facilities for such member of employees household are allowed in any other educational institution by reason of his being in employment of that employer, the value of the perquisite to the employee shall be determined with reference to the cost of such education in a similar institution in or near the locality. Where any amount is paid or recovered from the employee on that account, the value of benefit shall be reduced by the amount so paid or recovered:

Provided that where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, nothing contained in this sub-rule shall apply if the cost of such education or the value of such benefit per child does not exceed one thousand rupees per month.

(6) The value of any benefit or amenity resulting from the provision by an employer who is engaged in the carriage of passengers or goods, to any employee or to any member of his household for personal or private journey free of cost or at concessional fare, in any conveyance owned, leased or made available by any other arrangement by such employer for the purpose of transport of passengers or goods shall be taken to be the value at which such benefit or amenity is offered by such employer to the public as reduced by the amount, if any, paid by or recovered from the employee for such benefit or amenity:

Provided that nothing contained in this sub-rule shall apply to the employees of an airline or the railways.

(7) In terms of provisions contained in clause (viii) of sub-section (2) of section 17, the following other benefits or amenities and value thereof shall be determined in the manner provided hereunder:

(i) The value of the benefit to the assessee resulting from the provision of interest-free or concessional loan for any purpose made available to the employee or any member of his household during the relevant previous year by the employer or any person on his behalf shall be determined as the sum equal to the interest computed at the rate charged per annum by the State Bank of India, constituted under the State Bank of India Act, 1955 (23 of 1955), as on the 1st day of the relevant previous year in respect of loans for the same purpose advanced by it on the maximum outstanding monthly balance as reduced by the interest, if any, actually paid by him or any such member of his household:

Provided that no value would be charged if such loans are made available for medical treatment in respect of diseases specified in rule 3A of these Rules or where the amount of loans are petty not exceeding in the aggregate twenty thousand rupees:

Provided further that where the benefit relates to the loans made available for medical treatment referred to above, the exemption so provided shall not apply to so much of the loan as has been reimbursed to the employee under any medical insurance scheme.

(ii) The value of travelling, touring, accommodation and any other expenses paid for or borne or reimbursed by the employer for any holiday availed of by the employee or any member of his household, other than concession or assistance referred to in rule 2B of these rules, shall be determined as the sum equal to the amount of the expenditure incurred by such employer in that behalf. Where such facility is maintained by the employer, and is not available uniformly to all employees, the value of benefit shall be taken to be the value at which such facilities are offered by other agencies to the public. Where the employee is on official tour and the expenses are incurred in respect of any member of his household accompanying him, the amount of expenditure so incurred shall also be a fringe benefit or amenity:

Provided that where any official tour is extended as a vacation, the value of such fringe benefit shall be limited to the expenses incurred in relation to such extended period of stay or vacation. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity.

(iii) The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity:

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 either case does not exceed fifty rupees 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.

(iv) The value of any gift, 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:

Provided that where the value of such gift, voucher or token, as the case may be, is below five thousand rupees in the aggregate during the previous year, the value of perquisite shall be taken as nil.

(v) The amount of expenses including membership fees and annual fees incurred by the employee or any member of his household, which is charged to a credit care (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 as reduced by the amount, if any paid or recovered from the employee for such benefit or amenity:

Provided that there shall be no value of such benefit where 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.

(vi) (A) The value of benefit to the employee resulting from the 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 an 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:

Provided that 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.

(B) 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 employees by the employer.

(vii) The value of benefit to the employee resulting from the use by the employee or any member of his household of any movable asset (other than assets already specified in this rule and other than laptops and computers) belonging to the employer or hired by him shall be determined at 10% per annum of the actual cost of such asset or the amount of rent or charge paid or payable by the employer, as the case may be, as reduced by the amount, if any, paid or recovered from the employee for such use.

(viii) The value of benefit to the employee arising from the transfer of any movable asset belonging to the employer directly or indirectly to the employee or any member of his household shall be determined to be the amount representing the actual cost of such assets to the employer as reduced by the cost of normal wear and tear calculated at the rate of 10% of such cost for each completed year during which such asset was put to use by the employer and as further reduced by the amount, if any, paid or recovered from the employee being the consideration for such transfer:

Provided that in the case of computers and electronic items, the normal wear and tear would be calculated at the rate of 50% and in the case of motor cars at the rate of 20% by the reducing balance method.

(ix) The value of any other benefit or amenity, service, right or privilege provided by the employer shall be determined on the basis of cost to the employer under an arms length transaction as reduced by the employees contribution, if any:

Provided that nothing contained in this clause shall apply to the expenses on telephones including a mobile phone actually incurred on behalf of the employee by the employer.

(8)(i) For the purposes of clause (vi) of sub-section (2) of section 17, the fair market value of any specified security or sweat equity share, being an equity share in a company, on the date on which the option is exercised by the employee, shall be determined in accordance with the provisions of clause (ii) or clause (iii).

(ii) In a case where, on the date of the exercising of the option, the share in the company is listed on a recognized stock exchange, the fair market value shall be the average of the opening price and closing price of the share on that date on the said stock exchange:

Provided that where, on the date of exercising of the option, the share is listed on more than one recognized stock exchanges, the fair market value shall be the average of opening price and closing price of the share on the recognised stock exchange which records the highest volume of trading in the share:

Provided further that where, on the date of exercising of the option, there is no trading in the share on any recognized stock exchange, the fair market value shall be

(a) the closing price of the share on any recognised stock exchange on a date closest to the date of exercising of the option and immediately preceding such date; or

(b) the closing price of the share on a recognised stock exchange, which records the highest volume of trading in such share, if the closing price, as on the date closest to the date of exercising of the option and immediately preceding such date, is recorded on more than one recognized stock exchange.

(iii) In a case where, on the date of exercising of the option, the share in the company is not listed on a recognised stock exchange, the fair market value shall be such value of the share in the company as determined by a merchant banker on the specified date.

(iv) For the purpose of this sub-rule,

(a) closing price of a share on a recognised stock exchange on a date shall be the price of the last settlement on such date on such stock exchange:

Provided that where the stock exchange quotes both buy and sell prices, the closing price shall be the sell price of the last settlement.

(b) merchant banker means category I merchant banker registered with Security and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);

(c) opening price of a share on a recognised stock exchange on a date shall be the price of the first settlement on such date on such stock exchange:

Provided that where the stock exchange quotes both buy and sell prices, the opening price shall be the sell price of the first settlement.

(d) recognised stock exchange shall have the same meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956);

(e) specified date means,

(i) the date of exercising of the option; or

(ii) any date earlier than the date of the exercising of the option, not being a date which is more than 180 days earlier than the date of the exercising.

(9) For the purposes of clause (vi) of sub-section (2) of section 17, the fair market value of any specified security, not being an equity share in a company, on the date on which the option is exercised by the employee, shall be such value as determined by a merchant banker on the specified date.

Explanation. – For the purposes of this sub-rule, merchant banker and specified date shall have the meanings assigned to them in sub-clause (b) and sub-clause (e) respectively of clause (iv) of sub-rule (8).

(10) This rule shall come into force with effect from the 1st day of April, 2009.

Explanation.- For the purposes of this rule-

(i) accommodation includes a house, flat, farm house or part thereof, or accommodation in a hotel, motel, service apartment, guest house, caravan, mobile home, ship or other floating structure;

(ii) entertainment includes hospitality of any kind and also, expenditure on business gifts other than free samples of the employers own product with the aim of advertising to the general public;

(iii) hotel includes licensed accommodation in the nature of motel, service apartment or guest house;

(iv) member of household shall include-

(a) spouse(s),

(b) children and their spouses,

(c) parents, and

(d) servants and dependants;

(v) remote area, for purposes of proviso to this sub-rule means an area that is located at least 40 kilometres away from a town having a population not exceeding 20,000 based on latest published all-India census;

(vi) salary includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, by whatever name called from one or more employers, as the case may be, but does not include the following, namely:-

(a) dearness allowance or dearness pay unless it enters into the computation of superannuation or retirement benefits of the employee concerned;

(b) employers contribution to the provident fund account of the employee;

(c) allowances which are exempted from payment of tax;

(d) the value of perquisites specified in clause (2) of section 17 of the Income-tax Act;

(e) any payment or expenditure specifically excluded under proviso to sub-clause (iii) of clause (2) or proviso to clause (2) of section 17;

(f) lump-sum payments received at the time of termination of service or superannuation or voluntary retirement, like gratuity, severance pay, leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments;

(vii) maximum outstanding monthly balance means the aggregate outstanding balance for each loan as on the last day of each month.

3. After rule 40E of the Income-tax Rules, the following rule shall be inserted, namely:-

40F. Nothing contained in this Part, shall apply, in respect of any assessment for the assessment year commencing on the 1st day of April, 2010 or any subsequent assessment year.

Note :- The principal rules were published vide notification No. S.O. 969(E) dated the 26th March, 1962 and last amended by Income-tax (12th Amendment) Rules, 2009 vide notification No. S.O. 2227(E), dated 02-09-2009.

F.No.142/25/2009-S O (TPL)