Form 16

Salary employee gets the salary after deducting TDS (Tax Deduction at Source). The tax
is deducted by the employer. The employer deducts the TDS from the employee salary
and submits to the banks for payment of TDS. Income tax department issued every TDS
deduct or Tax Identification number (TIN). This is the duty of the TDS deduct or on
behalf of the employee whose salary is deducted, to fill form 16 for each employees
whose salary is deducted TDS. In this form all the details like every month salary, salary
deducted and salary paid should be submitted. Company, the deductor, need to pay every
employee details separately. Form 16 is also very much needed for the employees point
of view as any employee need form 16 to submit his/her income tax return. If any
employee works two or three places, and TDS deducted from each place, he/she need to
submit all the form 16 from each employer to submit income tax return. There are some
points for form 16.

1- No Form 16 is required to be issued if TDS is not deducted from the salary.

2- If TDS is deducted by banks to the pension holder, banks also need to issue Form 16.

3- These certificate need to give with in one month from the end of financial year it
means 30-04-2010.

4- If the salary is more than 150000 rupees the employer also need to furnish Form 12BA
for stating all the perks and allowances given to the employer.

5- Employer can sign digital on Form 16 as per circular 2/2007 dated 21-05-2007.

6- There is a penalty of rupees 100 daily for non submitting form 16 on time, without
good reason, and the plenty cant be more than total amount of TDS deducted.

7- If the original form 16 is lost, the deductor can submit the details on plain paper to the
department.

What is Form 16?

It is a certificate issued to you by your employer stating the details of the salary you have earned
and the tax deducted on your behalf and paid to the government.

If you are an employee of the company (which means you are on the company's payroll), you
should receive your Form 16 by April 30 every year
The government encourages certain types of savings mostly, long term savings for your
retirement and therefore, offers you tax breaks on such savings.

Sec 80C of the Income Tax Act is the section that deals with these tax breaks. It states
that qualifying investments, up to a maximum of Rs. 1 Lakh, are deductible from your
income. This means that your income gets reduced by this investment amount (up to Rs.
1 Lakh), and you end up paying no tax on it at all!

Qualifying Investments

Provident Fund (PF): The payments that you make to your PF are counted
towards Sec 80C investments. For most of you who are salaried, this amount gets
automatically deducted from your salary every month.

Thus, its not just compulsory savings for your future, but also immediate tax
savings!

Voluntary Provident Fund (VPF): If you increase your PF contribution over

and above the statutory limit (as deducted compulsorily by your employer), even
this amount qualifies for deduction under section 80C.
Public Provident Fund (PPF): If you have a PPF account, and invest in it, that
amount can be included in Sec 80C deduction. The minimum and maximum
allowed investments in PPF are Rs. 500 and Rs. 70,000 per year respectively.

Life Insurance Premiums: Any amount that you pay towards life insurance
premium for yourself, your spouse or your children can also be included in
Section 80C deduction.

Please note that life insurance premium paid by you for your parents (father /
mother / both) or your in-laws is not eligible for deduction under section 80C.

If you are paying premium for more than one insurance policy, all the premiums
can be included.

It is not necessary to have the insurance policy from Life Insurance Corporation (LIC)
even insurance bought from private players can be considered here.

Equity Linked Savings Scheme (ELSS): There are some mutual fund (MF)
schemes specially created for offering you tax savings, and these are called Equity
Linked Savings Scheme, or ELSS. The investments that you make in ELSS are
eligible for deduction under Sec 80C.

Home Loan Principal Repayment: The Equated Monthly Installment (EMI) that
you pay every month to repay your home loan consists of two components
Principal and Interest.

The principal component of the EMI qualifies for deduction under Sec 80C.
Even the interest component can save you significant income tax but that would be
under Section 24 of the Income Tax Act

Stamp Duty and Registration Charges for a home: The amount you pay as
stamp duty when you buy a house, and the amount you pay for the registration of
the documents of the house can be claimed as deduction under section 80C in the
year of purchase of the house.
National Savings Certificate (NSC): The amount that you invest in National
Savings Certificate (NSC) can be included in Sec 80C deductions.
Infrastructure Bonds: These are also popularly called Infra Bonds. These are
issued by infrastructure companies, and not the government. The amount that you
invest in these bonds can also be included in Sec 80C deductions.
Pension Funds Section 80CCC: This section Sec 80CCC stipulates that an
investment in pension funds is eligible for deduction from your income. Section
80CCC investment limit is clubbed with the limit of Section 80C - it maeans that
the total deduction available for 80CCC and 80C is Rs. 1 Lakh.

This also means that your investment in pension funds upto Rs. 1 Lakh can be
claimed as deduction u/s 80CCC. However, as mentioned earlier, the total
deduction u/s 80C and 80CCC can not exceed Rs. 1 Lakh.

Bank Fixed Deposits: This is a newly introduced investment class under Section
80C. Bank fixed deposits (also called term deposits) having a maturity of 5 years
or more can be included in your Sec 80C investment.

Senior Citizen Savings Scheme (SCSS): SCSS is a deposit scheme specially meant for
elderly citizens

Post Office Time Deposit Account: This is the fixed / term deposits offered by
the Department of Posts (Government of India) through the post offices in India.

If the time deposit is opened for a duration of 5 years or more, the amount
invested is qualified for deduction under section 80C.

Others: Apart form the major avenues listed above, there are some other things,
like childrens education expense (for which you need receipts), that can be
claimed as deductions under Sec 80C.

Lets say you are a male with an income of Rs. 2,50,000 for the year.

Your employer has deducted Rs. 24,000 as PF. You have no housing loan, but have
purchased NSC worth Rs. 10,000.
Thus, your total qualifying investments under Sec 80C are Rs. 34,000. Since this is less
than Rs. 1 Lakh, this is the amount that would get deducted from your income. Thus, you
would have to pay tax on Rs. 2,16,000.

The tax on Rs. 2,16,000 would be Rs. 17,200. If there were no investments made under
section 80C, the tax on an income of Rs. 2,50,000 would have been Rs. 24,000. Thus, by
making these investments, you end up saving Rs. 6,800!

Also, if you would have made the full investment of Rs. 1,00,000, the tax would have
further reduced to Rs. 4,000 a saving of Rs. 20,000!

So, where should you invest?

Like most other things in personal finance, the answer varies from person to person. But
the following can be the broad principles:

Provident Fund: This is deducted compulsorily, and there is no running away from it!
So, this has to be the first. Also, apart from saving tax now, it builds a long term, tax-free
retirement corpus for you.

Home Loan Principal: If you are paying the EMI for a home loan, this one is automatic
too! So, it comes as a close second.

Life Insurance Premiums: Every earning person having dependents should have
adequate life insurance coverage.

Voluntary Provident Fund (VPF) / Public Provident Fund (PPF): If you think that the
PF being deducted from your salary is not enough, you should invest some more in VPF,
or in PPF.

Equity Linked Savings Scheme (ELSS): After the above, if you have not reached the
limit of Rs. 1,00,000, then you should invest the remaining amount in Equity Linked
Savings Scheme (ELSS).

Equities provide the best, inflation-beating return in the long term, and should be a part of
everyones portfolio. After all, what can be better than something that gives great return
and helps save tax at the same time?

When to Invest?

Many of us start looking for investment avenues only in February or March, just before
the Financial Year is getting over.

This is a big mistake! One, you would end up investing your money without putting
proper thought to it. And secondly, you would end up losing the interest / appreciation for
the whole year!
Instead, decide where you want to make the investments, and start investing right from
the beginning of the financial year from April. This way, you would not only make
informed decisions, but would also earn the interest for the full year from April to March!

Happy tax planning!

TDS Rates for 2010-11

Tax
Male Female Senior Citizen
(%)
For Income Between 0 to For Income Between 0 to For Income Between 0 to
1,60,000 1,90,000 2,40,000 0
For Income Between For Income Between For Income Between 10
1,60,001 to 5,00,000 1,90,001 to 5,00,000 2,40,001 to 5,00,000
For Income Between For Income Between For Income Between 20
5,00,001 to 8,00,000 5,00,001 to 8,00,000 5,00,001 to 8,00,000
For Income above For Income above For Income above 30
8,00,001 8,00,001 8,00,001

Surcharge 0
Education Cess 3

Income Tax Due Dates

Payment of Advance Taxes of Income Tax - Individual/Firms:

1st Payment of 30% - 15th September

2nd Payment of 60% - 15th December
3rd Payment of 100% - 15th March

Income Tax Rates for financial year 2009-2010

For Men
Upto Rs. 1,60,000/- Nil
Rs. 1,60,001/- to Rs. 3,00,000/- 10 per cent
Rs. 3,00,001/- to Rs. 5,00,000 20 per cent
Above Rs. 5,00,000/- 30 per cent
For Women
Upto Rs. 1,90,000/- Nil
Rs. 1,90,001/- to Rs. 3,00,000/- 10 per cent
Rs. 3,00,001/- to Rs. 5,00,000 20 per cent
Above Rs. 5,00,000/- 30 per cent
For resident individual of 65 years or above
Upto Rs. 2,40,000/- Nil
Rs. 2,40,001/- to Rs. 3,00,000/- 10 per cent
Rs. 3,00,001/- to Rs. 5,00,000 20 per cent
Above Rs. 5,00,000/- 30 per cent

Computation of Income

This section contains only salient features for computation of income. The sections in this
topic are as under:

Salary income
House Property income
Capital Gains
Other Sources Income
Deductions
Rebates

INCOME TAX FREQUENTLY ASKED QUESTIONS

at 10:45 AM

INCOME TAX QUESTIONS AND ANSWERS :-

What is an Assessment Year?
It is the twelve-month period 1st April to 31st March immediately
following the previous year [refer answer-4]. In the Assessment year a
person files his return for the income earned in the previous year. For
example for FY:2006-07 the AY is 2007-08.
What does the Income Tax Department consider as income?
The word Income has a very broad and inclusive meaning. In case of a
salaried person, all that is received from an employer in cash, kind or
as a facility is considered as income. For a businessman, his net
profits will constitute income. Income may also flow from investments
in the form of Interest, Dividend, and Commission etc. Infect the
Income Tax Act does not differentiate between legal and illegal
income for purpose of taxation. Under the Act, all incomes earned by
persons are classified into 5 different heads, such as:
Income from Salary
Income from House property
Income from Business or Profession
Income from capital gains
Income from other sources
My children living abroad send me Rs.20000/- per month for my
maintenance. Would this be considered as my income?
No.
What is a return of income?
It is a prescribed form through which the particulars of income earned
by a person in a financial year and taxes paid on such income is
communicated to the Income tax department after the end of the
Financial year. Different forms are prescribed for filing of returns for
different Status and Nature of income.
From where can I get a return form?
The Public Relation Officer [PRO] can be contacted for this purpose.
The form can also be downloaded from the site
http://www.incometaxindia.gov.in/.
How can I know which form is applicable for my income?
You should choose a return form according to your status and nature
of income from the following:
ITR1 For Individuals having Income from Salary/ Pension/ family
pension & Interest
ITR2 For Individuals and HUFs not having Income from Business
or Profession
ITR3 For Individuals/HUFs being partners in firms and not
carrying out business or profession under any proprietorship
ITR4 For individuals & HUFs having income from a proprietary
business or profession
ITR5 For firms, AOPs and BOIs
ITR6 For Companies other than companies claiming exemption
under section 11
ITR7 For persons including companies required to furnish return
under section 139(4A) or section 139(4B) or section 139(4C) or section
139(4D)
ITR8 Return for Fringe Benefits
ITRV Where the data of the Return of Income/Fringe Benefits in
Form ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6 & ITR-8 transmitted
electronically without digital signature
If I fail to furnish my return within the due date of filing, will I be
fined or penalized?
Yes. This may take the form of interest if the return is not filed before
the end of the assessment year. If the return is not filed even after the
end of the assessment year, penalty may also be levied.
If I have paid excess tax how and when will it be refunded?
The excess tax can be claimed as refund by filing your income tax
return. It will be refunded by issue of cheque or by crediting to your
bank account. The department has been making efforts to settle refund
claims within four months from the month of filing return.
There are various deductions that have not been reflected in the Form
16 issued by my employer. Can I claim them in my return
 Yes.
What is considered as Salary income?
Whatever is received by an employee from an employer in cash, kind
or as a facility [perquisite] is considered as Salary.
What are allowances? Are all allowances taxable?
Allowances are fixed amounts, apart from salary, which are paid by an
employer for the purpose of meeting some particular requirements of
the employee. There are generally three types of allowances for the
purpose of income tax- taxable, fully exempted and partially exempted.

My employer reimburses all my expenses on grocery and childrens

education. Would this be considered as income?
Yes. These are in the nature of perquisite.
Even if no taxes have been deducted from salary, is there any need for
my employer to issue Form-16 to me?
Form-16 is a certificate of TDS and in your case it will not apply.
However your employer must issue a salary statement.
If I am receiving my pension through a bank who will issue Form-16
or pension statement to me- the bank or my former employer?
The bank.
Are retirement benefits such as PF and Gratuity taxable?
No. They are exempt subject to conditions and limits laid down in the
Income Tax Act.
Can my employer consider relief u/s 89(1) for the purposes of
calculating my tax liability?
Yes.
Is leave encashment taxable as salary?
It is taxable if received while in service. Received as retirement benefit,
however it is exempt subject to certain conditions.
What is TDS?
TDS means Tax Deducted at Source. It is the amount withheld from
payments of various kinds such as salary, contract payment,
commission etc. This withheld amount can be adjusted against your
tax due.
Some demand has been raised by my Assessing officer after
assessment. Can I pay this demand in installments or seek time till my
appeal is settled?
Yes. You may approach your Assessing officer within 30 days of
receipt of demand notice for installments or stay or seek time for
payment. However you are liable to pay interest for delay in payment
of demanded tax.

Obtain your Form 16 Early

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<h1>Obtain your Form 16 Early<
<p><strong>By: <a
href="http://w w w .articlesbase.
Rain's Articles">Maria Rain</a>

* Form 16 is a certificate issued by the employer at the end of the year and
provided to the employee. This certificate provides details of the salary income of the
employee and the TDS deducted from the employee's income.
* Form 16 is all you need to file ITR if you have reported all your income to your
employer.
* It is your right to obtain F16 from the employer within 15 days time after the end of the
financial year.
* Obtain your Form 16 early, so that you can file your return early. The earlier you file,
the faster you will get refund.
* Your chance of scrutiny reduces by filing early.
* Ensure that you have F16s from all the employers that you have worked for during the
year.