Section 4 Charge of Income

DIRECT TAX CODE
Section 4 CHARGE OF INCOME-TAX.

1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions (including provisions for the levy of additional income-tax) of, this Act in respect of the total income of the previous year of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly. 2) In respect of income chargeable under sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act. liability arising from contracts as well as torts. it would be incorrect to assume that the share of an assessee in a form consists only of income yielding assets. It equally comprises of risk and liability of paying debts on behalf of the firm. An assessee cannot, under the Hindu law make a declaration whereby the joint family would have to bear the risk and liability of the business and such a declaration should be ignored altogether. 6 Where payment is made to compensate for the loss of the use of any goods in which the assessee does not carry on any business or the payment is a just equivalent of the cost incurred by the assessee, but excess accrues due to fortuitous circumstances or is a windfall, then ccrual may be a receipt, but it would not be income arising from business, and, therefore, not taxable under the Act. 7 In the hands of an assessee, who maintains his accounts on the mercantile system, sales
ROYAL COLLEGE OF ARTS SCIENCE AND COMMERCE
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tax collected but not paid to the Sales Tax Department pending adjudication of dispute over his liability to pay sales tax, is a revenue receipt of the year in which it is collected. 8 Where a company goes into liquidation and the liquidator distributes the assets of the company among the shareholders, what each shareholder gets is in lieu of his shareholding. That is the worth, the value and the price of his shareholding. A shareholder participates in the distribution of the assets of a company on its liquidation by virtue of and because of his shareholding. It is true that a liquidator does not sell the shares. It is equally true that there is no transfer of shares by the shareholder to the liquidator or to any other person. That is not really necessary. So long as money is received in lieu of shares, there is a receipt and where an assessee is a dealer in shares, any surplus amount received by him constitutes his income. The money received by the assessee in lieu of its shareholding partakes of the same character in which he held the shares. If he held the shares as stock- in- trade, the money received by it represents his income i. e. a revenue receipt in its hands. If it held them by way of investment, the money it receives represents a capital receipt by it.
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DIRECT TAX CODE
Section 5 SCOPE OF TOTAL INCOME.
1. Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which Is received or is deemed to be received in India in such year by or on behalf of such person; or Accrues or arises or is deemed to accrue or arise to him in India during such year; or Accrues or arises to him outside India during such year : Provided that, in the case of a person not ordinarily resident in India within the meaning of sub-section (6) 127a of section 6, the income which accrues or arises to him outside India shall not be so included unless it is derived from a business controlled in or a profession set up in India. 2. Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which Is received or is deemed to be received in India in such year by or on behalf of such person; or Accrues or arises or is deemed to accrue or arise to him in India during such year.
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DIRECT TAX CODE Explanation 1 :

Income accruing or arising outside India shall not be deemed to be received in India within the meaning of this section by reason only of the fact that it is taken into account in a balance sheet prepared in India.
Explanation 2 :
For the removal of doubts, it is hereby declared that income which has been included in the total income of a person on the basis that it has accrued or arisen or is deemed to have accrued or arisen to him shall not again be so included on the basis that it is received or deemed to be received by him in India.
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What is included in salary and perquisite under section 17(1)

As per Sec. 17(1), salary includes the following:

Wages Any annuity or pension Any gratuity Any fees, commissions, perquisites or profit in lieu of or in addition to any salary or wages
Any advance of salary Any payment received by an employee in respect of any period of leave not availed by him
The portion of the annual accretion in any previous year to the balance at the credit of an employee participating in a recognized provident fund to the extent it is taxable
Transferred balance in a recognized provident fund to the extent it is taxable Contribution by the Central Government or any other employer to the account of an employee under a pension scheme referred to in Sec. 80CCD
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DIRECT TAX CODE SPECIFIC EXEMPTIONS

1. Gratuity [Sec. 10(10)] Gratuity is exempt only when it is received on - (a) retirement, or (b) becoming incapacitated prior to such retirement; or (c) resignation; or (d) termination of services. Exemption is also available to gratuity received by the widow, children or dependents of the employee on his death. Particulars Exemption
Gratuity recd. by Govt. & Local Authority Fully exempt u/s 10(10) (i) Employees Gratuity in case of employees covered by Lower of following amount. Payment of Gratuity Act, 1972 1. [15 26] x Salary last drawn x completed yrs. of service or part thereof in excess of 6 months 2. Maximum amount Rs. 10,00,000 (Rs. 3,50,000 up to 23rd May, 2010. 3. Actually received. Salary = Basic Pay + Dearness Allowance entire Gratuity in respect of any other employee. Lower of following amount. 1. 1/2 x average salary x completed years of service (ignore fraction) 2. Maximum amount Rs. 10,00,000 (Rs. 3,50,000 up to 23rd May, 2010. 3. Actually received.
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Average Salary = Average Salary of last 10 months preceding month of retirement. Salary = Basic Pay + Dearness Allowance (forming part of retirement benefits) + Commission based on the % of turnover 2. Pension: [Sec. 10(10A)]
Particulars
A) Uncommuted pension recd. by any (Govt. or Non-Govt.) B) Commuted pension recd. by Govt. employee. C) Commuted pension recd. by NonGovt. employee.
Exemption
employee. Fully taxable as salary.
Fully exempt from tax u/s 10(10A)(i)
1)
If
such
employee
receives 1/3 of full value of commuted pension will be exempt from tax u/s 10(10A)(ii)
gratuity.
2) If such employee does not receive 1/2 of full value of commuted pension will be gratuity. exempt from tax u/s 10(10A)(ii)
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DIRECT TAX CODE

3. Leave Salary (Encashment): [Sec. 10(10AA)]
Particulars
Encashment of leave during service Encashment of leave at the time of retirement 1. If Central or State Government Employees 2. For any other employees
Exemption
It is charged to tax.
Fully exempt from tax u/s 10(10AA)(i)
Whichever is less of following 1. Earned leave months x Average salary 2. Avg. monthly salary x 10 3. Maximum amount 3,00,000 4. Actual received
Note: Period of leave in month 1. No. of actual yrs. of service 2. No. of leave entitlement for each completed year of service as per rules (subject to 30 days) 3. Gross total leave (in days) (step 1 x step 2) 4. Less: Leave enchased & availed during continuation of service (in days) 5. Period of earned leave (in days) (step 3 - step 4) 6. Period of leave in months (step 5/30) Note: Average monthly salary for this purpose means avg. salary drawn in past 10 months immediately preceding the retirement. Salary = Basic Pay + Dearness Allowance (forming part of retirement benefits) + Commission based on the % of turnover.
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4. Retrenchment Compensation [Sec. 10(10B)] Compensation received at time of retrenchment, is exempt from tax to the extent of lower of the following: 1) 15 days average pay for each completed yr. of services or any part in excess of six months. 2) Maximum amount Rs. 5,00,000. 3) Actual amount received. 5. Voluntary Retirement Compensation [Sec. 10(10C)] Any amount received or receivable by an employee of 1) A public sector company 2) Any other company 3) Authority established under a Central, State or Provincial Act 4) A local authority 5) A co-operative society 6) A university established under a Central, State or Provincial Act or covered under the University Grants Commission Act 7) Notified Indian Institute of Technology 8) Notified Institute of Management 9) Indian Institute of Foreign Trade, New Delhi 10) Any State Government 11) Any Central Government
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12) Any other Institute notified by Central Government. at the time of his voluntary retirement under a scheme framed in accordance with guidelines prescribed by Rule 2BA. However an Employee of Public Sector Company should have completed 10 years of service or completed 40 years of age. Exemption is Least of the following. 1) Actual amount received under VRS. 2) Rs. 5 lakhs (to be reduced by total exemptions claimed in past years) in total from one or more employers 3) Last Drawn Salary multiplied by 3 months salary for each completed year of service. 4) Last Drawn Salary multiplied by Balance Nos. of Months of Service Left (Refer Rule 2BA also). Where any relief has been allowed to an assessee under section 89 for any assessment year in respect of any amount received or receivable on his voluntary retirement or termination of service or voluntary separation, no exemption under this clause shall be allowed to him in relation to such, or any other assessment year.
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DIRECT TAX CODE ALLOWANCES

Allowances Fully taxable in all cases: 1. City Compensatory Allowance 2. Fixed Medical Allowance 3. Tiffin/Lunch/Dinner/Refreshment Allowance 4. Servant Allowance 5. Dearness Allowance 6. Project Allowance 7. Overtime Allowance 8. Interim Allowance 9. Any Other Cash Allowance House Rent Allowance (HRA) [Sec. 10(13A) and Rule 2A] The least of the following is exempt 1. 40% of salary [50% if house situated at Mumbai, Kolkata or Chennai] 2. HRA actually received in respect of the period during which the accommodation is occupied 3. Rent Paid (Salary x 10%) Salary = Basic + Dearness Allowance (if part of retirement benefit) + Commission (fixed % of turnover)
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Other Allowances Allowances Exempted To The Extent Of Amount Received Or Specified Limit Whichever Is Less.
Allowances 1 Children Education allowance 2 Children hostel exp. allowance 3 Tribal area allowance 4 Transport allowance Exemption limits Rs. 100 p.m per child maximum 2 children Rs. 300 p.m per child maximum 2 children Rs. 200 p.m Rs. 800 p.m & Rs. 1600 p.m for blind/handicapped 5 Transport allowance for transport employee Least of 70% of allowance or Rs. 10,000 p.m (Rs. 6,000 till A.Y. 2010-11) 6 Underground allowance 7 Compensatory field area allowance 8 Compensatory modified hill area allowance 9 Special Compensatory hill area or high altitude Rs. 800 p.m maximum Rs 2600 p.m maximum up to Rs. 1000 p.m. Rs 300 p.m to Rs. 7000 p.m allowance, etc
10 Border area, Remote area, Disturbed area Rs. 200 p.m to Rs. 1300 p.m. allowance 11 High altitude allowances (Non-congenial climate) Rs. 1,060 p.m. (Altitude for 9000 ft to 15000 ft), Rs. 1,600 p.m. (Above 15000 ft) 12 Special compensatory for highly active field area Limit is Rs. 4,200 p.m. allowance 13 Island allowance 14 Counter Insurgency Allowance Limit is Rs. 3,250 p.m. Limit is Rs. 3,900 p.m.
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DIRECT TAX CODE PERQUISITES

Specified employee Sec. 17(2)(iii)

Director of the company or Employee having 20% or more voting power in the employer company or Employee having salary* more than Rs. 50000
* Salary means all taxable monetary benefit after deduction u/s 16
1. RENT FREE ACCOMMODATION

Unfurnished Accommodation Government Employees As per govt. rules: Owned employer Licenses less As Rent recovered Population lakhs 10 lakh >25 15%** 10%** Actual rent or 15% of salary whichever is lower per 2001 As per 2001 census ** nothing taxable if is more on from than transfer one census form employee Fees by Not owned by employer (on lease or rent) 24% of salary or actual In Hotel Other Employees
charges whichever is less
accommodation provided 15 of days not and
< 7.5%** Population < 25 lakh Population up to 10 lakhs
employee
place to another
The above is applicable only for unfurnished house % on amount of salary (less) Rent actually paid by employee
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DIRECT TAX CODE DEDUCTIONS FROM SALARY {SECTION 16} 1. Entertainment Allowance {Section 16(ii)
Only Government servant can claim the following deduction 1. Rs 5000/2. 1/5th of salary (20% of salary) [Salary = Basic Pay] 3. Actual entertainment allowance received during the F.Y.
2. Professional Tax or Tax on Employment {Section 16(iii)

Professional tax paid by an employee is allowed as deduction from his Salary income
Deduction is available in the year in which professional tax is actually paid.
If Profession Tax is reimbursed by the employer, then Profession Tax reimbursed by the employer will first be included in salary (in case of all employees whether specified or not) as perquisite & then the same amount is allowed as deduction u/s 16(iii) from gross salary.
Note:
If an employee has paid Profession Tax of more than one year in a particular year then
entire Profession Tax so paid is allowed as deduction.
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DIRECT TAX CODE
Exempted Income Under Section (10) Income From Other Source

In the following cases Income is exempt from Income tax:1. Agriculture Income [Sec. 10(1)] 2. Payments received from family income by a member of HUF [Sec. 10(2)] 3. Share of profit from a firm [Sec. 10(2A)] 4. Interest received by a non resident from prescribed securities [Sec. 10(4)] 5. Interest received by a person who is resident outside India on amounts credited in the non-resident (External) account [Sec. 10(4)] 6. Leave travel concession provided by as employer to his Indian citizen employee [Sec. 10(5)] 7. Remuneration received by foreign diplomats of all categories [Sec. 10(6)] 8. Salary received by a foreign citizen as an employee of a foreign enterprise provided his stay in India does not exceed 90 days [Sec. 10(6)(vi)] 9. Salary received by a non-resident foreign citizen as a member of ships crew provided his total stay in India does not exceed 90 days [Sec. 10(6)(vii)] 10. Remuneration received by an employee, being a foreign national, of a foreign government deputed in India for training in a Government establishment or public sector undertaking [Sec. 10(6)(xi)] 11. Tax paid on behalf of foreign companies [Sec. 10(6A)] 12. Tax paid by Government or an Indian concern in case of a non-resident / foreign company [Sec. 10(6B)] 13. Income arising to notified foreign companies from services provided in or outside India in project connected with the security of India [Sec. 10(6C)]
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14. Foreign allowance granted by the Government of India to its employees posted abroad [Sec. 10(7)] 15. Remuneration received from a foreign Government by an individual who is in India in connection with any sponsored co-operative technical assistance programme with a foreign Government and the income of the family members of such employee [Sec. 10(8)and(9)] 16. Remuneration / fee received by non-received consultants and their foreign employees [Sec. 10(8A),(8B) and (9)] 17. Death-cum-retirement gratuity [Sec. 10(10)] 18. Commuted value of pension and any payment received by way of commutation of pension by as individual out of annuity plan of LIC or any other insurer from a fund set up by that corporation or insurer [Sec. 10(10A)] 19. Leave salary [Sec. 10(10AA)] 20. Retrenchment compensation [Sec. 10(10B)] 21. Compensation received by victims of Bhopal gas leak disaster [Sec. 10(10BB)] 22. Compensation from the Central Government or a state Government or a local authority received by an individual or his legal heir on account of any disaster [Sec. 10(10BC)] 23. Compensation received from a public sector company at the time of voluntary retirement or separation [Sec. 10(10C)] 24. Tax on perquisite paid by employer [Sec. 10(10CC)] 25. Any sum (including bonus) on life insurance policy (not being a keyman insurance policy) [Sec. 10(10D)] 26. Any amount from provident fund paid to retiring employee [Sec. 10(11)] 27. Amount from an approved superannuation fund to legal heirs of the employee [Sec. 10(13)]
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28. House rent allowance subject to certain limits [Sec. 10(13A)] 29. Special allowance granted to an employee [Sec. 10(14)] 30. Interest from certain exempted securities [Sec. 10(15)] 31. Payment made by an Indian company, engaged in the business of operation of an aircraft, to acquire an aircraft on lease from a foreign Government or foreign enterprise [Sec. 10(15A)] 32. Scholarship granted to meet the cost of education [Sec. 10(16)] 33. Daily allowance of a member of parliament or state Legislature (entire amount is exempt), any other allowance subject to certain conditions [Sec. 10(17)] 34. Rewards given by the central or state Government for literary, scientific or artistic work or attainment or for service for alleviating or for service for alleviating the distress of the poor, the weak and the ailing, or for proficiency in sports and games or gallantry awards approved by the Government [Sec. 10(17A)] 35. Pension and family pension of gallery award winners [Sec. 10(18)] 36. Family pension received by family members of armed forces [Sec. 10(19)] 37. National property income of any one place occupied by a former ruler [Sec. 10(19A)] 38. Income from local authorities [Sec. 10(20)] 39. Any income of housing boards constituted in India for planning, development or improvement of cities, town or villages [Sec. 10(20A)] 40. Any income of an approved scientific research association [Sec. 10(21)] 41. Income of specified non- agencies [Sec. 10(22B)] 42. Any income (other than interest on securities income from property income received for rendering any specific services and income by way of interest or dividends) of approved professional bodies [Sec. 10(23A)]
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43. Any income received by any person on behalf of any regimental fund or non public fund established by the armed forces of the union for the welfare of the past and present members of the such forces or their dependents [Sec. 10(23AA)] 44. Income of funds established for the welfare of employees [Sec. 10(23AAA)] 45. Any income of the pension fund set by LIC or any other insurer approved by the controller of insurance or insurance Regulatory and development authority [Sec. 10(23AAB)] 46. any income (other than business income) of a trust or a society approved by Khadi and village industries commission [Sec. 10(23B)] 47. Income of an authority whether known as Khadi and village industries board or by any other name for the development of Khadi and village industries [Sec. 10(23BB)] 48. Income of the European Economic Community derived in India by way of, interest, dividends or capital gains in certain cases [Section 10(23BBB)] 49. Any income arising to anybody or authority established, constituted or appointed under any enactment for the administration of public religious or charitable trusts or endowments or societies for religious or charitable purposes [Section 10(23BBA)] 50. Income of SAARC Fund for Regional Projects, set up by Colombo Declaration [Section 10(23BBC)] 51. Any income of Secretariat of Asian Organisation of Supreme Audit Institutions [Section 10(23BBD)] 52. Any income received by any person on behalf of specified national funds and approved public charitable trust or institution [Section 10(23C)] 53. Income of Mutual Fund set up by a public sector bank or a public financial institution [Section 10(23D)]
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54. Any income by way of dividend, or long term capital gains of venture capital funds and venture capital companies [Section 10(23F)] 55. Income of a member of Scheduled Tribe, living in Nagaland, Manipur, Tripura, Arunachal Pradesh and Mizoram from any source arising by reason of his employment therein and income by way of dividend and interest on securities [Section 10(26)] 56. Any income accruing or arising to any resident of Ladakh from any source therein or out of India before the assessment year 1989-90, provided that such person was resident in Ladakh in the previous year relevant to the assessment year 1962-63 [Section 10(26A)] 57. Any income of a statutory Central or State corporation or of a body/institution, financed by the Government formed for promoting the interest of Scheduled Castes/Tribes [Section 10(26B)] 58. Income of co-operative society formed for promoting interests of members of Scheduled Castes/Scheduled Tribes [Section 10(27)] 59. Income by way of subsidy from Tea Board for replanting or replacement of tea bushes or for the purpose of rejuvenation or consolidation of areas used for cultivation of tea in India [Section 10(30)] 60. Subsidy received by planters of Rubber, Coffee, Cardamon [Section 10(31)] 61. Income of a minor child up to Rs. 1,500 in respect of each minor child whose income is includible under section 64(1A) [Section 10(32)] 62. Any income by way of Capital gains on transfer of US-64 units [Section 10(33)] 63. Dividend on or after April, 2003 from domestic companies [Section 10(34)] 64. Income on units of Mutual Funds on or after April 1, 2003 [Section 10(35)] 65. Long term Capital gains on transfer of listed Equity Shares purchased during 1-3-2003 to 29-2-2004 [Section 10(36)]
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66. Capital gain to individual/HUF on compensation received on compulsory acquisition of urban agriculture land [Section 10(37)] 67. Long term capital gain in some cases [Section 10(38)] 68. Sum received without consideration from international sporting event held in India [Section 10(39)] 69. Income of Industrial Units situated in trade-free zones, specified technology parks etc. [Section 10A] 70. Income from specified 100% export oriented undertakings [Section 10B] 71. Income from property held for approved charitable or religious purposes [Section 11] 72. Specified Income of Registered political parties [Section 13A]
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DEDUCTION UNDER SECTION CHAPTER VI

Deductions u/s 80C
The following investments/payments are inter alia eligible for deduction u/s 80C:Nature Of Investment Life Insurance Premium Remarks For individual, policy must be in the name of self or spouse or any childs name. For HUF, it may be on life of any member of HUF. Sum paid under contract for deferred annuity For individual, on life of self, spouse or any child of such individual. Sum deducted from salary payable to Govt. Payment limited to 20% of salary. Servant for securing deferred annuity for self, spouse or child Contribution made under Employees Provident Fund Scheme Contribution to PPF For individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family. Contribution by employee to a Recognised Provident Fund. Subscription to any notified securities/notified deposits scheme. Subscription to any notified savings certificates. e.g. NSC VIII issue. Contribution to Unit Linked Insurance Plan of e.g. Dhanrakhsa 1989 LIC Mutual Fund Contribution to notified deposit scheme/Pension fund set up by the National Housing Bank. -
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Certain payment made by way of instalment or Condition has been laid that in case the property part payment of loan taken for purchase/ is transferred before the expiry of 5 years from construction of residential house property. the end of the financial year in which possession of such property is obtained by him, the aggregate amount ofdeduction of income so allowed for various years shall be liable to tax in that year. Subscription to units of a-
Mutual Fund notified u/s 10(23D) Subscription to deposit scheme of a public sector company engaged in providing housing finance. Subscription to equity shares/ debentures -
forming part of any approved eligible issue of capital made by a public company or public financial institutions.
Tuition fees paid at the time of admission or Available in respect of any two children. otherwise to any school, college, university or other educational institution of situated full time
within India for education.
thepurpose
Any term deposit for a fixed period of not less This has been included in Section 80C by the than five years with the scheduled bank. Subscription NABARD to notified bonds issued Finance Act 2006. by This has been included in Section 80C by the Finance Act 2007 and has come into effect from 1.4.2008. Payment made into an account under the Senior This has been introduced by Finance Act, 2008 Citizens Savings Scheme Rules, 2004 and shall come into effect from 1.4.2009.
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Payment made as five year time deposit in an This has been introduced by Finance Act, 2008 account under the Post Office Time Deposit and shall come into effect from 1.4.2009. Rules, 1981
It may be noted that the aggregate amount of deductions under sections 80C, 80CCC and 80CCD are subject to an overall ceiling of Rs.1 lakh.
Deduction U/S 80ccc

80CCC- DEDUCTION IN RESPECT OF CONTRIBUTION TO CERTAIN PENSION FUNDS. I. Where an assesse being an individual has in the previous year paid or deposited any amount out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India for receiving pension from the fund referred to in clause (23AAB) of section 10, he shall, in accordance with, and subject to, the provisions of this section, be allowed a deduction in the computation of his total income, of the whole of the amount paid or deposited (excluding interest or bonus accrued or credited to the assessees account, if any) as does not exceed the amount of ten thousand rupees in the previous year. II. Where any amount standing to the credit of the assessee in a fund, referred to in subsection (1) in respect of which a deduction has been allowed under sub-section (1), together with the interest or bonus accrued or credited to the assessees account, if any, is received by the assessee or his nomineea) On account of the surrender of the annuity plan whether in whole or in part, in any previous year, or
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b) As pension received from the annuity plan, an amount equal to the whole of the amount referred to in clause (a) or clause (b) shall be deemed to be the income of the assessee or his nominee, as the case may be, in that previous year in which such withdrawal is made or, as the case may be, pension is received, and shall accordingly be chargeable to tax as income of that previous year. III. Where any amount paid or deposited by the assessee has been taken into account for the purposes of this section, a rebate with reference to such amount shall not be allowed under section 88.
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DIRECT TAX CODE Section 80D- DEDUCTION IN RESPECT OF MEDICAL INSURANCE PREMIA.
(1) In computing the total income of an assesse, there shall be deducted, at the following rates, such sum as is specified in sub-section (2) and paid by him by cheque in the previous year out of his income chargeable to tax, namely :(i) In a case where such sum does not exceed in the aggregate ten thousand rupees, the whole of such sum; and (ii) In any other case, ten thousand rupees. Provided that where the sum specified in sub-section (2) is paid to effect or to keep in force an insurance on the health of the assesse, or his wife or her husband or dependent parents or any member of the family in case the assesse is a Hindu undivided family, and who is a senior citizen, the provisions of this section shall have effect as if for the words ten thousand rupees, the words fifteen thousand rupees had been substituted. (2) The sum referred to in sub-section (1) shall be the following, namely :(a) Where the assesse is an individual, any sum paid to effect or to keep in force an insurance on the health of the assesse or on the health of the wife or husband, dependent parents or dependent children of the assesse (b) Where the assesse is a Hindu undivided family, any sum paid to effect or to keep in force an insurance on the health of any member of the family; Provided that such insurance shall be in accordance with a scheme 1001c framed in this behalf by the General Insurance Corporation of India formed under section 9 of the General
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Insurance Business (Nationalization) Act, 1972 (57 of 1972), and approved by the Central Government in this behalf. Explanation : For the purpose of this section, senior citizen shall have the meaning assigned to it in the Explanation to section 80DDB.
Section 80DD- DEDUCTION IN RESPECT OF MAINTENANCE INCLUDING MEDICAL TREATMENT OF HANDICAPPED DEPENDENT.
(1) In computing the total income of an assessee who is a resident of India, being an individual or a Hindu undivided family, there shall be deducted, in accordance with the subject to the provisions of this section, the amount (a) Of expenditure incurred by way of medical treatment (including nursing), training and rehabilitation of a handicapped dependent; or (b) Paid or deposited under any scheme framed in this behalf by the Life Insurance Corporation or Unit Trust of India subject to the conditions specified in sub-section (2) and approved by the Board in this behalf for the maintenance of handicapped dependant, out of his income chargeable to tax : Provided that no such amount shall exceed forty thousand rupees in the aggregate under clause (a) or clause (b) or both. (2) The deduction under clause (b) of sub-section (1) shall be allowed only if the following conditions are fulfilled, namely :- (a) The scheme referred to in clause (b) of sub-section (1) provides for payment of annuity or lump sum amount for the benefit of a handicapped dependant in the event of the death of the individual or the member of the Hindu undivided family in whose name subscription to the scheme has been made;
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(b) The assessee nominates either the handicapped dependant or any other person or a trust to receive the payment on his behalf, for the benefit of the handicapped dependant. (3) If the handicapped dependant predeceases the individual or the member of the Hindu undivided family referred to in sub-section (2), an amount equal to the amount paid or deposited under clause (b) of sub-section (1) shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and shall accordingly be chargeable to tax as the income of that previous year. (4) In this section, (a) Government hospital includes a departmental dispensary whether full-time or part-time established and run by a Department of the Government for the medical attendance and treatment of a class or classes of Government servants and members of their families, a hospital maintained by a local authority and any other hospital maintained by a local authority and any other hospital with which arrangements have been made by the Government for the treatment of Government servants; (b) Handicapped dependant means a person who (i) is a relative of the individual or, as the case may be, is a member of the Hindu undivided family and is not dependant on any person other than such individual or Hindu undivided family for his support or maintenance; and (ii) Is suffering from a permanent physical disability (including blindness) or is subject to mental retardation, being a permanent physical disability or mental retardation specified in the rules made by the Board for the purposes of this section, which is certified by a physician, a surgeon, an oculist or a psychiatrist, as the case may be, working in a Government hospital,
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and which has the effect of reducing considerably such persons capacity for normal work or engaging in gainful employment or occupation; (c) Life Insurance Corporation shall have the same meaning as in clause (iii) of sub-section (8) of section 88; (d) Unit Trust of India means the Unit Trust of India established under the Unit Trust of India Act, 1963 (52 of 1963)
Section 80E- DEDUCTION IN RESPECT OF REPAYMENT OF LOAN TAKEN FOR HIGHER EDUCATION.
(1) In computing the total income of an assessee, being an individual, there shall be deducted, in accordance with and subject to the provisions of this section, any amount paid by him in the previous year, out of his income chargeable to tax, by way of repayment of loan, taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education, or interest on such loan : Provided that the amount which may be so deducted shall not exceed twenty-five thousand rupees. (2) The deduction specified in sub-section (1) shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until loan referred to in sub-section (1) together with interest thereon is paid by the assessee in full, whichever is earlier. (3) For the purposes of this section, (a) Approved charitable institution means an institution specified in, or, as the case may be, an institution established for charitable purposes and notified by the Central Government
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DIRECT TAX CODE

under clause (23C) of section 10 or an institution referred to in clause (a) of sub-section (2) of section 80G; (b) Financial institution means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf; (c) Higher education means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics 1002f ; (d) Initial assessment year means the assessment year relevant to the previous year, in which the assessee starts repaying the loan or interest thereon
Maximum Deduction u/s 80U: Maximuum Deduction of Rs.50,000/-. and if the

assessee suffers from severe disability, the deduction limit will be Rs. 1,00,000/-. Severe disability means disability of 80% or more.
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DIRECT TAX CODE
Advance Income Tax with due Dates for Filing Return

With due dates for Filling Returns
PAYMENT OF ADVNCE TAX ON THE Example .: If an Assesses estimated ESTIMATED TAXABLE INCOME BY ALL tax payable for the full year is Rs.30,000 , ASSESSEE (Other than companies) he has to pay an Advance Tax of Rs.9,000 each in 1st & 2nd Installment & Rs. 12,000
Installment First Second Final
Percentage 30% 30% 40%
Due Date 15th September 15th December 15th March
in Final Installment.
1. No Advance Tax need to be paid, if total tax payable for the year is less than Rs. 5,000. 2. When employer deducts tax from Salary, employee need not pay Advance Tax. 3. Non-payment or short payment of Advance Tax will attract penal interest.
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DIRECT TAX CODE Advance Tax Example :
Mr. Sanjay estimates his income for the F/Year 2008-2009 as on 1.9.2008.
Details :
1. Business Income 2. Interest from Bank & NSC 3. PPF Contribution 4. Life Insurance Premium 5. ELSS 6. TDS on Interest
5,00,000 25,000 10,000 26,000 10,000 2,600
Solutions :
Taxable Income :
(1 & 2) Rs. 5,00,000 + 25,000 (3 to 5) Rs. 10,000, 26,000, 10,000
= 5,25,000 = (-)46,000 _______________ = 4,79,000
Tax on 4,79,000 including EDU Cess @3% Less : TDS on Interest Total Tax Payable
32,857 2,400 30,457
Installment of Advance Tax Payable
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DIRECT TAX CODE

1 st. - 30% on 30,457 payable on 15/09/10 2 nd. - 30% on 30,457 payable on 15/12/10 3 rd. - 40% on 30,457724 payable on 15/03/2011 9,137 9,137 12,283
To Avoid Penalty - File Your Return before Due Date
Description 1. Salaried Employees
Due Date July,31
2. Business Class - Non-company Assessee a) Whose accounts need NOT be compulsorily audited b) Whose accounts required to be compulsorily audited
July,31
September, 30 3. Co-operative Societies 4. Trust/Charitable Institutions claiming exemption u/s11 5. Companies
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Section 4 Charge of Income

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DIRECT TAX CODE