06 February 2016
Dear Sir,
What is the provision of Development Offers Insensitive in the income Tax act. and How to calculate tax on insensitive
From
Sujata
(Student)
07 February 2016
The DO being a salaried person, the incentive bonus received has to be treated as salary and he / she is entitled only for the permissible deductions under Section 16 of the Act. The expenses incurred in the performance of duty as Development Officer for generating the business so as to make him / her eligible for the incentive bonus is not a permissible deduction and, hence, the same is liable to tax. Incentive to Development officers of LIC is the subject matter of litigation with most of the Tribunals / High Courts, taking the view that an ad hoc deduction is not available from incentive, bonus etc. available as in case of LIC agents. The Development Officers are employees and their income falls under the head ‘salary’, while agents are not employees and their income taxable under the head ‘PGBP’, from which deductions are allowed. Many courts held that agents are not employees of LIC. Thus, the Circular No. 648 dated 30-03-1993 is not applicable to LIC Development Officers, who are employees of LIC.
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