Highlights in Direct tax code for Salaried Individuals

Highlights in  Direct tax code for Salaried Individuals

Scope of Income from employment:

As per the DTC Bill 2010, the Gross salary includes all of the following

1.       Any sum received from the employer under employment

2.       Any allowance for the purpose of journey between Residence to office and other work places

3.       Any allowance  provided for the purpose of perform official duties or Business purpose less the actual expenses incurred against the allowance

4.       Any allowance provided to meet personal expenses in the place of posting or duty or residence

5.       Contribution of employer towards approved pension fund notified by the Central Government for employee in excess of 10 % of salary of the employee

6.       Any  amount  contribution by the employer  to superannuation fund for employee

7.       Employer contribution towards Provident fund  in excess of 12 %  of salary of the employee

8.       Interest credited  on the balance of approved  fund to the extent of  rate of interest notified by the Government

9.       Any allowance provided to meet the rent expenditure of accommodation occupied by the employee to the extent of limit prescribed

Note :Salary means the Basic salary and Dearness allowance (if the terms of employment so provide)  for the purpose of  calculation of Pension fund 10 %, Provident fund 12 % and limit of House rent allowance

10.   Also Salary will be taxed  on the basis of due, paid, allowed whichever is earlier  also   from whether current employer or previous employer

11.   Following benefits under Income tax act, 1961 will be taxable under Direct tax code

1.       LTA benefit 

2.       Car benefits

3.    Employee stock option

 Savings benefits under Direct tax code

1.       Under clause  69  deduction for savings under  pension fund, gratuity fund, any other fund approved by the Board in accordance with  scheme framed by the Central Government

2.        a. Under clause 70 Life Insurance paid by Individual  on behalf of own, spouse, child of such individual  & paid by HUF on behalf of any member

b. Under clause 71 Health Insurance paid by Individual on behalf of own, spouse, child and parents of such individual & paid by HUF on behalf of any member

c. Under clause 72 a person, being an individual or a Hindu undivided family, shall be allowed a deduction in respect of any sum paid during the financial year towards the tuition fee to any school, college, university or other educational institution situated within India for the purpose of full time education of any 2 children of such individual or HUF

Aggregate deduction under Clause 70, 71, 72 shall not exceed Rs.50000/-

Housing Loan Benefit under Income from employment

 Under Clause 74 A person, being an individual or a Hindu undivided family, shall be allowed a deduction subject to the maximum of Rs.1, 50,000/- in respect of any amount paid or payable by way of interest on loan taken for the purpose of acquisition, construction, repair or renovation of a house property in which he is occupied as self in the financial year in which such property is acquired or constructed or any subsequent financial year

Overall, the DTC Bill has retained most of the current provisions except some of the perquisite benefits under Income tax act, 1961