Income Tax on Salaries

The end of financial year 2017-18 is fast approaching and the Income Tax on salaries shall be calculated accordingly before the end of March 2018 and remitted before the due date. Any excess or shortfall in taxes deducted can be adjusted during the financial year 2017-18 (before 31.3.2018). The Income Tax is deductible annually for each financial year commencing 1st of April and ending on 31st of March. Income Tax Department has fixed the responsibility on the employer/ Drawing and Disbursing Officer (DDO) to deduct Income Tax from the salaries of employees monthly on a proportionate basis and deposit before the due date as prescribed and report the same to Income tax Department (quarterly as well as annually). DDOs/ employers have been authorised to allow certain deductions, exemptions or allowances or set-off of certain loss as per the provisions of the Act for the purpose of estimating the income of the employee or computing the amount of tax deductible. DDOs/ employers shall obtain from the employee evidence or proof of savings or investments made during the financial year 2017-18 before allowing such deductions/ exemptions. The responsibility of collecting proper evidence lies on the employer/ DDO. TDS on Income from pension: In the case of pensioners who are paid pension (not being family pension paid to a spouse) from a Nationalised Bank, the same conditions shall apply as the salary income of the staff. Deductions from the amount of pension on account of contribution to Life Insurance, Provident Fund, NSC etc., shall be allowed by the Bank. Necessary instructions in this regard have been issued by the RBI. These instructions should be followed by all branches of Banks, which have been entrusted with the task of payment of pensions. Further, all branches of the banks are bound to issue certificate of tax deducted in Form 16 to the pensioners. No tax shall be deducted on family pension paid to a widow or widower which is an income from other sources but not as pension in the hands of the recipient. Rebate of Income Tax Tax Rebate of Rs.2,500 under Section 87A is available to resident individuals for Assessment Year 2018-19, that is Financial Year 2017-18, whose  income, after all deductions, does not exceed Rs. 3,50,000. Further, the rebate is available on certain conditions, unless specifically withdrawn.

1. a) Section 87A is also applicable from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2018-19.
2. b) Rebate is available only to resident individuals.
3. c) Rebate is available to both male and female assessees.
4. d) If the total tax payable is less than Rs. 2,500, rebate is restricted to “total tax payable.”
5. e) Rebate is allowed before levy of cess.
6. f) Rebate benefit is available to all categories of individuals but not to super senior citizens, aged above 80 years since they are already fully exempted up to Rs. 5 lakh.