INCOME TAX PROVISION FOR THE FINANCIAL YEAR – 2010-11

1. Rates Of Income-Tax

A. Normal Rates of tax :—

Net Income Range Income Tax Rates Education Cess
Up to Rs. 1,60,000. Nil Nil
Rs. 1,60,001 - Rs. 5,00,000 10% of (total income minus Rs. 1,60,000) 3% of the
income-tax
Rs. 5,00,001 – Rs.8,00,000 34000 + 20% of (total income minus Rs. 5,00,000 3% of the
income-tax
Above Rs. 8,00,000 94000 + 30% of (total income minus Rs. 8,00,000 3% of the
income-tax

B. Rates of tax for a woman, resident in India and below sixty-five years of age at any time during the
financial year :—
Net Income Range Income Tax Rates Education Cess
Up to Rs. 1,90,000. Nil Nil
Rs. 1,90,001 - Rs. 5,00,000 10% of (total income minus Rs. 1,90,000) 3% of the
income-tax
Rs. 5,00,001 – Rs.8,00,000 31000 + 20% of (total income minus Rs. 5,00,000 3% of the
income-tax
Above Rs. 8,00,000 91000 + 30% of (total income minus Rs. 8,00,000 3% of the
income-tax

2. Allowances Which Are Exempted U/S. 10.

¾ House Rent Allowance

¾ Transport Allowance / Conveyance Allowance

¾ Children Education Allowance

¾ Hostel Expenditure Allowance

¾ Medical Reimbursement

¾ Leave Travel Allowance

2.1 House Rent Allowance

¾ The least of the following is exempt from tax:

a. Actual HRA received
b. Actual rent paid less 10% of the salary
c. 50% of the salary if the rented house is situated at Mumbai, Chennai, Kolkata or Delhi and 40% of
the salary for other location.

**Salary means Basic + DA. (if form parts of retirement benefits)

Exemption is not available where an employee lives in his own house, or in a house for which he
does not pay any rent.

2.2. Transport Allowance / Conveyance Allowance

¾ The exemption shall be minimum of conveyance allowance received or Rs.800/- per month

2.3. Children Education Allowance

¾ Actual amount received or Rs. 100 per month per child up to maximum of two children.

2.4. Hostel expenditure Allowance

¾ Actual amount received or Rs. 300 per month per child up to maximum of two children.

2.5. Reimbursement of Medical bills:-

Medical Reimbursement up to 15000/- is exempt from tax,

The bill should be pertaining to the current Financial Year

2.6. Leave Travel Concession

The exemption shall be,

Different situations Amount of exemption

Where the journey is performed by air
Where the journey is performed by rail
Amount of air economy fare of the national carrier
by the shortest route or the amount spent, whichever
is less.
Amount of air-conditioned first class rail fare by the
shortest route or the amount spent, whichever is less.

Where palace of origin of journey and Amount of air-conditioned first class rail fare by the
destination are connected by rail and journey is shortest route or the amount spent, whichever is less.
performed by any mode of transport

Where place of origin of journey and

destination (or part there of) are not connected
by rail

¾ Where a recognized public transport system First class or deluxe class fare by the shortest route
exists or the amount spent, whichever is less.

¾ Where no recognized public transport Air-Conditioned first class rail fare by the shortest
system exists route (as if the journey had been performed by rail)
or the amount spent, whichever is less.

Note 1 : The exemption shall be available only for 2 journeys in a block of 4 calendar years.

Current block is 2010 – 2013(January 1, 2010 to December 31,2013)

Note 2. The journey performed by individual and family:-

The family means,

a. the spouse and children of the individual

b. the parents, brothers and sisters of the individual who are wholly or mainly
dependent on him.

.
3. Deduction u/s 16(ii)
Tax on Employment (Profession Tax) paid by employee is allowed as deduction to the extent of actual
payment (Maximum Rs. 2500)

4. Computation Of Income From Self Occupied Property

Gross Annual Value NIL

Less: 30% on Gross Annual value NIL

Interest Paid /payable xxxx

(Max Rs. 150000/-)

Loss from House Property xxxx

Note:
¾ Loan availed before 1.04.99 Interest of Rs. 30000/- will be deducted against salary Income.
¾ Loan availed after 1.04.99(Construction to be completed within 3 years from the date of
availing loan)
¾ Interest of Rs. 150000/- (Maximum for self occupied property) will be allowed as deduction.

¾ As the deduction is available on “accrual” basic, even if the interest is not actually paid
during the year.
¾ Pre EMI interest is deductible in five equal installments from the year of completion of
construction.
5. Deduction Allowed Form Gross Total Income (Chapter VI A)

5.1. Deduction Under Section 80 C

¾ The maximum amount deductible under section 80C Rs. 1,00,000. Moreover, the aggregate of
amount deduction under sections 80C, 80CCC and 80 CCD can not exceed Rs. 1,00,000.

A) Investments Eligible Under Sec 80 C :

¾ Life Insurance Premiums for Self / Spouse / Children

¾ Contribution towards Statutory Provident Fund. ( Through employer)

¾ Contribution towards 15 years PPF for Self / Children.

¾ Subscription towards notified units of Mutual Fund

¾ Subscription to National Savings Certificate

¾ Interest accrued on National Savings Certificate

¾ Investments in National Savings Scheme (NSS)

¾ Investment made under Equity Linked Saving Scheme( ELSS)

¾ Principal repayment on Housing Loan

¾ Payment towards purchase a house property ( Stamp Duty / Registration Charges )

¾ Amount deposited in a Fixed deposit for 5 years or more with scheduled bank.

¾ Amount deposited in Five Year Time Deposit Scheme in Post Office

¾ Tuition fees paid for full time education of any two children of the employee.(Payment towards

donation /development fee / payment of similar nature is not eligible for deduction)

(B)Investment in Pension Scheme U/s 80 CCC

¾ Amount paid for any annuity plan of the Life Insurance Corporation of India or any other
Insurance Company for receiving pension.
5.2 ) Subscription to long- term infrastructure bonds - U/s 80CCF
¾ Amount paid towards long term infrastructure bonds.

Deduction under this section will be available only for the financial year 2010 -11. The maximum
deduction Rs.20000/-.

5.3) Deduction in respect of Medical Insurance premium - U/s 80D

Employee, Spouse and Parents are dependent

dependent children of the employee
General Deduction 15000 15000

Additional amount which is deductible NA 5000

when policy is taken on the health of a
senior citizen

Documents required : Payment of medical insurance premium for the FY 2010 – 11.

5.4) Maintenance of Handicapped Dependent - u/s 80DD

¾ Expenditure incurred for the medical treatment / deposit made in LIC for maintenance of
handicapped dependent
¾ The amount deductible is a fixed deduction of Rs.50,000. A higher deduction of Rs.1,000,00
shall be allowed , where such dependent is a person with severe disability having any disability
of 80 per cent or above.
¾ To claim this deduction disability certificate required from government medical authority
(Form No10-IA)

5.5) Repayment of loan taken for Higher Education - u/s 80E

Conditions:
a. Employee had taken a loan from any financial institution or an approved charitable institution
b. The loan was taken for the purpose of pursuing higher education for Self, spouse or children

Deduction:
¾ Entire payment of interest for the financial year is eligible for deduction.
¾ The above deduction is available for a maximum period of 8 years or till closure of loan,
whichever is earlier
¾ Repayment of principal is not eligible for deduction.
5.6) Deduction in case of Donations made for charitable purposes - u/s 80G
No deduction should be allowed by the employer from the salary income in respect of any
donations made for charitable purposes. The tax relief on such donations as admissible under
section 80G of the Act, will have to be claimed by the tax payer in the return of income.

5.7) Deduction in case of a person with disability- u/s 80U

¾ The above deduction is eligible only for self.

¾ The amount deductible is a fixed deduction of Rs.50,000. A higher deduction of Rs.1,000,00
shall be allowed , where such dependent is a person with severe disability having any disability
of 80 per cent or above.

¾ To claim this deduction disability certificate required from government medical authority
(Form No10-IA)