K.E. College, Mannanam
Member, AKPCTA Service cell
Computation of Income Tax
For the Financial Year 2009 – 10
Income tax is computed on total income of a Less professional
person. Total income is Gross total Income minus tax u/s 16(iii) …….....…
deductions under sections 80’s (80C, 80D, 80DD, Net Salary
80 DB, 80E, 80G, 80 GGC, 80D etc). Gross total
Less Interest on loan
Income is the Sum total of (1) Income chargeable
taken for the
under the head Salaries (2) Income from house
property, (3) Profits and gains of Business or
self occupied House …….....…
profession (4) Capital Gains and (5) Income from
other Sources. Usually a Salaried assessee has Add Interest on NSC …….....…
Income under three heads namely salaries, Add Examinership
Income from house property (Interest on Remuneration if any …….....…
housing loan) and Income from other sources Add interest on
(Valuation remuneration, computed Interest on Bank deposit if any …….....…
NSC, Bank Interest). Income tax is on total
Income of a person during the Previous years Gross Total Income
(Financial Year). Total Income is assessed during Less deduction u/s
the next Financial year (Assessment Year). Income 80C-80 U …….....…
tax is collected during the previous year it self Total Income
by way of deduction of tax at Source (T.D.S). Tax on total income
Every employer or salary disbursing officer in Tax rate applicable for the Assessment Year 2010-
bound to make TDS from the Salary of 11 i.e. in the previous year (financial year) 2009-
Employees to whom he is giving Salaries every 10.
This article explains the provisions of Income tax 1. Ordinary individual
Act 1961 and Finance Act 2009 to helps the First 1,60,000 of the total income - Nil
teachers to estimate their total Income, total tax, Next 1,40,00 of the total income- 10%
and helps in filing Income line returns for the Next 2,00,000 of the total income - 20%
previous year, Financial year) 2009-10 ie Balance of the total income - 30%
assessment year 2010-11.
Scheme of Total Income II. Individual (women below
the age of 65 years)
Basis pay …….....… First 1,90,000 of the total income - Nil
D Pay …….....… Next 1,10,000 of the total income- 10%
D.A …….....… Next 2,00,000 of the total income - 20%
HRA (after Balance of the total income - 30%
deduction u/s 10 (13A) …….....…
Festival Allowance …….....… III. Senior Citizen
Arrear Salary First 2,40,000 - Nil
(Including arrear Next 60,000 - 10%
D.A credited to PF …….....… Next 2,00,000 - 20%
Balance - 30%
earned leave …….....… Surcharge : No Surccharge
Gross Salary Educational cess : @ 3% on the amount of income
Relief u/s 89(1) : Relief in respect of arrear salary 6. Contribution of Unit linked insurance plan
received is deducted from tax payable after of LIC Mutual Fund.
educations cess. 7. Subscription of Home loan account scheme
of National Housing bank.
1. Exemptions u/s 10 (13A) Rule 2 A - HRA 8. Amount paid for the (repayment principal)
Only those who are residing in rented of loans taken for the construction or
accommodation can claim exemptions for HRA. acquisition of self occupied house property.
Exempted portion of HRA is least of the following Note : Stamp duty, registration fee and other
3 figures. expenses for the transfer of such house
1. Actual amount of HRA received property to the assessee are also qualify.
2. Excess of rent paid over 10% of salary 9. Sums paid towards Jeevan Dhara and Jeevan
3. 40% of salary due Akshy schemes of LIC of India.
HRA as reduced by the amount of exemption u/ 10. Tuition fees (excluding any payment towards
s 10 (13 A) is included in gross salary. any development fees for donation or
payment of similar nature) Paid at the time
II. Professional 16(iii) of admission or thereafter to any university,
Employment tax paid by the assessee leviable by college, school or other educational
or under any law will be allowed as deducaiton. institution situated in India for the purpose
of full time education of his two children (no
III. Rules for claiming interest on loan for self maximum limit).
occupied house 11. Investment in equity shares or debentures
A. Allowable maximum interest Rs. 30,000 where of a public company or public financial
such property has been (1) acquired (2) institution forming part of any eligible issue
constructed (3) repaired (4) renewed (5) of capital approved by the board.
reconstructed. 12. Sum paid as subscription to any units of
B. Allowable interest Maximum Rs. 1,50,000- mutual fund approved by the board.
where such property (1) acquired (2) constructed 13. Contribution to pension fund LIC or any
with capital borrowed after other insurer. (8 CCC- maximum Rs1,00,000/
31-03-99 and construction completed within 3 -)
years from the end of the financial year in which 14. Fixed deposit with scheduled Bank for a term
the capital was borrowed. of 5 years or more.
Note. 15. Deposit under the Senior Citizens Saving
1. Enhanced deduction Rs. 1,50,000/- is Scheme Rules 2004.
available only for acquisition and 16. Deposit under Five Year time deposit under
construction of the properly or new loan the Post Office Time deposit Rules 1981.
taken for the repayment of the existing loan
taken for acquisition or construction. Quantum of Deduction
2. No stipulation regarding the date of Maximum deduction is restricted to Rs.1,00,000
commencement of construction. (including pension fund u/s 80CCC). I.e.
3. Interest is allowed on accrual basis ie. Rs.1,00,000 or actual saving whichever is less.
Amount payable though not paid is also
deductible. V. 80 D Deduction in respect of Medical
4. The self occupied house or part of it should Insurance premia
not be let out during whole or part of the The premium paid for insure the health of
previous year. the assessee, his spouse, depended parents
or depended children. The amount should
IV. 80 C Deduction in respect of LIC premium, be paid by any mode other than cash out of
contribution to PF etc. taxable income of the assessee. Deductible
The following payments will qualify for amount.
deduction u/s 80 C. 1. Premium paid for self, spouse and depended
1. Premium paid for insuring the life of spouse children Rs. 15000 or actual amount paid
or his or her child including major children. W.I.L
2. Contribution to provident Fund including 2. Premium paid for parents dependend or not
public provident fund in the name of any Rs 15000 or actual W.I.C.
member of family. Note : 1. If the parent is a senior citizen Rs.
3. Contribution to unit linked insurance plan of 15000 is enhanced to 20000.
UTI. 2. Assess can claim a maximum of Rs 30,000
4. Amount used to purchase NSC VIII issue. or 35 000 under this section
5. Interest accrued on NSC VIII issue (excluding VI. 80 DD Deduction in respect of maintenance
interest credited in the 6th year. including medical treatment of
Items eligible for deduction d. Alaxia
a. Expenditure incurred by way of medical e. Chorea
treatment (including nursing) training
and rehabilitation of handicapped
dependent or g. Aphasia
b. The amount paid or deposited for the h. Parkinsons disease
benefit of such dependent under any II. Malignant cancers
scheme framed by the L.I.C of India or III AIDS
any other insurer.
Quantum of Deduction IV. Chronic Renal failure
1. Rs. 50, 000 irrespective of the amount of V. Hematological disorders
expenditure incurred for 40% of the a. Hemophilia
disability or more. b. Thalassaemia
2. In case of serve disability -Rs. 1,00000
irrespective of the amount of expenditure. Assessee should file a certificate in
Ie., for disability of 80% or more. prescribed form (Form No. 10-1) from a
Handicapped dependent : Means a relative neurologist, an oncologist, a urologist, a
of the assessee and dependent for support haematologist, an immunologist, etc.
and maintenance on the assessee. He is working in a government hospital.
suffering from a permanent physical Dependent relative- same as stated in 80 DD
disability or mental retardation, which is
certified by a medical authority. Copy of the VIII. 80 E Deduction in respect of interest on
certificate should be field along with the Loan taken for Higher education of the
return of income. Fresh certificate should be Assessee, Spouse and Children
field where the disability required Quantum of deduction- Full amount of
reassessment. interest paid during the year.
Dependent: The spouse, children, parents, Period of deduction- Deduction is allowed
brothers and sisters of the individual for 8 years.
dependent wholly or mainly on such Higher education- Full time studies for any
individual for support and maintenance. graduate or postgraduate courses in
engineering, medicine, management or post
VII. 80 DDB Deduction in respect of medical graduate course in applied science or pure
treatment of assessee or any dependent science including mathematics and statistics.
relative of specified disease. Including Vocational Studies.
Assessee incurred expenditure for the IX. 80 G Donation made during the previous
medical treatment of specified disease of year.
assessee himself or dependent relative Donation made to certain funds are 100%
prescribed in rule 11DD. deductible.
Quantum of deduction Donation to certain charitable trust
1. Rs. 40,000/- or the amount of deduction only 50%.
expenditure which ever is less. X. 80 GGC Donation to political parties.
2. Where the expenditure is incurred for Quantum of Deduction- Full amount of
the treatment of a senior citizen the donation is allowed as deduction.
amount of Rs. 40,000/- mentioned above XI. 80 U Deduction in respect of persons with
will be enhanced to Rs. 60,000- disability
3. Where any compensation (Mediclaim) is Persons suffering from the following
received from an insurance company for disabilities, ie. Not less than 40% disability.
the medical treatment or Reimbursement Blindness, low-vision, leprosy cured,
of expenses from employer, the hearing impairment, locomotor disability
deductions mentioned above shall be metal retardation, mental illness, autism,
reduced by such compensation. cerebral palacy and multiple disability.
Specified diseases Quantum of Deduction - A fixed deduction
1. Neurological disease where eh disability of Rs. 50, 000/- for 40% or more disability.
level had been certified to be of 40% and For severe disability i.e. 80% or above - Rs.
above. 75, 000.
a. Dementia Filing of certificate - Same as for 80 DD
b. Dystonia musculorum detormans EXAMPLE
c. Motor Neuron Disease Details of salary of Assessee “A”
Basic pay - 16200 p.m 80 D premium of
D.P. Mediclaim 8,000
- 8100 p.m 80 GGC Donation
D.A. to political party 5000 - 1,13,000
- 15552 p.m. Total income - 358670
HRA - 150 p.m
Festival allowance - 1250 p.a.
D.A. arrear credited 1. Computation of Tax on total income
to P.F. - 20,000 First 1,60,000 - Nil - Nil
Interest on NSC Next 1,40,000 - 10% - 14000
accrued - 13,000 Balance 58,670 - 20% - 11734
Interest on Housing Total 25734
Loan - 40,000 p.a Add education cess 3% 25734 772
(Loan taken after 31.03.99) Tax Payable 26506
paid - 15,000 p.a
Donation to political II. If the Assessee is women below the age of
party - 5000 65 years.
Principal of Housing
Loan repaid - 23000 p.a First 190000 - Nil - Nil
P.F. Contribution - 24000 p.a Next 110000 - 10% - 11000
Investment in IDBI Balance 58670 - 20% - 11734
tax Saving bond - 40,000 Total 22734
Employment tax paid - 2600 p.a
Add education cess 3% 22734 682
pension fund of LIC - 22,000 p.a. Tax Payable 23416
of First child - 25,000 Deductible Amount u/s 80C
Medical Insurance 1. P.F. contribution current 24,000
premium paid - 8000 p.a.
2. P.F. D.A. arrear credited 20,000
3. Interest on NSC 13,000
Computation of total income
4. Principal of H. Loan 23,000
and tax payable by assessee ‘A’
Assessment Year 2010-11 5. LIC premium paid 15,000
Previous Year 2008-09 6. EducationalExpense
First Child 13,000
Basic pay - 1,94400 Second child 25,000
Dearness Pay - 97200 7. Contribution to
D.A - 186624 pension fund (80CCC) 22,000
Festival Allowance - 1250 8. Investment IDBI tax
HRA - 1800 saving Bond Rs. 40,000 40,000
D.A. credited P.F - 20,000
Gross Salary - 501274
Less Employment Tax
paid u/s 16 (III) - 2600
Net salaries - 498674 Notes:
Less Interest on 1. Qualifying sum deductible u/s 80 C Rs.
Housing Loan - 40000 1,00,000 (including pension fund
- 458674 contribution u/s 80 CCC) Or Rs. 62000 which
Add interest on NSC - 13,000 our is Less.
Gross Total Income - 471674 2. Treatment of NSC
Less 80 C 100000 a. Include interest on NSC under the Head
income from other source.
b. Qualifies for deduction u/s 80 C
Table showing interest on NSC for
deduction u/s 80C. Given rate is interest
for every Rs. 100 of investment.
investment I II III IV V VI
year year year year year year
1.3.2003 9.20. 10.05 10.07 11.98 13.09 14.29
onwards 8.16 8.83 9.55 10.33 11.17 12.08