CTC PLANNING GUIDANCE AND HOW TO INVEST WISELY TO SAVE TAX EFFECTIVELY.

2. CTC AND OTHER POINTS NEEDS TO BE KEPT
 25th Feb, 2021, Friday
Mondeal Heights, Iscon Circle, Ahmedabad
 CA Nitin Pathak
 President, ISACAAhmedabad Chapter
 F.C.A ,CISA, CISM,CIA, CISSP(USA)
 DISA(ICAI) ,DIRM(ICAI) ,SAP(FICO)
Certification course on International taxation( ICAI)
Certification course on IFRS ( ICAI)

3. We are going to deliberate on CTC ,
what is simple tax option available, what
needs to be taken while submitting the
papers to CA/Tax consultant

5. EXEMPT INCOME
1. Interest on PPF/GPF/EPF
2.Interest on tax free bonds( Infra structure
Companies)
3.Dividends on Shares and on Mutual Funds.
4.Any sum received under a life insurance
policy.
5.Saving bank interest of bank up to Rs
10,000/- U/s 80TTA & 50,000/- U/S80TTB

6. GIFT TAX
 Gift received above Rs.50,000/- is taxable, except from
specified persons :
 1. Spouse .
 2. Brother or sister
 3. Brother or sister of the spouse.
 4. Brother or sister of either of the parents of the individual.
 5.Any lineal ascendant or descendant of the individual.
 6. Any lineal ascendant or descendant of the spouse of the
individual.
 7. Spouse of the person referred to in (2) or (6).
Also, gifts received on the occasion of marriage or
under a will by way of inheritance are also tax free

8. Tax Planning
Filling income tax return of wife, sons,
daughters, etc.
Creating HUF/Company/Firm/LLP
Invest Income flow in such a manner that
creates minimum tax liability
Transferring the fund directly/indirectly in the
name of spouse, daughter-in-law or minor
child will lead to deem income in the hand of
transferor

9. NATIONAL PENSION SCHEME(NPS)
NPS keep contributing till the age of 65 years
Deduction to NPS Scheme for contribution by
individual u/s 80CCD(1) :
Salaried employee 10% of his salary;
Non salaried employee 20 % of his GTI
Deduction towards NPS scheme for
contribution made by the employer u/s
80CCD(2)(No deduction in excess of 10% of
salary)

10. NATIONAL PENSION SCHEME(NPS)
Additional exemption up to Rs.50,000 :u/s
80CCD(1B)
Tax at NPS-Withdrawal
Partial withdrawal up to 25 % exempt
40% of the accumulated balance shall be
exempt from tax on withdrawal /maturity
On death tax free to nominee
Pension taxable
Amount utilized for buying annuity tax free
from NPS-Withdrawal /Maturity

11. COMPUTATION OF GROSS TAXABLE INCOME
Five heads of income
1.Income from Salaries
2.Income from House Properties
3.Profit & Gains of Business &
Profession
4.Capital Gains
5.Income from Other Sources

12. INCOME FROM HOUSE PROPERTY
Self occupied/Let-out: Up to Rs200000
for HBA interest : No other rebate .
Before possession interest 5 years
Other than self occupied:
A. Determine Annual Rental Income
B. Municipal tax
C. Deduct 30 %: Statutory deduction
D. HBA interest

13. PROFIT FROM BUSINESS / PROFESSION
Income derived from business and
profession
The expenses which are incurred to earn the
income is allowable as business expenditure
Capital expenditure/Expenditure having
endurable benefit not allowed
Personal expenditure not allowed

14. INCOME FROM OTHER SOURCES
Interest Income:
Company deposits
Debentures/bonds
Savings / Fixed deposits with banks
Post office savings schemes like MIS,
NSC, Time Deposit etc.
Private loans given to relatives, friends
or any other entity.
Government securities.

15. 15G AND 15H
The above form one can not submit if
income of the assessee is higher than basic
exemption limit.
If you still submit the form you are liable
for penal action.

16. CAPITAL GAINS
Any sale of a personal asset
( Certain assets exempt), capital gain is taxable
between sale price and purchase price
Capital gain tax is a levy on sale of
immovable property, FMV, Shares & Mutual
funds, etc.
Certain deduction is available to reduce tax
liability.
Base Year of indexation for Immovable property
is change to 01/04/2001.

17. Sr.
No.
Capital Asset Minimum Holding
Period for "Long-
Term"
1 Listed security in a recognised stock
exchange in India (other than a unit)
12 months
2 Units of Unit Trust of India 12 months
3 Unit of an equity oriented fund 12 months
4 Unlisted shares (w.e.f 1st April 2017) 24 months
5 Land or Building or both (w.e.f 1st April
2018)
24 months
6 Units of a Mutual Fund specified under
section 10(23D)
36 months
7 Any other Capital Asset 36 months

18. Exemption Capital gains:
 U/s 54 HP : 1 year before and 2/3 after
 U/s 54B Agriculture land: within two year
 U/s 54D Industrial Land: Within 3years
 U/s 54EC LTCA: within six month bonds
 U/s 54EE LTCA: within six month bonds
 U/s 54F Any Capital Assets (Less residential) 1 year
before 2 /3 year after in residential property.
 U/s 54G Industrial land /Building and plant shifting of a
plant
U/s 54GB residential property being a House/Plot of land
Investment in specified equity within 1 year
 U/s 54GA shifting of a plant to specified economic zone

19. LTCG SALE OF EQUITY SHARES, MF U/S 10(38)
& 112A
 Section 10(38) exemption withdrawn
 New section 112A added
 LTCG on from transfer of long term capital asset(LTCA) being
an equity share in a company or a unit of an equity oriented fund
or a unit of a business trust shall be taxed at 10 per cent of
such capital gains exceeding one lakh rupees .
 The rate of 10 per cent will be applicable to such LTCG, if—
 i) in a case where LTCA is in the nature of an equity share in a
company , securities transaction tax(STT) has been paid on both
acquisition and transfer of such capital asset; and
 ii) in a case where LTCA is in the nature of a unit of an equity
oriented fund or a unit of a business trust, STT has been paid on
transfer of such capital asset.
18

20. U/S 112A FOR COMPUTATION OF LTCG
 The first and second provisos to section 48, The indexation benefit in
respect of cost of acquisitions and cost of improvement while
computation of LTCG is withdrawn
 Capital gains in foreign currency in the case of a non-resident, will
not be allowed.
 The new scheme of computation of LTCG under:-
 The cost of acquisitions in respect of the LTCA acquired by the
assessee before the 1st day of February,2018 , shall be deemed to be
the higher of –
 a) the actual cost of acquisition of such asset; and
 b) the lower of –
 (I) the fair market value of such asset as on 31st January, 2018 ; and
 (II) the full value of consideration received or accruing as a result of
the transfer of the capital asset.
 Broad three scenario is explained
19

21. FMV : FAIR MARKET VALUE(SHARES/UNITS OF MF)
 1. In a case where the capital asset is listed on any
recognized stock exchange, the highest price of the
capital asset quoted on such exchange on the 31st day of
January, 2018.
 1.A However, where there is no trading in such asset on such
exchange on the 31st day of January, 2018 , the highest price
of such asset on such exchange on a date immediately
preceding the 31st day of January, 2018 when such asset was
traded on such exchange shall be the fair market value;
 2. In a case where the capital asset is a unit and is not listed
on recognized stock exchange, the net asset value of such
asset as on the 31st day of January, 2018.
20

22. Sr NO. Particulars Scenario-1 Scenario-2 Scenario-3
1 Actual Cost of acquisition 1000 1000 100
2
2A
FMV as on 1st
February,2018 3000 3500 300
2B Sales consideration 4000 3000 70
2 Lower of 2A & 2B 3000 3000 70
3
Cost of acquisition(Higher
of 1 or 2) 3000 3000 100
4 Sales consideration 4000 3000 70
4-3 LTCG(S-C) 1000 0 -30
ROT 10% 10% 10
Tax payable 100 0 -3

23. 22

24. DEDUCTION 80C
Under this section, a deduction of up to Rs.
1,50,000 is allowed from taxable Income in
respect of investments made in some specified
schemes.
1. Life Insurance Premiums
2. Employee’s Contributions to
Employees Provident Fund/GPF
3. PPF(Maximum Rs.1,50,000/-)

25. DEDUCTION 80C
4. NSC (National Savings Certificates)
5. Unit Linked Insurance Plan (ULIP)
6. Repayment of Housing Loan (Principal)
7. Equity Linked Savings Scheme (ELSS) of
Mutual Funds
8. Tuition Fees including admission fees or
college fees paid for full-time education of
any two children of the assesse (Any
development fees or donation or payment of a
similar nature shall not be eligible for
deduction).

26. DEDUCTION 80C
9.Interest accrued in respect of NSC VIII issue.
10.Pension scheme of LIC of India or any other
insurance company.
11.Fixed Deposit with Banks having a lock-in
period of 5 Years
12.Amount deposited under Post Office Senior
Citizens Scheme.
 13.Amount deposited in Five Year Time Deposit
Scheme in Post Office
14.Amount deposited in the NABARD (Rural
Development Bonds of NABARD)

27. 80D
On whose life health
Insurance Policy is taken
Self
&
Pare
nts
Total
Premium paid + preventive
health check up expenses of
self, family, dependent
25000 25000 50000
Additional Deduction if one
of the Insured is Senior
Citizen (60 year of Age)
5000 5000 10000

28. U/S 15/17 SALARY INCOME
. Salary is chargeable to tax on “due” or
“receipt” basis whichever is earlier and
includes wages, annuity or pension,
gratuity, fees, commission, perquisites or
profits in lieu of salary, advance salary,
leave encashment, etc.

29. SECTION 17(3)/ PROFITS IN LIEU OF
SALARY
Any compensation from employer
or former employer on termination
or modification of the terms of
employment.

30. SECTION 17(3)/ PROFITS IN LIEU OF
SALARY
Any receipt from Employer/former
employer or from provident/other fund
(other than gratuity, commuted pension,
retrenchment compensation, house rent
allowance, provident fund or such other
funds) to extent not consisting of
contributions by assessee/ interest on
such contributions.

31. SECTION 17(3)/ PROFITS IN LIEU OF
SALARY
Any sum received under a Keyman insurance
policy including the sum allocated by way of
bonus on such policy.
Any sum received before his joining any
employment or after cessation of his
employment.

32. PENSION [SECTION 10(10A)]
 Pension is taxable as salary
 Commuted value of pension is exempt:
For Government employees, fully exempt
For other employees, following is exempt —
If employee has received gratuity then commuted value
of 1/3rd of the pension which he is entitled to receive,
and
In any other case, commuted value of 1/2 of the
pension which he is entitled to receive.
Any payment in commutation of pension received from
fund set up by LIC is exempt under section 10(23AAB)

33. GRATUITY [SECTION 10(10)]
 Death-cum-retirement gratuity received by the Government
employees or employees under Civil Services — wholly
exempt from tax.
 Employees covered by Payment of Gratuity Act.
Amount received on termination, after continuous service
of not less than five years qualifies for exemption.
Exemption is least of the following: (aggregate
maximum from any number of employers)
15 days salary (denominator taken as 26 in case of
monthly salary) for every completed year/ part thereof
in excess of 6 months, or
₹20,00,000/-
Gratuity actually received whichever is less.

34. Other employees — Amount received on retirement,
incapacitation, death or termination
— Exemption is least of the following :
(aggregate maximum from any number of
employments)₹20,00,000/-.
Half month’s salary for each completed year of
service; (based on last ten months’ average salary),
or
Gratuity actually received.
Definition of salary: Salary includes dearness
allowance, if terms of payment allows but excludes
all other allowances and perquisites
GRATUITY [SECTION 10(10)]

35. RETRENCHMENT COMPENSATION
-SECTION 10(10B)
Exempt to the extent of the lower of the
following:
Amount calculated in accordance with s.
25F(b) of the Industrial Disputes Act, 1947; or
₹5,00,000/-
In cases where the scheme is approved by the
Central Government the entire amount is exempt.

36. VOLUNTARY RETIREMENT
COMPENSATION [SECTION 10(10C)]
Any amount received or receivable by an
employee of
A public sector company, or
Any other company, or
An authority established under a Central, State or
Provincial Act, or
A local authority.
A co-operative society.
A university established under a Central, State or
Provincial Act.

37. VOLUNTARY RETIREMENT
COMPENSATION [SECTION 10(10C)]
An Indian Institute of Technology/ State
Government/The Central Government;
Notified institutions having importance
throughout India or in any State or States
Notified Institute of Management at the time of
his voluntary retirement or termination under a
scheme framed in accordance with guidelines
prescribed by Rule 2BA.

38. Exemption allowable only in one A.Y.
restricted to Rs 5 lakhs. The said limit is
relaxed w.e.f. A.Y. 2004-05 to cover VRS
payments received in instalments with an
overall limit of ₹5,00,000.
* U/s 89 relief will not be available w.e.f. 1-4-
2010 where exemption is claimed.
VOLUNTARY RETIREMENT
COMPENSATION [SECTION 10(10C)]

39. HOUSE RENT ALLOWANCE
50% of salary (Mumbai, Kolkata, Delhi or
Chennai) and 40% of salary where
residential house is situated at any other
place;
 HRA paid
 Actual rent paid over 10% of salary
Where Salary = B+A+B+C

40. LEAVE ENCASHMENT
Encashment of earned leave while in service
will be treated as income
Exempt at the time of retirement:
10 months salary * last 10 months
average salary or
Rs.3,00,000/- whichever is less
Entitlement to earned leave not to
exceed 30 days for every year of actual
service.
Limits aggregate n of employers.

41. LEAVE TRAVEL CONCESSION
For himself/spouse/children/dependent
parents/siblings
Amount actually spent for travelling
In India only
Twice in a block of four calendar years. (Block year
2018-21)
Two surviving child
Road travel on vehicle, second class train fair
Air fare of a economy class/Air condition first class
rail fare/1st class or deluxe class public transport fare
For C/f entitlement one is allowed

42. Specified period means the period commencing from
12thOctober, 2020- 31st March, 2021
The amount of exemption shall not exceed thirty-six
thousand rupees per person or one-third of specified
expenditure, whichever is less;
LEAVE TRAVEL CONCESSION: CASH SCHEME

43. Situations Amount of exemption
Where journey is
erformed by air
Amount of economy class air fare of the
national carrier by shortest route or
amount spent whichever is less
Where journey is
erformed by rail
Amount of air-conditioned first
class rail fare by the shortest route
or amount spent whichever is less
Where the place of origin of
ourney-destination are connected
y rail and journey is performed by
ny other mode of transport
Amount of air-conditioned first
class rail fare by the shortest route
or amount spent whichever is less

44. Situations Amount of exemption
Where the place of origin of journey and destination are not
connected by rail
a. Where a recognized
public transport exists
First class or deluxe class
fair by the shortest route
or the amount spent
whichever is less
b .Where no recognized
public transport exists
Air conditioned first class
rail fare by shortest route
or the amount spent
whichever is less.

45. MEDICAL BENEFITS (U/S 17)
Family includes: Spouse, children and
dependent brothers, sisters and parents
Hospital maintained by the employer.
Hospital maintained by the Government, or any
local authority or any other hospital approved by
Government.
Treatment in respect of prescribed diseases in a
hospital approved by the Chief Commissioner,
provided certificate from the hospital specifying the
disease and receipt for amount paid is attached
along with the return of income.

46. MEDICAL BENEFITS U/S 17
Medical insurance only under a Central
Government approved scheme.
Reimbursement of Insurance premium for
mediclaim, etc.
FOR AY21-22 this will above would not be
entitled. It will be included in Standard
Deduction upto Rs. 40,000/-

47. MEDICAL BENEFITS U/S 17
Actual expenditure on medical treatment outside
India, including expenditure on travel and stay
abroad as also on travel and stay abroad of one
attendant, to the extent permitted by RBI.
Expenditure on travel abroad will be exempt only
if the gross annual total income of the employee
excluding this perquisite is ₹2 lakhs or less.

48. SPECIALALLOWANCES EXEMPT
Any allowance, not in the nature of perquisite,
granted to meet expenses wholly, necessarily and
exclusively incurred in the performance of duties,
to the extent to which actually incurred.
Allowance granted to meet personal expense at the
place where duties of his office are ordinarily
performed or at the place where he ordinarily
resides or to compensate for increased cost of
living as may be prescribed in Rule 2BB.

49. SPECIAL ALLOWANCES EXEMPT
Travel expenses on tour or transfer,
Ordinary daily charges on account of
absence from normal place of duty on tour
or journey in connection with transfer
For conveyance in performance of
duties where it is not provided
For expenditure on helper engaged for
performance of office duties

50. For encouraging academic, research and
training pursuits in educational and
research institutions
For purchase or maintenance of
uniform,
Special Compensatory Allowance in
specified areas to extent specified
SPECIAL ALLOWANCES EXEMPT

51. 1 City Compensatory Allowance
2 Fixed Medical Allowance
3 Tiffin/Lunch/Dinner/Refreshment
Allowance
4 Servant Allowance
5 Dearness Allowance
6 Project Allowance
7 Overtime Allowance
8 Interim Allowance

52. Sr Allowances Exemption limits
1 Children Education allowance ₹100 p.m per child
maximum 2 children
2 Children hostel exp. Allowance ₹300 p.m per child
maximum 2 children
3 Tribal area allowance ₹200 p.m
4 Transport allowance (between
Residence & office)From
AY19- 20:Rs.3200/-
₹800 p.m & ₹1600 p.m
for blind/handicapped
5 Transport allowance for transport
employee (During the course of
transport)
Least of 70% of
allowance or ₹10,000
p.m
6 Underground allowance ₹800 p.m

53. Sr Allowances Exemption limits
7 Compensatory field area
allowance
Maximum ₹ 2600
p.m.
8 Compensatory modified hill area
allowance
Maximum up to ₹1000
p.m.
9 Special Compensatory hill area
or high altitude
₹300 p.m to ₹ 7000
p.m allowance, etc.
10 Border area, Remote area,
Disturbed area allowance
₹200 p.m to ₹ 1300
p.m.
11 High altitude allowances
(Non-congenial climate)
₹ 1,060 p.m. (Altitude for
9,000 ft. to 15,000 ft.), ₹
1,600 p.m. (Above 15000
ft.)
12 Special compensatory for
highly active field area
Limit is ₹ 4,200
pm allowance

54. PERQUISITES
 Value of rent-free accommodation/value of
concession in rent. 15 % of Salary or rent paid
whichever is lower
 Value of any security or sweat equity shares allotted
or transferred by employer/former employer as free
or concessional cost.
 Contribution to an approved superannuation fund by
the employer, up to Rs.1,00,000/-
 Any sum payable either directly or through a fund by
employer (other than recognized PF, approved
superannuation fund, etc.) to effect an assurance on the
life of the employee or to effect a contract for an annuity.

55. LOAN TO EMPLOYEE
Any loan given by an employer is taxable
at the rate of for the same purpose, if
given by SBI, on maximum monthly
balance
Reduced by any amount charged by an
employer

56. Assets given Value of benefits
a) Use of laptops and Nil
computers
b) Movable asset other
than Laptops and
computers
i. 10% p.a. of the actual
cost of such asset, or
ii.the amount of rent
paid, or payable by the
employer
iii.Less: amount
recovered from
employee.

57. Assets transferred Value of perquisites
Computers &
electronics
Depreciated value of asset [depreciation is
computed @50% on WDV for each completed
year of usage] less: amount recovered from
employee.
Motor cars Depreciated value of asset [depreciation is
computed @20% on WDV for each completed
year of usage] less: amount recovered from
employee.
Any other asset Depreciated value of asset [depreciation is
computed @10% on SLM for each completed
year of usage] less: amount recovered from

58. MISCELLANEOUS
Free meals during Actual cost to the
office hours employer in excess of
₹
50 per meal or tea
or snacks
(Free meal in less: amount
remote area or recovered from the
offshore installation employee. (Tea or
area is not taxable non-alcoholic
perquisite) beverages and snacks
during working hours
is not taxable)

59. MISCELLANEOUS
Expenditure incurred on
credit card or add on card
including membership fee
and annual fees
Actual expenditure to
employer is taxable Less:
amount recovered
Less spent for official purpose
Expenditure on club other
than health club or sports
club or similar facilities
provided uniformly to all
employees
Actual expenditure
incurred by the employer
Less: amount recovered Less
spent for official purpose

60. Specified employee Section 17(2)(iii)
Director of the company or
Employee having 20% or more voting
power in the employer company or
Employee having salary* more than ₹
50,000
*Salary means all taxable monetary benefit
after deduction u/s 16

61. WHAT IS THE DEFINITION OF SALARY FOR
CALCULATION ?
Salary = basic salary + DA + bonus (current
year) + commission + taxable portion of all
allowances + monetary payment from
employer other than PF (not include
perquisites)

62. TAX FREE PERQUISITES
Employer’s contribution to staff group
insurance scheme
Actual traveling expenses paid/reimbursed for
journeys undertaken for business purposes
Payment of annual premium on personal
accident policy, if such policy is taken to
safeguard the employer’s interest

63. Statutory Provident
Fund
Recognised
Provident Fund
Employers
contribution to
provident fund
Not taxable Not taxable up to 12
per cent* of salary
Employee’s
contribution
Available
deduction u/s 80C
Available
deduction u/s 80C
Interest
credited
Fully exempt Exempt up to 9.5%
Lump sum payment
received at the time
of retirement/
Exempt u/s
10(11)
Exempt from tax
u/s10(12)
Subject to conditions:
not

64. Unrecognised Provident
Fund
Public Provident Fund
Employers
contribution to
provident fund
Not taxable Employer does not
contribute
Employee’s
contribution
Not available U/s 80C Available deduction u/s 80C
Interest
credited
Not taxable at the time of
credit
Exempt from tax
Lump sum
payment
received at the
time of
retirement or
termination of
service or
withdrawn
Employee’s contribution
exempt from tax & Interest
thereon is taxable under the
head of Income from other
sources.
Employer s contribution
and interest thereon is
taxable as Profits in lieu
Exempt from tax u/s

65.  Change in ITR of A.Y. 2021-22
 Fees for late filing of return [Section 234F].
 Require more details of salary and
house(PAN/Adhar/Cash@Cheque) property income.
 On presumptive basis additional details :
 Debit side: Fixed assets, Cash/bank balance, Inventories,
Sundry debtors, Loans and advances and other current assets
including advance to creditors :
 Credit side: Capital Account, Secured/Unsecured loan,
Advances from debtors, Sundry creditors ,GIFT receive during
the year in cash or kind
 Further, new ITR 4 seeks GSTR no. of the assessee and
turnover as per GST return filed by him.
 Details of GSTin 26AS
 Details of business transactions with registered and
unregistered suppliers under GST.

66. Capital Gains in case of transfer of unquoted
shares.
 Reporting of sum taxable as Gift.
Revised Depreciation Schedule i.e. the highest rate
of depreciation for any block of asset is restricted to
40%
Info relating to capital gains exemption to be furnished
in detail.
Disallowance of expenses in case of TDS default (for
residuary income).

67. Taxability on remission of trading liability in case
of 'Income from other source'.
Impact on profit or loss due to ICDS deviation.
Details of foreign bank account of non-residents.
 Ownership information in case of unlisted
company.
Taxability of Dividend in excess of Rs. 10
lakhs.[Section 115BBDA]
No deduction for corpus donations made to other
institutions [Section 11].
Political Parties to confirm if cash donations are
received [Section 13A].

68. THINKS COVERED IN ONE LINE
WILL
Annual Return
RTI
Rights of consumer
Rights of a citizen
Record of books, vouchers and
documents
Reverse Mortgage
GST

69. Prayer
Oh god give me a courage,
To change the things, which I can,
Oh God give me a serenity to
accept the things,
which I cannot change, Give me a
wisdom to know,
what I can change and what I can’t
change.

70. Follow me on:
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https://canitinmpathak.blogspot.com/
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71. Thank you for being with me.