Clarification on Tax deduction on stipend to post graduate

चिकित्सा विज्ञान के पोस्ट-डिग्री/पोस्ट-डिप्लोमा पाठ्यक्रमों के छात्रों को भुगतान/देय छात्रवृत्ति आयकर से मुक्त है। इस प्रकार, उनके अनुसार वजीफा छात्रवृत्ति के चरित्र का हिस्सा है और ‘वेतन’ सहित किसी भी शीर्ष के तहत आयकर के लिए उत्तरदायी नहीं है।

Contributory pension Scheme (NPS/CPF)

The government has fixed 10% of the Basic Pay+ Grade Pay+ Dearness Allowance+ NPA, as the mandatory amount of contribution to the Scheme. No excess or lesser amount should be

deducted from the salary. It is the responsibility of the DDOs, for the correctness of the deduction. If, say, the total of BP+GP+DA is Rs 13410, than only 1341/ (@10% of 13410/-) should be deducted from the salary.
For any deviation, in the deduction, the DDO concerned would be held responsible.

The eligible state government employee shall commence contribution to CPS, after allotment of CPS account no. by this office, from the first month of joining the government service, as ‘Arrear’. This will also be deducted @ 10% of the BP+GP+DA, of the particular month. months are due, starting from the month of joining CPS, to the month of ‘First contribution’ is made by the DDO, after getting the CPS INDEX NUMBER.

Illustration: If month of joining is January, 2007 and month of first deduction, after getting CPS INDEX NUMBER, is January, 2009, the total arrear months are 24, and arrear has to be deducted as 1/24 in January, 2009, 2/24 in February, 2009, 3/24 in March, 2009…..up to 24/24 in Dec, 2010.

This amount has to be shown separately, as ‘ARREAR’ along with current month’s CONTRIBUTION’. (I.e. one subscription for current month and one additional for subscription arrears).

For ‘Arrear’ contribution also, equivalent amount would be contributed by the employer.

Other arrears such as PC arrears or DA arrears should be deducted in the month of account and SHOWN SEPARATELY AS ‘OTHER ARREARS’ in instalments only.

Interest would be calculated at the prevailing rate applicable to GPF which is now at 8%.

Interest is given for current credits from the month of contribution. For arrear credit, interest is from the month of transaction, though arrear may relate to previous months.

Final payment procedure: At the time of retirement, the employee would be required to invest 40% of the pension wealth to purchase an annuity which will provide pension for life time to the employees and in the event of his death to his dependent parents/spouse.
The remaining 60% pension wealth would be paid to the employee at the time of his retirement to utilize in any manner.

CPF deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites).

The monthly contribution is 10 percent of the Pay and DA to be paid by the employee and matching contribution by the state Government. The contributions and returns thereon would be deposited in a non-withdrawable pension account.

CPF = 10% of (Basic Pay+DA+NPA)

House Rent Allowance & Deduction (HRA)

Salaried employees who live in a rented house can claim the HRA to lower taxes. This can be partially or completely exempt from taxes. The allowance is for expenses related to rented accommodation. If you don’t live in a rented accommodation, this allowance is fully taxable.

Type of cities% of HRA
X type cities30
Y type cities20
Z type cities/areas10

Type of cities% of HRA
X type cities24
Y type cities16
Z type cities/areas8

Classification of cities –

Here is a list of revision of cities classified for house rent allowance:

Cities falling under X (population of 50 lakh & above) category

Hyderabad, Delhi, Ahmedabad, Bengaluru, Greater Mumbai, Pune, Chennai, Kolkata.

Cities falling under Y (population between 5 lakh & 50 lakh) category

Vijaywada, Warangal, Greater Visakhapatnam, Guntur, Nellore, Guwahati, Patna, Chandigarh, Durg-Bhilai Nagar, Raipur, Rajkot, Jamnagar, Bhavnagar, Vadodara, Surat, Faridabad, Gurgaon, Srinagar, Jammu, Jamshedpur, Dhanbad, Ranchi, Bokaro Steel City, Belgaum, Hubli-Dharwad, Mangalore, Mysore, Gulbarga, Kozhikode, Kochi, Thiruvanthapuram, Thrissur, Malappuram, Kannur, Kollam, Gwalior, Indore, Bhopal, Jabalpur, Ujjain, Amravati, Nagpur, Aurangabad, Nashik, Bhiwandi, Solapur, Kolhapur, Vasai-Virar Cty, Malegaon, Nanded-Waghala, Sangli, Cuttack, Bhubaneswar, Raurkela, Amritsar, Jalandhar, Ludhiana, Puducherry, Bikaner, Jaipur, Jodhpur, Kota, Ajmer, Salem, Tirupur, Coimbatore, Tiruchirappalli, Madurai, Erode, Dehradun, Moradabad, Meerut, Ghaziabad, Aligarh, Agra, Bareilly, Lucknow, Kanpur, Allahabad, Gorakhpur, Varanasi, Saharanpur, Noida, Firozabad, Jhansi, Asansol, Siliguri, Durgapur.

Cities classified under Z (population below 5 lakh) category

The remaining cities and towns in various states or union territories which are not covered by under X or Y category of cities come under it.

  • HRA is  payable with  reference to  Band  Pay  +  GP +  NPA*, if any  but  special pay/personal  pay not  to  be  included.
  • In  case of  re-employed pensioners, portion of  pension to  be  added with  actual pay,  subject to  the   total   limit  of  maximum pay  scale.
  • HRA is  admissible during   all  kind  of  leave or  suspension at  the   rate  admissible before proceeding on  leave or  suspension for  the   first  180  days, beyond this  period allowance can be  claimed by  furnishing prescribed  certificates.  In  case of  leave with  medical certificate admissible up  to  8  months.
  • If the   employee does not  join  after leave in  case of  death/invalidation HRA paid  will not  be recovered but  in  case of  resignation, recovery will be  made after accepting of  resignation.
  • HRA is  admissible upto   one  year   in  case of  deputation abroad and  in  case deputation exceeds one  year,   allowance can  be  drawn   on  furnishing certificate  if the   family  resides at headquarters.
  • HRA will be  discontinued, when   an  employee is  provided with      government accommodation, from  the   date of  occupation or  from  the   8th  day  of  allotment  whichever is  earlier.
  • On  transfer, it  is  admissible for  eight   (8)  months only  at  new  station, if Govt. accommodation is  retained at  old  station.
  • HRA is  admissible to  employee living  in  a  house owned   by  him/his wife/children/parent but HRA is  not  admissible if an  employee lives  in  accommodation allotted to  his  wife/ her husband at  the   same station or  shares rent   free  accommodation with  another employees.* In seventh pay commission for HRA calculations NPA is NOT part of basic pay.

House Rent Deduction –

If any Government employee uses(allotted) govt. accommodation than rent of that place deducted 2% of Basic pay !
Applicable for both Probationary and Permanent employees !

How tax exemption is calculated –

The deduction available is the least of the following amounts:

a. Actual HRA received or

b. 50% of [basic salary + DA] for those living in metro cities (40% for non-metros); or

c. Actual rent paid less 10% of basic salary + DA