Why Should Indians Be Proud of Their Track-record of Corruption?

By Dr Awdhesh Singh The Transparency International (TI) has recently published the Corruption Perception Index (CPI) for 175 countries. India is ranked 85 with a score of 51.72 on a scale from 0 (perceived to be highly corrupt) to 100 (perceived to be very clean). It is easy to see that India is perceived to be among the most corrupt countries of the world and that calls for close introspection and deep analysis of the state of governance in our country. We are often disturbed by perceptions of others about us even though perceptions are not truths but often reflect the biases and prejudices of the perceiver. Two salesmen were sent to an African country by a shoe manufacturing company to scout new markets where they could sell their company shoes. The salesmen spent a couple of weeks there, then came back to report their findings to their manager. The first salesman said, 'There is no market in that country. I did not see anyone wearing shoes there.' The second salesman said, 'There is a huge market for shoes in that country. I did not see anyone wearing shoes there.' It is interesting to note that both salesmen observed exactly the same facts but they perceived the truth in just the opposite way. It is easy to see that one salesman was a captive of the past while the other has the vision for the future. How Corrupt We Are We Indians are a confused lot. On one extreme we feel extremely proud of our ancient civilization, culture, non-violence and spirituality but on the other end, we are ashamed of our caste system, the poverty of our masses and corruption in Governments. Our media is full of stories of corruption, crime, rape as if nothing good is happening in our country. Most people believe that government officers and politicians are corrupt beyond any hope of redemption and that nothing moves in this country without bribes. The perception, however, vary dramatically when you switch sides. If you are in government, you can see many officers who are honest and lead a simple life. I personally know many officers who retired as Member and Chairman, the top position of the revenue service, and still live in a two/three bedroom apartments in a not-so-posh colonies. However, the public perception is fueled by the exceptionally corrupt officers, whose rag-to-riches stories are flashed all over the newspapers and electronic media. Our perceptions often become our reality as we don't want to change them which give us sadistic pleasure and moral superiority. When 99% of the people in India are not part of Government, it is easy to sell the fallacy of corruption as the remaining 99% of the people feel better when government officers are defamed and condemned. Let us try to understand the truth as it is without praise or condemnation. It is here that the data provided by "Transparency International" becomes of a great value. We can trust this data more than our own perceptions of corruption in India-which are biased and subjective. The Missing Link of Corruption Before we proceed any further, please answer the following question- The height of boy A is 4 feet and the height of boy B is 5 feet. Which boy is tall? You must have answered the questions within a fraction of a second- 'Boy B is tall.' You may not even realize your mistake in answering the question, without knowing the full facts. I now give you the additional information- The age of boy A is 5 years and the age of boy B is 15 years. I am sure that your answer is different now. You now realize that boy A is exceptionally tall (for his age) while boy B is quite short (for his age). We are immediately able to correct our answers once we know that boys between the age of 5 and 15 in the growing-age. Our earlier answer was wrong because we presumed that both boys were of the same age. We know for sure that after 10 years or more, the boy A would become much taller than boy B. In the same way, there is an important factor which is missing, when we decide about the issue of corruption in any country. The most important factor that affects corruption is the economic development of the country, which can be measured by the per capita income (GDP) of the country. Let us now take a complete view of corruption by analyzing the data provided in Table 1. Table 1: Integrity and Prosperity Scores of Least and Most Corrupt Countries Country CPI Rank Integrity Score Per Capita GDP GDP Rank Prosperity Score Denmark 1 100.00 59129 6 97.31 New Zealand 2 99.43 40516 21 89.25 Finland 3 98.85 49055 12 94.09 Sweden 4 98.28 58014 7 96.77 Norway 5 97.70 100579 2 99.46 Switzerland 5 97.70 81276 4 98.39 Singapore 7 96.55 55182 8 96.24 Netherlands 8 95.98 50816 11 94.62 Luxembourg 9 95.40 112473 1 100.00 Canada 10 94.83 52037 10 95.16 India 85 51.72 1509 146 22.04 Venezuela 161 8.05 7576 77 59.14 Yemen 161 8.05 1516 145 22.58 Eritrea 166 5.17 544 177 5.38 Libya 166 5.17 10702 64 66.13 Uzbekistan 166 5.17 1878 137 26.88 Turkmenistan 169 3.45 7157 79 58.06 Iraq 170 2.87 6594 86 54.30 South Sudan 171 2.30 1289 150 19.89 Afghanistan 172 1.72 679 170 9.14 Sudan 173 1.15 1941 134 28.49 I have taken the data of the per capita income based on IMF staff estimates for the year 2013, made in April 2014. This data is available for 185 countries while the data of Transparency International is for 175 countries. Hence, in order to rationalize the two data sets, I have taken the percentile score of integrity (based on CPI score) and prosperity (based on Per Capita Income) for the purpose of comparison. It is evident from the perusal of Table 1 that ALL the most honest countries are those who are also the richest. In fact the poorest country figuring in top 10 of the CPI rank is New Zealand which is richer than 89.25 percent of the countries with per-capita-income of USD 40516. The average per capita of top 10 honest countries is USD 65908. On the bottom of the Integrity list are the countries which are mostly poor with average per capita of USD 3987-a good 16 times lower than that of the top nations. It is, therefore, evident that integrity and prosperity have a positive correlation. It is not possible for any country to become honest unless it is prosperous. It is remarkable here that even though India is poorer than 88% of the countries but it is more honest than 51.72% countries of the world. Let us try to understand why it is not possible for nations to become free from corruption unless they achieve a certain level of prosperity. Lack of Money is Root of All Evil You must have seen the news regarding the placements made by Indian Institutes of Technology (IIT) and Indian Institute of Management (IIM) students. There are hundreds of students who were offered more than a Crore rupees of salary by multinational companies for the international jobs and more than 30 lakhs of salary for Indian jobs. Some of these graduates would become CEO of the private sector companies soon and earn a salary of several crores per annum in India itself. Now compare these salaries with the salaries of the top civil servants like IAS, IPS or IRS officers, who are selected through the prestigious Civil Services Examinations (CSE) conducted by UPSC. On the average, 4-5 lakhs candidates appear for the examination for around 1000 positions. Aspirants must complete a three-stage process, with a final success rate of about 0.2% of the total participants. Thus getting into Civil Services is far more difficult than getting into IITs and IIMs. There are thousands of civil servants in India who have IIT and IIM degrees. Yet the salary of a civil servant is hardly Rs. 5 lakhs per annum with an annual increment of just 3%. Most newly joined IRS officers have to arrange for their own accommodation with the small HRA. They have no vehicle at their disposal. Yet, these officers are expected to maintain the highest level of integrity and perform their job without any fear or favour. It is wisely said: If you pay peanuts, you will get monkeys. Yet no country has taken this dictum as seriously as Singapore, which has consistently occupied the position of the most honest country of Asia. In October 1994, Government issued a White Paper entitled "Competitive Salaries for Competent & Honest Government", where it was recommended that salaries of Ministers and senior Civil Servants be pegged at 2/3 rd the average income of the top 4 earners in 6 private sector professions. The annual pay of the Prime Minister of Singapore was set at USD 3,072,200 (Rs 15 Crores approx) in 2010 and all other Ministers and bureaucrats are also paid the salary which was in tune with the salaries paid in the corporate for the commensurate work. Lee Kuan Yew, the first Prime Minister of Singapore, who is widely recognized as the founding father of modern Singapore said in 2000 - "… Singapore will remain clean and honest only if honest, able men are willing to fight elections and assume office. They must be paid a wage commensurate with what men of their ability and integrity are earning for managing a big corporation or successful legal or other professional practice. … If we underpay men of quality as ministers, we cannot expect them to stay long in office earning a fraction of what they could outside. With high economic growth and higher earnings in the private sector, ministers' salaries have to match their counterparts in the private sector. Underpaid ministers and public officials have ruined many governments in Asia. Adequate remuneration is vital for high standards of probity in political leadership and high officials." If we adopt the similar yardstick for Indian Ministers and top civil servants and judges in India, their salaries should be several crores per annum. However, even the Prime Minister of India draws a meager monthly salary of Rs. 1.6 lakhs, which is even less than the salary of many fresh IIT/IIM graduates. The salaries of top bureaucrats and Judges are no better. It is impossible for any Government in India to pay such high salaries as we simply don't have such revenues as the developed countries have at their disposal. Hence, unless the economy improves, we can't expect the government servants and common people to display the same level of integrity as expected from them. The Measurement of Character While it is easy for politicians to give slogans and promise to remove poverty and corruption within days of coming to power, it is difficult to fulfill such promises. Often citizens develop distrust and contempt against the politicians who can't keep their promises. Yet citizens too have to share the blame as they tend to vote for a party, which makes maximum promises, rather than a party which promises what it can truly deliver. The path of economic growth is slow. At present, the per capita income of India is only USD 1509, yet people try to compare India to a developed country – whose per capita is often USD 30,000 or more. We must know that it is going to take time grow from USD 1509 to USD 30,000. Even if we take an annual growth rate of 8% per annum, it will take at least 40 years to reach to the level of a developed country presuming that they don't grow at all.  With the growth rate of 6% per annum, the time needed is more than 50 years to become a developed country. There are unfortunately no short cuts for removing corruption, though we are often tempted to believe that stricter laws and severe penalties can curb corruption. One of the best examples is the case of China where corruption is punishable with the death penalty if the sums acquired illegally go beyond a certain threshold. China executes more people in the world than rest of world put together. Yet they have failed to tackle corruption. As a matter of fact China is placed much worse than India at number 100 even though its per capita incomes of USD 20925, which is 14 times more than India. The other totalitarian country Russia performs even worse being ranked136 in honesty even though its per capita income is USD 14591. The Character of Indians There is no doubt that integrity is extremely important for the growth of a nation. Hence, if a country is relatively more honest than the nations of similar income level, it has better chance of development. The nations whose people are able to resist the temptation are more likely to succeed in future than those who are giving in to temptation. I have tried to measure the Character of nation by assigning the "Character Score", which is derived by comparing the Integrity Score with the Prosperity Score. If people can resist being corrupt despite being poor, they certainty have higher character than those who give in to corruption despite being rich. Let us now see where India stands on the 'Character Score' chart. Table 2: The List of Major Countries based on their "Character Score" Country CPI Rank Integrity Score Per Capita Income GDP Rank Prosperity Score Character Score Ethiopia 110 37.36 518 178 4.84 32.52 India 85 51.72 1509 146 22.04 29.68 Zambia 85 51.72 1845 139 25.81 25.91 Mozambique 119 32.18 593 174 6.99 25.19 Nepal 126 28.16 692 169 9.68 18.48 Sri Lanka 85 51.72 3204 123 34.41 17.31 Pakistan 126 28.16 1275 152 18.82 9.34 United Kingdom 14 92.53 39372 23 88.17 4.36 Japan 15 91.95 38468 24 87.63 4.32 Germany 12 93.68 44999 18 90.86 2.82 Denmark 1 100 59129 6 97.31 2.69 Bangladesh 145 17.24 1033 159 15.05 2.19 Luxembourg 9 95.4 112473 1 100 -4.6 United States 17 90.8 53001 9 95.7 -4.9 Myanmar 156 10.92 1113 156 16.67 -5.75 Brazil 69 60.92 11173 61 67.74 -6.82 Israel 37 79.31 36926 26 86.56 -7.25 Iran 136 22.41 4769 99 47.31 -24.9 Italy 69 60.92 34715 27 86.02 -25.1 Argentina 107 39.08 14709 51 73.12 -34.04 China 100 43.1 20925 39 79.57 -36.47 Russia 136 22.41 14591 52 72.58 -50.17 Venezuela 161 8.05 7576 77 59.14 -51.09 Iraq 170 2.87 6594 86 54.3 -51.43 It is hearkening to see that India is almost on the top of Character Score, just behind Ethiopia. There is no country in the world which is as honest as India with the same level of economic development. Ethiopia, the only country which excels India, is much smaller with a population of merely 85 million as compared to 1250 million inhabitants of India. Proud to Be Indian It is evident that the future of India is bright as Indians are better in resisting temptations as compared to people of other nationalities. The same conclusion was drawn by the world famous experiment called "The Marshmallow Test" conducted in the late 1960s by Walter Mischel at a Stanford University nursery school. In the experiment, 4 and 5-year-olds were presented with a difficult choice. They could eat one treat i.e. Marshmallow (Sugar candy) immediately or wait for 15 minutes longer to be rewarded with two. Years later, Mischel followed up with children in his original study and discovered a surprising link: The kids who had waited for two treats (resisters) had higher SAT scores, greater workplace success, a lower body mass index and they were less likely to take drugs. The effect of high character is quite visible for India which is constantly improving its ranking in the honesty front. We have improved over 9 points in a single year as we climbed from 94 in 2013 to 85 position this year. However, it would be unreasonable to believe that we can occupy the top position soon as we have long way to go to remove poverty in India and become a developed nation. What we need is patience, constant economic growth and confidence in our values. [About the Author - Dr Awdhesh Singh is posted as Commissioner of Central Excise and Service Tax in Large Taxpayer Unit (LTU) Chennai. His first book "Practising Spiritual Intelligence" has been on the bestseller list. His new book "The Secret Red Book of Leadership" has been launched recently. The views expressed by the author are strictly personal.] (DISCLAIMER: The views expressed are strictly of the author)

Inordinate delay in DPC

F. No. AICEIA/CBEC/CR/2014/37                                                 Date: 29.12.2014

To

The Chairman,

Central Board of Excise & Customs,

North Block,

New Delhi-110 001.

Subject: - Convening of DPC for promotion of Inspectors to the Grade of the Superintendent of Central Excise and protection of Seniority - Reg.

Sir,

       Please refer to our letters dated 28.10.2014, 07.11.2014 and 18.11.2014 under captioned subject, "Fixation of single unified date of promotion across all Cadre Controlling Zones - request reg".

          Your kind attention is invited on the fact that the DPC for promotion to the grade of Superintendent has not been convened in Central Excise & Service Tax, Chennai Zone and Mumbai Zone against the vacancies created due to promotion from the grade of the Superintendent, Central Excise to the grade of Assistant Commissioner, Central Excise & Customs vide Office Order No. 192/2014 dated 22.10.2014 issued by CBEC.  

         Sir, the inordinate delay in convening the DPC in Chennai Zone and Mumbai Zone has caused undue mental agony to several Inspectors of both zones.  It is established fact that the cadre of Inspector in Central Excise is the most stagnated cadre in any of the Central Government departments and delay in promotion affects moral of the cadre.        

   

        The DPC for the promotion of Inspector to the grade of the Superintendent has already been conducted in almost all the zones of Central Excise.  It is, therefore, requested to order:-

1.      the respective Cadre Controlling Authorities to conduct the DPC on priority basis and without further delay.

2.   to protect the seniority in the grade of the Superintendents, of those Inspectors, who have been badly affected due to these inordinate delays.

        

          Thanking you.                                                       

Yours faithfully,

Abhishek Kamal

Secretary General

DECLARING ASSETS AND LIABILITIES UNDER LOKPAL EXTENDED TILL 30TH APRIL 2015

 No. 407/12/2014-AVD-IV(B)

Bharat Sarkar / Government of India

Ministry of Personnel, Public Grievances and Pensions

Department of Personnel and Training

New Delhi, the 25th December, 2014

Office Memorandum

Subject: Declaration of Assets and Liabilities by Public Sevants under Section 44 of the Lokpal and Lokayuktas Act, 2013 – Extension of last date for filling revised returns by public servants who have filed property returns under the existing service rules – regarding

The undersigned is directed to refer to this Department’s D.O letter of even No. dated 8th September 2014 regarding the furnishing of information relating to assets and liabilities by public servants under section 44 of Lokpal and Lokayuktas Act, 2014 and forwarding therewith copies of the Central Government’s Notification dated 8th September, 2014 containing

(a) amendment to the Lokpal & Lokayuktas (Removal of Difficulties) Order, 2014, for the purpose of extending the time limit for carrying out necessary changes in the relevant rules relating to different services from “two hundred and seventy days” to “three hundred and sixty days” from the date on which the Act came into force, i.e., 16th January, 2014 and

(b) the Public Servants (Furnishing of Information and Annual Return of Assets and Liabilities and the Limits for Exemption of Assets in filing Returns) Amendment Rules, 2014, extending the time limit for filing for revised returns by all public servants from 15th September, 2014 to 31st December 2014.

2. In this regard, the undersigned is directed to convey that the last date for filing of revised returns by public servants under the rules indicated in para 1 (b) above has been extended by a period of four months, i.e., from 31st December 2014 to 30th April 2015. Formal Amendments to the Public Servants (Furnishing of Information and Annual Return of Assets and Liabilities and the limits of Exemption of Assets in Filing Returns) Rules, 2014 and to the Lokpal & Lokayuktas (Removal of Difficulties) Order, 2014 are being notified separately. The formats for submission of statements regarding movable properties (Form II) and for submission of statements regarding debts and liabilities (Form-IV) under the said rules are also being revised and will be notified as a part of amendments to the aforesaid rules. They will also be uploaded on the website of this Department i.e., http://persmin.nic.in/DOPT.asp.

3. All Ministries / Departments and cadre authorities are requested to kindly issue orders towards ensuring compliance with the revised Rules by all officers and staff in the respective Ministry / Department / Organisations / PSUs under their control, within the revised time-limit mentioned therein

sd/-

(Joint Secretary of Government of India)

GST BILL

Cabinet has approved constitution amendment bill for GST.
Petroleum products and real estate also to be under GST.

Central Executive Committee (CEC) Meeting at Kolkata on 13th & 14th of February 2015

Notice for Central Executive Committee (CEC) Meeting at Kolkata on 13th & 14th of February 2015

Ref. No. AICEIA/ADMIN/2014/34                                                                              Dated 14.12.2014

Notice for Central Executive Committee (CEC) Meeting at Kolkata on 13th & 14th of February 2015

            Notice is hereby issued for the meeting of the Central Executive Committee of the All India Central Excise Inspectors' Association to be held on 13th & 14th of February 2015 at Kolkata.

            The Meeting shall commence at 10:00 AM sharp on 13.02.2015 and conclude by 05:00 PM on 14.02.2015.

Agenda

1.      Presidential Address

2.      Reading and confirmation of the minutes of the XVIII th Convention held at Trivandrum, Kerala on 27th & 28th June,  2014.

3.      Tabling of Action Taken Report (ATR) by the Secretary General.

4.      Discussion on ATR.

5.      Fixing of Date and Venue of the next Meeting of the CEC of AICEIA.

6.      Any other items with the permission of the Chair

            The Venue of the Central Executive Committee Meeting shall be informed very soon, once it is confirmed by the Kolkata Circle of the AICEIA.

 Note:-

1.      Each Branch/Circle is hereby requested to submit details of their accounts, which may kindly be sent to the Secretary General/President by e-mail by 10.01.2015 in order to enable incorporation of the same in the Action Taken Report to be presented by the Secretary General.

2.      Confirmation of attendance and details of arrival and departure of All India Office Bearers and all CEC Members (Name, Mobile No., Post held in Circle/Branch/Unit) who shall be attending the said meeting may please be made by the concerned Branch/Circle Secretary to the following Members latest by 10.01.2015:-

i.   Com. Smarjit Bandopadhyay, Email- amismarajit@yahoo.co.in, Mobile-09831527312

ii.  Com. Devesh Sanker Srivastava, Email-devesh07@rediffmail.com, Mobile-09163783370

iii. Com. Abhishek Chakraborty, Email-abhishek.irs@gmail.com, Mobile- 09830410199

3.  All Circles/Branches/Units desirous of participating in the meeting of the CEC are required to email latest by 10.01.2015 at sgaiceia@gmail.com, abhishekkamal@gmail.com and anupamneeraj@rediffmail.com, the information in the appended format for proper maintenance and updating of records and accounts.  Please realize that this is of utmost importance and an absolute precondition for effective participation in the Meeting.

4.  All Office Bearers of the Central Committee elected at Trivandrum Convention are required to send by  10.01.2015 at above e-mail ids a comprehensive account of all major initiatives, meetings and tours undertaken by them including drives to enhance membership and strengthen organization at the grassroots level, and all significant engagements with the Departmental Authorities, Sister Organizations, Confederation etc. during 28.06.2014 to 31.12.2014.

5.  Any Circle/Branch/Unit desirous of sponsoring any resolution in the meeting may send a draft of the same with brief explanatory notes to the President and Secretary General latest by 10.01.2015.

                                    (Abhishek Kamal)

Secretary General

Copy to:-

1.      The President, All India Central Excise Inspectors' Association for favour of information.

2.      All members of the Central Executive Committee of AICEIA

3.      President and General Secretary, All Branches/Circles/Units of the AICEIA.

                              Secretary General

Junior staff not to escort senior officers: Govt to police chiefs

New Delhi: Heads of central police organisations and departments have been directed by the government to shun British era “decorative” practices like a battery of junior staff “escorting” their bosses for official meetings and events.

The government while issuing the directive said the junior staff should instead be more involved in some productive work because the “fashion” of accompanying the bosses was needed by Britishers earlier to show their might.
Following the orders of the Union Home Ministry, central police organisations, departments and forces have issued directives to their formations that such practises should be avoided and stopped with immediate effect and officers should not be accompanied by anyone, except, in cases where a subordinates’ presence is required for a specific purpose.

“It is commonly seen that whenever there is any movement of police officials besides CPO (central police organisations), there is a mighty show of junior staff to escort the senior officers, generally seen in IPS and allied services.

“Let the staff involved in decorating the senior officer, should be more involved in some productive work because this fashion was needed by Britishers to show their might, now they are our own brethren,” the Home Ministry recently wrote to police departments under its command like Delhi Police and forces like CRPF and BSF.

The Ministry, top sources said, issued orders after it received instructions in this regard from the top leadership indicating that the displeasure in this regard was noted by none other than the office of Home Minister Rajnath Singh.

The top bosses of central police organisations have now directed their formations that “follow up actions must be ensured strictly to avoid such practices, if any, and human resources of the force/department should be put to use judiciously.”

A senior officer said the issue requires to be addressed as it was noticed by the top echelons of the government that officers above the rank of Commandant or Assistant Commissioner of Police to Director General or Commissioner were spotted at varied times in the corridors of the Home Ministry, other government offices or official events, being followed by two-three juniors and other staff.

Only the officers in the rank of DG or Commissioner are allowed a Personal Security Officer (PSO) to accompany them for official movements and meetings.

Some of the prominent subordinate offices under the MHA include the Intelligence Bureau, paramilitary forces like BSF, CISF, CRPF, ITBP, SSB, NSG, Assam Rifles, NDRF, Bureau of Immigration, BPRD, National Crime Records Bureau, Narcotics Control Bureau, National Police Academy in Hyderabad and NIA among others.

Inputs with PTI

Incometax FAQ.

1. Under how many heads the income of a taxpayer is classified?​
​

S​ection 14​ of the Income-tax Act has classified the income of a taxpayer under five different heads of income, viz.:

Salaries
Income from house property
Profits and gains of business or profession
Capital gains
Income from other sources​
​2. What is gross total income?

Total income of a taxpayer from all the heads of income (as discussed in previous FAQ) is referred to as Gross Total Income.

​
​3. What is the difference between gross total income and total income?

Section 80C to 80U provides certain deductions which can be claimed from Gross Total Income (GTI). After claiming these deductions from GTI, the income remaining is called as Total Income. In other words, GTI less Deductions (under section 80C to 80U) = Total Income (TI). Total income can also be understood as taxable income. Following table gives a better understanding of the difference between GTI and TI :

Computation of gross total income and Taxable Income

Particulars Amount
Income from salary XXXXX
Income from house property XXXXX
Profits and gains of business or profession XXXXX
Capital gains XXXXX
Income from other sources XXXXX
Gross Total Income XXXXX
Less : Deductions under Chapter VI-A (i.e. under ​section 80C to 80U) (XXXXX)
Total Income (i.e., taxable income) XXXXX
Note : Inter source losses, inter head losses, brought forward losses, unabsorbed depreciation, etc., (if any) will have to be adjusted (as per the Income-tax Law) while computing the gross total income. ​

​4. How to round off total income before computing tax liability?

As per section 288 A​​, total income computed in accordance with the provisions of the Income-tax Law, shall be rounded off to the nearest multiple of ten. Following points should be kept in mind while rounding off the total income:

First any part of rupee consisting of any paisa should be ignored.
After ignoring paisa, if such amount is not in multiples of ten, and last figure in that amount is five or more, the amount shall be increased to the next higher amount which is in multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is in multiple of ten and the amount so rounded off shall be deemed to be the total income of the taxpayer.​

Illustration for better understanding

If the taxable income of Mr. Keshav is Rs. 2,52,844.99, then first paisa shall be ignored, i.e., 0.99 paisa shall be ignored) and the remaining amount of Rs. 2,52,844 shall be rounded off to Rs. 2,52,840 (since last figure is less than five). If the total income is Rs. 2,52,845 or Rs. 2,52,846.01, then it shall be rounded off to Rs. 2,52,850 (since the last figure is five or above).​

​5. Can I claim deduction for my personal and household expenditure while calculating my taxable income or profit?​

No, you cannot claim deduction of personal expenses while computing the taxable income.

While computing income under various heads, deduction can be claimed only for those expenses which are provided under the Income-tax Act.

6. Is there any limit of income below which I need not pay tax?​

​At this moment (i.e., for the financial year 2014-15) Individual, HUF, AOP, and BOI having income below Rs. 2,50,000 need not pay any Income-tax. In respect of resident individuals of the age of 60 years and above but below 80 years, the basic exemption limit is Rs. 3,00,000 and in respect of resident individuals of 80 years ​and above, the limit is Rs. 5,00,000. For other categories of persons such as co-operative societies, firms, companies and local authorities, no basic exemption limit exists and, hence, they have to pay taxes on their entire income chargeable to tax.

​7. ​How to compute the total tax liability?

After ascertaining the total income, i.e., income liable to tax, the next step is to compute the tax liability for the year. Tax liability is to be computed by applying the rates prescribed in this regard. For rates of tax, refer “Tax Rate” section. Following table will help in understanding the manner of computation of the total tax liability of the taxpayer.

Computation of total income and tax liability for the year

Particulars Amount
Income from salary XXXXX
Income from house property XXXXX
Profits and gains of business or profession XXXXX
Capital gains XXXXX
Income from other sources XXXXX
Gross Total Income XXXXX
Less : Deductions under Chapter VI-A (i.e., under section 80C to 80U)) (XXXXX)
Total Income (i.e., taxable income) XXXXX
Tax on total income to be computed at the applicable rates (for rates of tax, refer “Tax Rate” section) XXXXX
Less : Rebate under section 87A (discussed in later FAQ) (XXXXX)
Tax Liability After Rebate XXXXX
Add: Surcharge (discussed in later FAQ) XXXXX
Tax Liability After Surcharge XXXXX
Add: Education cess @ 2% on tax liability after surcharge XXXXX
Add: Secondary and higher education cess @ 1% on tax liability after surcharge XXXXX
Tax liability before rebate under sections 86, section 89, sections​ 90, 90A and 91 (if any) (*) XXXXX
Less : Rebate under sections 86, section 89, sections​ 90, 90A and 91(if any) (*) (XXXXX)
Tax liability for the year before pre-paid taxes XXXXX
Less: Prepaid taxes in the form of TDS, TCS and advance tax (XXXXX)
Tax payable/Refundable XXXXX
(*) Rebate under section 86 is available to a member of association of persons (AOP) or body of individuals (BOI) in respect of income received by such member from the AOP/BOI.

Rebate (i.e., relief) under section 89 is available to a salaried employee in respect of sum received towards arrears of salary, gratuity, etc.

Rebate under sections​ 90, 90A and 91​ is available to a taxpayer in respect of double taxed income, i.e., income which is taxed in India as well as abroad.

Note : For provisions relating to Minimum Alternate Tax (MAT) in case of corporate taxpayers and Alternate Minimum Tax (AMT) in case of non-corporate taxpayers refer tutorial on “MAT/AMT”. ​

​8. How to round off the tax liability?

​​As per section 288B​, tax payable by the taxpayer or tax refundable to the taxpayer shall be rounded off to the nearest multiple of ten, following points should be kept in mind while rounding off the tax :

First any part of rupee consisting of any paisa should be ignored.
After ignoring paisa, if such amount is not a multiples of ten, and the last figure in that amount is five or more, the amount shall be increased to the next higher amount which is a multiple of ten and if the last figure is less than five, the amount shall be reduced to the next lower amount which is a multiple of ten; and the amount so rounded off shall be deemed to be the tax payable by the taxpayer or refundable to the taxpayer.

Illustration for better understanding

​If the tax liability or refund due to Mr. Keshav is Rs. 2,52,844.99, then first paisa shall be ignored, (i.e., 0.99 paisa shall be ignored) and the remaining amount of Rs. 2,52,844 shall be rounded off to Rs. 2,52,840 (since last figure is less than five). If the tax liability or refund due is Rs. 2,52,845 or Rs. 2,52,846.01, then it shall be rounded off to Rs. 2,52,850 (since the last figure is five or above).​

9. ​What is rebate under section 87A and who can claim it?

An individual who is resident in India and whose total income does not exceed Rs. 5,00,000 is entitled to claim rebate under section 87A. Rebate under section 87A is available in the form of deduction from the tax liability. Rebate under section 87A will be lower of 100% of income-tax liability or Rs. 2,000. In other words, if the tax liability exceeds Rs. 2,000, rebate will be available to the extent of Rs. 2,000 only and no rebate will be available if the total income (i.e. taxable income) exceeds Rs. 5,00,000.

Illustration for better understanding

Mr. Raja (age 35 and resident in India) is a salaried employee. His taxable salary for the year 2014-15 amounted to Rs. 5,84,000. He has deposited Rs. 94,000 in public provident fund untitled for deduction under section 80C. The employer has deducted tax of Rs. 22,660 from his salary. What will be his tax liability for the year?

Particulars Amount
Income from salary 5,84,000
Income from house property Nil
Profits and gains of business or profession Nil
Capital gains Nil
Income from other sources            Nil
Gross Total Income 5,84,000
Less : Deductions under section 80C on account of investment in PPF     94,000
Total Income (i.e., taxable income) 4,90,000
Tax on taxable income to be computed by applying the applicable rates (*) 24,000
Less : Rebate under section 87A (**)      2,000
Tax Liability After Rebate 22,000
Add: Surcharge ($)      Nil
Tax Liability After Surcharge 22,000
Add: Education cess @ 2% on tax liability after surcharge 440
Add: Secondary and higher education cess @ 1% on tax liability after surcharge       220
Tax liability before rebate under sections 86, section 89, sections​ 90, 90A and 91 (if any) 22,660
Less : Rebate under sections 86, section 89, sections​ 90, 90A and 91 (if any)         Nil
Tax Liability for the Year Before Pre-paid Taxes 22,660
Less: Prepaid taxes in the form of TDS 22,660
Tax payable/Refundable   Nil
(*) The tax rates for the financial year 2014-15 applicable to an individual below the age of 60 years are as follows :

Nil upto income of Rs. 2,50,000
10% for income above Rs. 2,50,000 but upto Rs. 5,00,000
20% for income above Rs. 5,00,000 but upto Rs. 10,00,000
30% for income above Rs. 10,00,000.

Apart from above, education cess @ 2% and secondary and higher education cess @ 1% will be levied on the amount of income-tax. Applying the above normal tax rates, tax on income (before cess) will come to Rs. 24,000.

(**) Rebate under section 87A will be Rs. 2,000, being lower of following :

(a) Tax on total income, i.e., Rs. 24,000; or

(b) Rs. 2,000

($) Surcharge is levied @ 10% on the amount of income-tax where the total income of the taxpayer exceeds Rs. 1 crore. In this case, the total income is below Rs. 1 crore and, hence, no surcharge will be levied.

Illustration for better understanding

Mr. Kapoor (age 35 years and resident in India) is running a medical store. Taxable business income for the year amounted to Rs. 5,84,000. He does not have any other income. He deposited Rs. 50,000 in public provident fund. Can he claim rebate under section 87A?

Rebate under section 87A is available to an individual who is resident in India and whose total income does not exceed Rs. 5,00,000. In this case, the gross total income of Mr. Kapoor is Rs. 5,84,000 and he has deposited Rs. 50,000 in PPF and, hence, total income i.e. taxable income will come to Rs. 5,34,000 (Rs. 5,84,000 less Rs. 50,000). Rebate under section 87A is available only if the total income does not exceed Rs. 5,00,000. In this case, the total income exceeds Rs. 5,00,000 and, hence, he cannot claim rebate under section 87A​.
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