Companies must start calculating the payable tax amount for every year and start deducting tax from the salary of the employees at an average rate. Technically speaking salary also includes gratuity, wages, any type of pension or annuity, commission, fees, profits or perquisites lieu that are in addition to wages or salary. All these payments are under section 192 of the 1961 Income Tax Act. The rates of income tax for income that are obtained from various other sources are as follows:
Interest obtained on Dividends/ Interest/ Securities/ Insurance Commission
Earnings through these sources are taxable and the tax deduction is carried out @ 20 percent for the domestic companies and 10 percent for the others having basic exemption limits for those who are obtaining income through interest and if this interest is only Rs.5000 in one financial year. However, if the interest is paid by Co-operative society, banking company or a public company which has interests in construction of residential houses in the country or of financing it, the limit of exemption is Rs. 10,000. All these payments are covered under Income Tax Act 1961 Sec. 193, 194, 194A & 194D.
Income obtained from lottery, games or puzzles
In case you have earned income by winning from games, puzzle or lottery or similar sort then, tax is deducted @ of 30 percent on amount above Rs.10000. Earlier this amount was Rs. 5000 but from 2010 onwards, this amount has been increased. The income tax rate paid in this category is covered in the 194B section of Income Tax Act.
Income from winning horse races
Income earned above Rs. 5000 through horse racing win is subject to tax deduction of 30 percent according to section 149BB. Until 1st July 2010, this amount was Rs.2500.
Work land labor contracts and contract payments
In case you are receiving payments through contracts then the tax has to be deducted @ of 2 percent and for subcontract as well as the contract payments of advertisements tax deduction rate is 1 percent. The deduction of tax under section 194C begins when a single payment of more than Rs.30000 is made or in case the total aggregate payment goes above Rs.75000 annually. Earlier the same amounts were Rs. 25000 and 50000 respectively.
In this way there is various other tax rates such as deduction on insurance commission, rent received and so on which have been changing from time to time since past 10 years.
