In Seventh Pay Commission bonanza, lakhs of central government employees will soon receive higher salaries and arrears in one go. This may result in an increase in the tax slab of many employees as they will receive arrears from January 1, 2016.

Suppose an employee's annual salary is Rs 9.50 lakh and receives Rs 1 lakh as arrears, of which Rs 50,000 is for the previous fiscal year. His/her tax slab will change. The total income for this year will be Rs 10.50 lakh as against Rs 10 lakh (including the arrears of this year). Income of individuals above Rs 10 lakh is taxed at the rate of 30 percent while income between Rs 5 lakh and Rs 10 lakh is taxed at the rate of 20 per cent.

Download Excel Based Automated Arrears Relief Calculator including Form 10E for the Financial Year 2016-17

So will employees have to pay an extra tax? No.

There are provisions which provide tax relief to employees due to delay in the receipt of the arrears.

"If an employee or his family receives pension arrears or salary arrears, he or she can claim tax relief under Section 89(1). This Section makes sure you don't end up paying the higher tax due to moving up a tax slab from receipt of arrears. Or because tax slab rates in the year of receipt are higher as compared to the year to which arrears belong to.

How the tax relief is calculated

The tax break is arrived at by recalculating the tax for the both the years in which the arrears are received and the year to which arrears pertain to.

1) Calculate the tax payable on the total salary including and excluding the arrears in the year in which it is received. Calculate the difference between the two and assume it is 'A'

2) Calculate the tax payable on the total salary including and excluding the arrears for every year of which the arrear relates to and sum it up. Calculate the difference between the two and assume it as 'B'.

3) If 'A' is more than 'B', the employee will get tax break equivalent to 'A'.

How it can be claimed

To avail the tax break, it is mandatory under the income tax laws to file Form 10E. The form includes details like the PAN, arrear and advance salary details. This form has to be uploaded on the website of the Income Tax Department.

On September 03, 2016 by www.taxexcel.net

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The Budget has made no significant change in Tax Rates for Individuals. The Individuals who earn the income of fewer than 5 Lakhs rupees will get Rs 5000/- as Tax rebate under section 87A. There is increase surcharge on income tax levied on individuals earning the income of Rs 1 crore or more from 12 percent at present to 15 percent. This move is aimed at taxing the rich. The Middle Class always pay effective more tax including indirect taxes and have to plan their retirement and savings at the same time save on overall tax outgo. The Article gives you brief idea on how to save tax and at the same time make proper investment and cover insurance and Medical expenses risk.

Download House Rent Exemption Calculator U/s 10(13A)[Excel Based Software]

1. Investment in 80C for Purpose of taking full benefit of 1.5 Lakhs + Additional benefits NPS U/s 80CCD(1B) Rs. 50,000/- total Rs. 2 Lakh.

Deduction under 80C is related to the deduction that an individual can deduct from his gross taxable income in order to reduce his tax liability by investing in specified investment. It is applicable to individuals and HUF. An assessee can get deduction under section 80C up to a maximum of Rs.150000.The qualifying investments and expenditure as the deduction under 80C are an investment in Insurance Policy, Post Office Time Deposit Account, Investment in Equity Linked Saving Scheme (Mutual Funds), Public Provident Fund, National Saving Certificate.Tuition Fees Paid, Bank Fixed Time Deposit, Repayment of Principal of Housing Loan, SukannyaSamriddhi account.

 2.Investment in National Pension Scheme up to Rs 1.5 Lakhs

Download Automated Arrears Relief Calculator U/s 89(1) from the F.Y.2000-01 to F.Y.2016-17  updated Version with Form 10E [Excel Based Software]

Finance Minister ArunJaitley in Budget 2015-16 introduced an additional income tax deduction of Rs. 50,000 for contribution to the New Pension Scheme (NPS) under Section 80CCD. NPS is a voluntary pension scheme, which is regulated by the Pension Fund Regulatory and Development Authority.This extra deduction U/s 80CCD(1B) of Rs. 50,000 on NPS will increase the total deduction allowed under Section 80C and 80CCD of Income Tax Act to Rs. 2 lakh. In Budget 2016, the finance minister has made withdrawals from NPS on maturity tax-free up to 40% of the total corpus accumulated. Currently, none of the withdrawals were tax-free unlike other competing instruments such as PPF and EPF where the total withdrawal was tax -free. This is a major step towards making the NPS scheme more attractive and bringing it on par with the other EEE pension schemes. The Budget 2016 proposes to provide a uniform tax treatment to the recognized provident fund, national pension system, and superannuation fund.
It is proposed that 40% of the pension wealth received by an employee from the National Pension System Trust shall be exempt. 

3.Home Loan Interest and House Rent Allowance (up to Rs 2 Lakhs ) U/s 24B,.Employees get HRA as a part of Salary. If the Employee is living in rented accommodation they can Claim HRA benefit and save on taxes. If the Employee is staying with parents in that case too they can pay rent to parents and Claim HRA benefit.  

For employees who don't get HRA benefits, the FM raised the deduction against house rent from Rs 2,000 per month to Rs 5,000. This would result in tax savings in the range of Rs 3,708 to Rs 12,204, depending on the income slab.

 Further in Budget 2016 First time home buyers to get additional deduction of Rs 50,000 on interest for the loan up to Rs 35 lakh U/s 80EE. This additional deduction has been given on interest for the loan up to Rs 35 lakh, provided the house value doesn't exceed Rs 50 lakh.  For, the 2016-17 Budget proposes tax relief on interest payment on a home loan if the property bought, or under construction, is completed within 5 years from the end of the financial year in which the loan was availed instead of the current 3 years. Assuming a loan of Rs 35 lakh to be paid over 20 years, the annual deduction comes to around Rs 2.5 lakh, including the Rs 2 lakh. 

4.Tax-Free Medical Allowance and Transport Allowance up to Rs 40 Thousand

Medical reimbursement and Transport Reimbursement can be claimed by the employee and it will be taken care in form 16 itself. For Medical Bills Employee needs to submit proof of expenditure incurred.

Download Income Tax Preparation Excel Based Software All in One for Govt & Non-Govt Employees for F.Y.2016-17 & A.Y.2017-18 [This Software can prepare at a time Individual Tax Compute Sheet + Individual Salary Structure + Automatic H.R.A Calculation + Automatic Arrears Relief Calculation with Form 10E + Automated Form 16 Part A&B + Form 16 Part B ]

5.Medical insurance for Self Rs 25 thousand & Parents who are above 60 years of age can get Rs. 30 thousand, Total Rs. 55 thousand U/s 80D.

Payment of premium on life insurance policy and health insurance policy not only gives insurance cover to a taxpayer but also offers certain tax benefits. Medical insurance premium paid by an assessee, being individual/HUF by any mode other than cash. The sum paid by the assessee, being individual on account of preventive health check-up. Medical expenditure incurred by the assessee, being individual/HUF on the health of a very senior citizen person provided that no amount has been paid to effect or to keep in force an insurance on the health of such person.  

6.Leave Travel Allowance Up to Rs 25000

An LTA is a remuneration paid by an employer for Employee’s travel in the country when he is on leave with the family or alone. Amount from LTA is tax-free. Section 10(5) of the Income-Tax Act, 1961, which provides for the exemption and outlines the conditions subject to which LTA is exempt.

 7.Reimbursement of Expenses for Mobile, Travel, newspaper as actuals

Many employers provide reimbursement of Travel Expenses, Mobile, and Phone Bill and for News Paper. The employee has to submit proof of expenditure.

Download All in One TDS on Salary for Non-Govt Employees for F.Y.2016-17 & A.Y.2017-18 [ This Excel Based Software can prepare at a time Individual Tax Compute Sheet + Individual Salary Structure as per Non-Govt Salary Pattern + Automatic H.R.A. Exemption Calculation + Automated Form 12 BA + Automated Form 16 Part A&B and Part B]

9.Relief under Section 87A

The budget has increase the relief under section 87A from Rs 2000/- at present to Rs 5000/-. So effectively if taxable income is less then Rs 5 Lakhs an individual can Claim relief of Rs 5000/- in taxes paid. If we consider 10% slab rate it turn out to be Rs 50000/- as additional benefit which can be claimed in this Section

 From the above Picture, it is clear that if the Individual plan in the proper manner for the year 2016 -17 financial year he can not only save taxes but can also plan an investment in Resident Property if he is not owing one. For Retirement benefit NPS seems to be the better option considering current changes in Budget 2016.

On August 12, 2016 by www.taxexcel.net

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The All of Central and State Govt employees Arrears Pay which comes from the 7th Pay Commission, and this Relief had already past. 

But the some of the employees of Govt or Non-Govt Concerned who have may get  the Salary Arrears from there previous years and they may get the relief the Income Tax U/s 89(1) by the Salary Bifurcation the Salary Year to Year and can get the tax relief by this section. 

Some of the employee who have got the arrears salary from 2000-01 or 2016 or between the period of FY 2000-01 to F.Y.20016-17.

Download the Automated Arrears Calculator U/s 89(1) with Form 10E up to F.Y.2016-17 [ This Excel Utility can prepare your Arrears Calculation from the Financial Year 2000-01 to 2016-17, up to date version]

On July 24, 2016 by www.taxexcel.net

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Income Tax Calculator for Central Govt employees for Financial Year 2016-17 & Assessment Year 2017-18 as per Finance Budget 2016

Deductions under Section 80C (Available to Individuals / HUFs)
For investments in specified schemes, saving instruments etc.

The aggregate of total deduction available under sections 80C, 80CCC and 80CCD is limited to whole of the amount paid or deposited subject to a maximum of Rs. 1,50,000/-

Section 87A :- Tax Rebate Max Rs. 5000/- who’s Taxable Income less than 5 lakh. 

Automated Arrears Relief Calculator with Form 10E From the F.Y.2000-01 to F.Y. 2016-17 [ Up to date Version]

 

Section 80CCC (Available to Individuals)
Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer

Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 150,000/-.

The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.

Note: The limit for maximum deduction available under Sections 80C, 80CCC and 80CCD(1) (combined together) is Rs. 1,50,000/-.

Section 80CCD (1) (Available to Individuals):-

Deduction in respect of Contribution to Pension Account (by Assessee}

Deduction available for the amount paid or deposited in a pension scheme notified or as may be notified by the Central Government subject to a maximum of :
(a) 10% of salary in the previous year in the case of an employee
(b) 10% of gross total income in any other case.

The maximum deduction allowable under the secion is Rs. 1.00 lac. Rs. 1.50 lacs w.e.f. 01.04.2015 in case of contribution to New Pension Scheme (NPS).

Section 80CCD (2) (Available to Individuals) 

Deduction in respect of Contribution to Pension Account (by Employer}

Deduction available for the amount paid or deposited by the employer of the assessee in a pension scheme notified or as may be notified by the Central Government subject to a maximum of 10% of salary in the financial year.

Section 80CCD(1B) (Available to Individuals)
Additional Contribution to New Pension Scheme (NPS)

A deduction of upto Rs. 50,000 is available over and above the limit of Rs. 1.50 lakh in respect of contributions made to NPS under Section 80CCD(1B).

Section 80CCG (Available to specified Resident Individuals)

50 per cent of amount invested by resident individuals, whose gross total income does not exceed Rs. 12 lakhs, in listed shares or listed units in accordance with notified scheme for a lock-in period of 3 years (Subject to certain conditions). Maximum deduction : Rs. 25,000/-.

Section 80D (Available to Individuals / HUFs) 
Deduction in respect of Medical Insurance

Deduction is available upto Rs. 30,000/- (enhanced from Rs. 20,000 w.e.f. 01.04.2015) for senior citizens and upto Rs. 25,000/- (enhanced from Rs. 15,000 w.e.f. 01.04.2015) in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 30,000/- (enhanced from Rs. 20,000 w.e.f. 01.04.2015) if parents are senior Citizen and Rs. 25,000/- (enhanced from Rs. 15,000 w.e.f. 01.04.2015) in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 60,000/- in case of individuals and Rs. 30,000/- in case of HUFs. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.

Section 80DD (Available to Resident Individuals / HUFs)
Deduction available to resident Individual and HUF in respect of Rehabilitation of Handicapped Dependent Relative

Deduction of Rs. 75,000/- (enhanced from Rs. 50,000 w.e.f. 01.04.2015) in respect of

1.                         Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative.

2.                         Payment or deposit to specified scheme for maintenance of dependent handicapped relative.

Further, if the defendant is a person with severe disability a deduction of Rs. 125,000/- (enhanced from Rs. 1,00,000 w.e.f. 01.04.2015) shall be available under this section. The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist. Note: A person with 'severe disability' means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the 'Persons with disabilities (Equal opportunities, protection of rights and full participation)' Act.

Section 80DDB (Available to Individuals / HUFs)
Deduction allowed to resident Individual and HUF in respect of Medical Expenditure on Self or Dependent Relative

A deduction to the extent of Rs. 40,000/- (Rs. 60,000 in case of senior citizen) or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.

Section 80E (Available to Individuals)
Deduction in respect of Interest on Loan for Higher Studies

Deduction in respect of interest on loan taken for pursuing higher education (subject to certain conditions) (maximum period : 8 years).

Section 80EE (Available to Individuals) 
Deduction in respect of Interest on Residential House Property

The deduction under this sub-section is available w.e.f. AY 2017-18. The maximum deduction available is Rs. 1.5 lac. In a case where the interest payable for the financial year 2016-17

The deduction under sub-section (1) shall be subject to the following conditions :

i.                               the loan has been sanctioned by the financial institution during the period beginning on the 1st day of April, 2016 and ending on the 31st day of March, 2016;

ii.                               the amount of loan sanctioned for acquisition of the residential house property does not exceed twenty-five lakh rupees;

iii.                               the value of the residential house property does not exceed forty lakh rupees;

iv.                               the assessee does not own any residential house property on the date of sanction of the loan.

If deduction for Housing Loan Interest is availed under this section, no deduction can be availed for such interest under any other provisions of the Act for the same or any other assessment year.

Section 80G (Available to all assessees)
Deduction in respect of Various Donations

The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G

Section 80GG (Available to Individuals not receiving any house rent allowance)
Deduction in respect of House Rent Paid

Deduction available is the least of

1.                         Rent paid less 10% of total income

2.                         Rs. 2000/- ( Rs. 5000/- )* per month i.e. Maximum Deduction available is 24,000/- ( 60,000/- )*

* Increased w.e.f. 01/04/2016 (i.e. for AY 2017-18 )

3.                         25% of total income, provided

·                                               Assessee or his spouse or minor child should not own residential accommodation at the place of employment.

·                                               He should not be in receipt of house rent allowance.

·                                               He should not have self occupied residential premises in any other place.

Section 80 TTA (Available to Resident Individuals/HUFs)
Deduction from gross total income in respect of any Income by way of Interest on Savings account

Deduction from gross total income of an individual or HUF, upto a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 01.04.2012 (Assessment Year 2013-14).

Section 80U (Available to Resident Individuals)
Deduction in respect of Person suffering from Physical Disability

Deduction of Rs. 75,000/- (enhanced from Rs. 50,000 w.e.f. 01.04.2015) to a resident individual who suffers from a physical disability(including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 125,000/- (enhanced from Rs. 1,00,000 w.e.f. 01.04.2015)shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D.

Deductions Allowable under Section 24 of Income Tax Act :

Where a housing property has been acquired / constructed / repaired / renewed with borrowed capital, the amount of interest payable yearly on such capital is allowed as deduction under Section 24 of Income Tax Act, subject to the limits stated below. Penal interest on housing loan is not eligible for deduction. If a fresh loan has been raised to repay the original loan and the new loan has been used only for the purpose of repaying the original loan then, the interest accrued on such fresh loan is allowed for deduction.

1.                         If the property is acquired or constructed with the capital borrowed on or after 01-04-1999 and such acquisition or construction is completed within 3 years of the end of the financial year in which capital was borrowed then the actual interest payable is allowed as deduction subject to a maximum Rs. 2,00,000/- (Rs. 1,50,000/- up to 31.03.2015).

2.                         In other case interest up to maximum Rs. 30,000/- is deductible.

3.                         The ceiling of Rs.2,00,000/- (Rs. 1,50,000 upto 31.03.2015) or Rs. 30,000/- is only in case the property is self occupied. There is no limit on deduction of interest if the property is let out.

On March 14, 2016 by www.taxexcel.net

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