Employees generally receive a house rent allowance (HRA) from their employers. This is a part of the salary package, in accordance with the terms and conditions of employment. HRA is given to meet the cost of a rented house taken by the employee for his stay. The Income Tax Act allows for deduction in respect of the HRA paid to employees.
Showing posts with label Free download Arrears Relief Calculator with Form 10E. Show all posts
Showing posts with label Free download Arrears Relief Calculator with Form 10E. Show all posts
Tuesday 22 January 2019
Friday 2 March 2018
Owing a home is a dream of every salary earning individual. It takes a lot of time and efforts to fulfill this dream. The best part of owning a home is not to pay the rent. This the financial benefit and there are many other social benefits too. It sucks when you pay the rent. But then there is a concept of House Rent Allowance (HRA) which comes to our rescue. HRA is an important ingredient of salary. Not only it compensates the rent paid, but also helps in claiming tax exemptions. So let us discuss the calculation of House rent allowance exemption.
Thursday 24 November 2016
Experts are divided over how taxpayers can claim the additional tax deduction for NPS contributions announced in last year's Budget. Some tax experts claim that employees covered by NPS can claim the deduction for their mandatory contributions under the new Sec 80CCD(1b). "An employee's mandatory contribution to NPS the is eligible for deduction under Section 80CCD (1b).
This means taxpayers covered by NPS will not have to make additional investments to claim the new deduction. Other tax-saving investments and expenses, such as home loan principal, children's tuition fees, life insurance premium, NSCs and ELSS funds, can be claimed under Section 80C while the mandatory contribution to NPS can be claimed under Section 80CCD (1b).
If you have contributed Rs 50,000 or more towards NPS via salary deductions, maximise the tax benefits under both Section 80C and Section 80CCD(1b). Claim the full Rs 50,000 under the new section first and then adjust the residual to achieve total tax deduction of Rs 2 lakh.
Another interpretation says that the mandatory contribution can be claimed under the new section only if it exceeds the Rs 1.5 lakh limit under Section 80CCD(1). High-income earners covered by NPS stand to benefit from this interpretation. If the taxpayer contributes more than Rs 1.5 lakh to the NPS in a year, the amount in excess of Rs 1.5 lakh can be treated as the voluntary investment and claimed as a deduction under the new Section 80CCD(1b).
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Salary Structure
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Tax Compute Sheet
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Arrears Relief Calculation with Form 10E
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Form 16 Part B
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"Taxpayers have the flexibility to choose the sub-sections under which they want to claim the deduction. All they have to specify is that the deduction claimed is for their own contributions and there is no duplication in these claims.
However, others believe that the mandatory contribution to retirement savings made by an individual will not make him eligible for the new deduction. For that, the taxpayer must make an additional 'voluntary' or 'self' contribution to the NPS.
Income tax laws allow the tax deduction for contributions to NPS under three sections. First, the employee's contribution under Section 80CCD(1). This deduction is under the overall Rs 1.5 lakh limit under Section 80C. Second, up to 10% of the basic salary put into the NPS by the company on behalf of the employee is deductible without any limit. The third is the new Section 80CCD(1B) under which a taxpayer can claim the deduction for the voluntary contribution of up to Rs 50,000.
The new tax return forms have done little to dispel the confusion. While the deductions under different sub-sections of 80CCD have to be shown separately in the forms, there is no clarity regarding whether 'employee contributions' can be treated as 'self-contribution'. Tax experts say the department should clarify how this deduction can be availed of.
Monday 12 October 2015
Owing a home is a dream of every salary earning individual. It takes a lot of time and efforts to fulfill this dream. The best part of owning a home is not to pay the rent. This the financial benefit and there are many other social benefits too. It sucks when you pay the rent. But then there is a concept of House Rent Allowance (HRA) which comes to our rescue. HRA is an important ingredient of salary. Not only it compensates the rent paid, but also helps in claiming tax exemptions. So let us discuss the calculation of House rent allowance exemption.
Many of the salaried class taxpayers remain confused relating to the taxability of HRA received by them. HRA is an allowance a sum of money regularly paid to meet expenditure relating to rent.
1) DOWNLOAD THE AUTOMATIC HOUSE RENT EXEMPTIONCALCULATOR IN EXCEL
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HRA Exemption Calculator Snapshot
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2) DOWNLOAD THE ARREARS RELIEF CALCULATOR U/S89(1) WITH FORM 10 E SINCE F.Y.2000-01 TO F.Y.2015-16
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Arrears Relief Calculator Snapshot
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Annexure -1 of Arrears Relief Calculator
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EXEMPTION OF HRA UNDER SECTION 10(13A) & Rule 2A
Condition
Under Section 10(13A), the condition to claim HRA Exemption is that the person who is in receipt of HRA, does not live in his own house, and pays rent in excess of 10% of his salary for his residential accommodation.
No Entitlement for Exemption:
- When an employee stays in his house
- When an employee does not pay any rent or incur any expenditure towards rent.
- When the rent paid is less than 10% of salary
Points to be Considered:
- The exemption shall be calculated on the basis of where the accommodation is situated
- If Place of employment is the same for the whole year, then HRA Exemption shall be computed for the whole year. If there is change I place of employment is the same for the whole year, then HRA exemption shall be computed for the whole year. If there is change in place of employment during the previous year, then HRA exemption shall be calculated on monthly basis.
- Exemption should be calculated in respect of the period during which rental accommodation is occupied by the employee during the previous year.
HOW TO CLAIM HRA EXEMPTION
As per income Tax Act, 1961 the employer need to deduct the TDS on salary of employee. He calls for all deduction/exemption proof from the employee. As an employee you need to provide the House rent receipts duly signed & Stamped to your employer. Generally every employer collects the HRA receipts at the end of the year.
As per the Circular 17/2014 issued by CBDT for deduction of TDS on salary, it has been decided that as an administrative measure that salaried employees drawing HRA upto Rs. 3000/- p.m will be exempted from production of rent receipt. However this concession is only for the purpose of TDS, a income tax officer may call for rent receipt below Rs. 3000/-.
Further if annual rent paid by the employee exceeds Rs 1,00,000 per annum, it is mandatory for the employee to report PAN of the landlord to the employer. In case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.
Thursday 12 February 2015
WHAT IS THE ACTUAL CALCULATION OF ARREARS RELIEF U/S 89(1) AND WHAT'S THE PROCEDURE TO CALCULATE THE ARREARS RELIEF WHICH IS GET THE AMOUNT OF AN EMPLOYEE BEHIND HIS PREVIOUS YEARS. HERE IS GIVEN BELOW THE AUTOMATIC ARREARS RELIEF CALCULATOR SINCE THE FINANCIAL YEAR 2000-01 TO 2015 WITH FORM 10E.
BELOW GIVEN THE METHOD OF CALCULATION U/S 89(1)AS PER THE INCOME TAX RULES.
SECTION 89 l RELIEF WHEN SALARY ETC., IS
PAID IN ARREARS OR IN ADVANCE
Scope of relief under the section in five situations explained
1. Section 89(1) authorises grant of relief in a case where an employee receives salary in arrears or in advance or has received in any financial year salary for more than twelve months, a payment which under the provisions of section 17(3)(ii) is a profit in lieu of salary. The effect of such increase is that the income will be assessed at a higher rate than it otherwise would have been assessed and it is for this reason that section 89(1) authorises relief to be allowed. The relief is to be allowed in terms of rule 21A of the Income-tax Rules, 1962.
2. Rule 21A(1) enumerates the following five different situations wherein the assessees will be entitled to relief (four of these are specific situations while the fifth is a residuary one) :
a. salary being received in arrears or advance;
b. where the payment is in the nature of gratuity in respect of past services extending over a period of not less than five years is received;
c. where the payment is in the nature of compensation received by the employee from his employer or former employer at or in connection with termination of his employment after continuous service of not less than three years and where the unexpired portion of the term of employment is also not less than three years;
d. where the payment is in the nature of commutation of pension;
e. where the payment is not covered by the description given in (a) to (d) above.
The relief is to be worked out in the first four situations in accordance with the specific modes described in rule 21A (2)(a) to (d).
3. The authority to grant relief in the four specific cases is the Income-tax Officer assessing the employee. In the residuary case, it is Central Board of Direct Taxes.
4. The relief under section 89(1) is to be given in the assessment in which the extra payment by way of arrears, advance, etc., is taxed. The mode of granting relief spelt out in rule 21A(2) to 21A(5) would show that in all the four different cases the exercise of giving relief is initiated by bringing to tax the whole of the extra amount in the assessment for the assessment year relevant to the year of receipt. Basically, the relief under section 89(1) is arithmetical. It involves finding out of two rates of tax. The first is the rate of tax applicable to the total income including the extra amount in the year of receipt. The second is finding out the rate by adding the arrears to the total income of the years to which they relate. For this purpose the assessee should be asked for a true and authentic statement of the total income of the earlier years to which the arrears pertain There is no warrant for issuing a notice under section 148 or calling for returns of income of the earlier years.
Circular : No. 331 [F. No. 174/102/79-IT(A-I)], dated 22-3-1982.
Click here to Download Automated Arrears Relief Calculator with Form 10E from the Financial Year 2000-01 Financial Year 2014-15
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