Section
80GG is one of the lesser-known sections which can be used by taxpayers
to lessen their tax burden by claiming tax exemption for rent paid (in case HRA is not part of salary). This section can be used to be either a salaried/pensioner or self-employed taxpayers.
Showing posts with label HRA. Show all posts
Showing posts with label HRA. Show all posts
Friday 5 April 2019
Monday 21 January 2019
Both HRA and Home Loan Interest tax sections are unrelated. You claim tax benefit on HRA (House Rent Allowance) under section 10(13A) while the tax benefit on payment of interest on home loan comes under section 24(b). However, there can be issues if both the sections are used together with the intent of tax evasion.
Friday 20 April 2018
Sunday 3 December 2017
Sunday 10 September 2017
1. The tax rate for income between Rs 2.5 lakh to Rs 5 lakhs has been reduced to 5% from 10%
2. 10% Surcharge introduced for Income between Rs 50 Lakhs to Rs 1 crore
3. Tax Rebate under Section 87A reduced to Rs 2,500 for income up to Rs 3.5 Lakhs
4. Tax exemption under RGESS (Rajiv Gandhi Equity Scheme) has been discontinued from FY 2017-18
Download: Automated All in One for Non-Govt Employees for F.Y.2017-18 with Form 12 BA.
5. Loss from House/Property capped at Rs 2 Lakh irrespective if the house is rented or self-occupied
6. NPS tax deduction for self-employed increased to 20% of gross income
Mentioning Some Points I am frequently asked
1. There is NO tax benefit on Infrastructure Bonds
2. There is NO separate tax slab for Men & Women
We give a brief of all the tax saving sections below:
1. Section 80C/80CCC/80CCD
These 3 are the most popular sections for tax saving and have lot of options to save tax. The maximum exemption combining all the above sections is Rs 1.5 lakhs. 80CCC deals with the pension products while 80CCD includes Central Government Employee Pension Scheme.
You can choose from the following for tax saving investments:
1. Employee/ Voluntary Provident Fund (EPF/VPF)
2. PPF (Public Provident fund)
3. Sukanya Samriddhi Account
4. National Saving Certificate (NSC)
5. Senior Citizen’s Saving Scheme (SCSS)
6. 5 years Tax Saving Fixed Deposit in banks/post offices
7. Life Insurance Premium
8. Pension Plans from Life Insurance or Mutual Funds
9. NPS
10. Equity Linked Saving Scheme (ELSS – popularly known as Tax Saving Mutual Funds)
11. Central Government Employee Pension Scheme
12. Principal Payment on Home Loan
13. Stamp Duty and registration of the House
14. Tuition Fee for 2 children
We have done a comprehensive analysis of all the above available options and you can choose which is the best for you.
Download: Automated All in One TDS onSalary for Govt & Non-Govt employees For F.Y.2017-18 with Arrears ReliefCalculation U/s 891(1) & Form 10e
2. Section 80CCD(1B) – Investment in NPS
Budget 2015 has allowed additional exemption of Rs 50,000 for investment in NPS. This is continued this year too. We have done a complete analysis which you can read by clicking the link below.
Download: Automated Pan Application Form 49A( New Format)
3. Payment of interest on Home Loan (Section 24/80EE)
The interest paid up to Rs 2 lakhs on home loan for self-occupied or rented home is exempted u/s 24. Earlier there was NO limit on interest deduction on rented property. Budget 2017 has changed this and now the tax exemption limit for interest paid on home loan is Rs 2 lakhs, irrespective of it being self-occupied or rented. However for rented homes any loss in excess of Rs 2 lakhs can be carried forward for up to 7 years.
Budget 2016 had provided additional exemption up to Rs 50,000 for payment of home loan interest for first time home buyers. To avail this benefit the value of home should not exceed Rs 50 lakhs and loan should not be more than Rs 35 lakhs.
4. Payment of Interest on Education Loan (Section 80E)
The entire interest paid (without any upper limit) on education loan in a financial year is eligible for deduction u/s 80E. However there is no deduction on principal paid for the Education Loan.
The loan should be for education of self, spouse or children only and should be taken for pursuing full time courses only. The loan has to be taken necessarily from approved charitable trust or a financial institution only.
The deduction is applicable for the year you start paying your interest and seven more years immediately after the initial year. So in all you can claim education loan deduction for maximum eight years.
Download:- All in One TDS on Salary for Govt and Non-Govt Employees for F.Y. 2017-18
5. Medical insurance for Self and Parents (Section 80D)
Premium paid for Mediclaim/ Health Insurance for Self, Spouse, Children and Parents qualify for deduction u/s 80D. You can claim maximum deduction of Rs 25,000 in case you are below 60 years of age and Rs 30,000 above 60 years of age.
An additional deduction of Rs 25,000 can be claimed for buying health insurance for your parents (Rs 30,000 in case of either parents being senior citizens). This deduction can be claimed irrespective of parents being dependent on you or not. However this benefit is not available for buying health insurance for in-laws.
HUFs can also claim this deduction for premium paid for insuring the health of any member of the HUF.
To avail deduction the premium should be paid in any mode other than cash. Budget 2013 had introduced deduction of Rs 5,000 (with in the Rs 25,000/30,000 limit) is also allowed for preventive health checkup for Self, Spouse, dependent Children and Parents. Its continued to this year too.
6. Treatment of Serious disease (Section 80DDB)
Cost incurred for treatment of certain disease for self and dependents gets deduction for Income tax. For very senior citizens (more than 80 years of age) the deduction amount is up to Rs 80,000; while for senior citizens (between 60 to 80 years of age) it Rs 60,000 and for all others its Rs 40,000. Dependent can be parents, spouse, children or siblings. They should be wholly dependent on you.
To claim the tax exemption you need a certificate from specialist from Government Hospital as proof for the ailment and the treatment. In case the expenses have been reimbursed by the insurance companies or your employer, this deduction cannot be claimed.In case of partial reimbursement, the balance amount can be claimed as deduction
Diseases Covered:
1. Neurological Diseases
2. Parkinson’s Disease
3. Malignant Cancers
4. AIDS
5. Chronic Renal failure
6. Hemophilia
7. Thalassaemia
Download: Automated All in One TDS on Salary for West Bengal Govt employees for F.Y. 2017-18
8. Physically Disabled Tax payer (Section 80U)
Tax Payer can claim deduction u/s 80U in case he suffers from certain disabilities or diseases. The deduction is Rs 75,000 in case of normal disability (40% or more disability) and Rs 1.25 Lakh for severe disability (80% or more disability)
A certificate from neurologist or Civil Surgeon or Chief Medical Officer of GovernmentHospital would be required as proof for the ailment.
Disabilities Covered
1. Blindness and Vision problems
2. Leprosy-cured
3. Hearing impairment
4. Locomotor disability
5. Mental retardation or illness
6. Autism
7. Cerebral Palsy
Download: Automated Arrears Relief Calculator U/s 89(1)with Form 10 E From F.Y.2000-01 to F.Y. 2017-18
9. Physically Disabled Dependent (Section 80DD)
In case you have dependent who is differently abled, you can claim deduction for expenses on his maintenance and medical treatment up to Rs 75,000 or actual expenditure incurred, whichever is lesser. The limit is Rs 1.25 Lakh for severe disability conditions i.e. 80% or more of the disabilities. Dependent can be parents, spouse, children or siblings. Also the dependent should not have claimed any deduction for self disability u/s 80DDB.
To claim the tax benefit you would need disability certificate issued by state or central government medical board.
You can also claim tax exemption on premiums paid for life insurance policy (in tax payers’ name) where the disabled person is the beneficiary. In case the disabled dependent expires before the tax payer, the policy amount is returned back and treated as income for the year and is fully taxable.
40% or more of following Disability is considered for purpose of tax exemption
1. Blindness and Vision problems
2. Leprosy-cured
3. Hearing impairment
4. Locomotor disability
5. Mental retardation or illness
Download:- Automated H.R.A. Calculator U/s 10(13A)
10. Donations to Charitable Institutions (Section 80G)
The government encourages us to donate to Charitable Organizations by providing tax deduction for the same u/s 80G. Some donations are exempted for 100% of the amount donated while for others its 50% of the donated amount. Also for most donations, the maximum exemption you can claim is limited to 10% of your gross annual income. Please note that only donations made in cash or cheque are eligible for deduction. Donations in kind like giving clothes, food, etc is not covered for tax exemption.
How to Claim Sec 80G Deduction?
1. A signed & stamped receipt issued by the Charitable Institution for your donation is must
2. The receipt should have the registration number issued by Income Tax Dept printed on it
3. Your name on the receipt should match with that on PAN Number
4. Also the amount donated should be mentioned both in number and words
Download: Automated All in One TDS on Salary for Non-Govt Employees forF.Y.2017-18.
13. House Rent in case HRA is not part of Salary (Section 80GG)
In case, you do not receive HRA (House Rent Allowance) as a salary component, you can still claim house rent deduction u/s 80GG. Tax Payer may be either salaried/pensioner or self-employed.
To avail this you need to satisfy the following conditions:
1. The rent paid should be more than10% of the income
2. No one in the family including spouse, minor children or self should own a house in the city you are living. If you own a house in different city, you have to consider rental income on the same
The House Rent deduction is lower of the 3 numbers:
1. Rs. 5,000 per month [changed from Rs 2,000 to Rs 5,000 in Budget 2016]
2. 25% of annual income
3. (Rent Paid – 10% of Annual Income)
You need to fill form no 10BA along with the tax return form
Thursday 29 June 2017
Sunday 17 January 2016
It’s time of the year when everyone including your employer is worried about your taxes. Most people would have received mail from their Accounts department about “submission of proofs for investments done to claim income tax exemption”. In case you have not, it might be on its way.
This post helps you understand why It is the time for Submit the Income Tax deduction Proof to Employer – With Automatic Tax Preparation Excel Based All in One TDS on Salary with Form 16 for F.Y.2015-16
Salaried class needs to submit these proofs to their employers, how it should be done, what documents to be submitted and if there is a deadline?
Why Employers Ask for Tax Saving Investment Proofs?
Employers are responsible to deduct income tax (TDS – Tax deduction at source) from salary paid to its employees and deposit the same to income tax department. But income tax is complicated and the final tax depends on the tax saving investments a person makes or if the person lives on rent or if he has a house. So to compute your taxes correctly your employer asks for a declaration at the start of financial year (in April). The TDS is deducted based on this declaration.
As we approach the end of financial year, employer wants to make sure you did what you declared as it impacts the tax calculation. So it asks you to submit proofs for income tax saving investment that you made, rent receipts along with any other documents. Once the proof is submitted the employer computes tax based on the actual investments made and TDS is adjusted accordingly.
AlsoDownload Master of Form 16 Part B for F.Y.2015-16: [This Excel Utility Can prepare at a time 50 employees Form 16 Part B for FY 2015-16.]
When does Employer ask for Proofs?
There are no guidelines about when any employer should ask for investment proofs. Some companies start asking for the same in December but most of them would ask for it before end of January. This is asked so early on as the enhanced tax deduction can be done from 2-3 months’ salary. Also this awakes the lazy ones and they start their tax planning.
What if you do not Submit the Proofs?
In case you do not submit the proofs, employer would not be able to give you tax benefit on your tax saving investments. This would lead to higher deduction of taxes. You can claim refund of these taxes only during filing of tax returns.
Documents to be Submitted
Indian income tax laws are complicated and have multiple exemptions and investment options. Below is the list of documents that needs to be submitted to your employer to get relevant tax deductions.
Download All in One TDS on Salary for Private (Non-Govt) Employees for the Financial Year 2015-16 and Ass Year 2016-17 [ This Excel Based Software can prepare at a time Income Tax Compute Sheet + Automatic H.R.A. Exemption Calculation + Individual Salary Sheet + Individual Salary Structure for Central Govt Salary Pattern + Automatic Form 16 Part A&B + Automatic Form 16 Part B + Form 12 BA for F.Y.2015-16]
House Rent Allowance (HRA) u/s 10(13A):- Click here to download the Automatic HRA Exemption Calculator U/s 10(13A)
Following documents need to be submitted to claim tax benefit on HRA:
§ Rent receipt for starting and the end month and of intermediate month in case there has been change in rent or rented accommodation. So you need to submit rent receipt for April and Dec/Jan if there is no rent change.
§ The rent receipt must have One rupee revenue stamp on it (ideally a revenue stamp is required for receipts if the rent is paid by cash and is over Rs.5,000 but most employers still ask for it).
§ No rent receipt is required if the monthly rent paid is below Rs.3,000
§ Some employers may also ask for copy of rent agreement.
§ If the annual rent paid exceeds Rs 1 lakh you also need to give PAN number of the landlord. In case your landlord does not have PAN card, a declaration needs to be submitted stating so.
Also Read: What can you do if your landlord does not give his PAN number?
Home Loan Interest u/s 24
§ Copy of Provisional Interest certification from Bank/Financial Institution stating the amount of principle and interest separately.
§ The certificate should also have the loan sanction date
§ Copy of Possession Certificate
§ Copy of Sale Deed (In case possession letter in not available)
§ Copy of Lease deed, in case of let out property
§ In case of Joint Home Loan, self-declaration of the ownership proportion needs to be furnished
§ Form 12C
Medical Insurance Premium u/s 80D
§ Copy of Insurance Premium receipt paid
§ Copy of receipt for Preventive Health Checkup for self, spouse, dependent children or parents
Interest on Repayment of Education Loan u/s 80E
§ Copy of Provisional Interest certification from Bank/Financial Institution showing the interest and principle separately.
Rajiv Gandhi Equity Saving Scheme (RGESS) u/s 80CCG
§ Demat Account Statement
§ Self declaration stating RGESS enabled investments
Handicapped dependent u/s 80DD
§ Amount paid or deposited under any scheme framed in this behalf by the LIC or UTI or any other insurer and approved by the Board for the maintenance of the handicapped dependent
§ Physical disability certificate from a physician, a surgeon, or a psychiatrist, as the case may be, working in a Govt. hospital. The certificate should contain the employee’s name and percentage of Disability clearly.
§ Form 10-IA.
Medical Treatment Expenses u/s 80DDB
§ Medical Bills / expenditure incurred by way of medical treatment for a specified disease along with a certificate from a hospital in the prescribed form.
§ Form 10-I
National Pension Scheme u/s 80CCD(1B)
§ Photo copy of deposit receipt or account statement
Section 80C Deductions:
.No.
|
Investment Type
|
Documents as Investment Proof
|
1
|
Life Insurance Premium
|
Copy of Premium Receipt. Late payment fees will not be included as premium paid
For the premium falling due after submission deadline, attach previous year’s receipt with declaration (Download: Declaration for Insurance Premium Payment)
|
2
|
Public Provident Fund (PPF)
|
Copy of passbook/statement along with the cover page showing investor’s name OR
Copy of the deposit challan duly acknowledged by the Bank
|
3
|
Senior Citizens’ Savings Scheme
|
Copy of passbook/statement along with the cover page showing investor’s name OR
Copy of the deposit challan duly acknowledged by the Bank
|
4
|
NSC
|
Copy of the Certificates purchased during the financial year
For accrued Interest on NSC – Copy of Certificates to be enclosed with date of purchase and the amount
|
5
|
ELSS (Tax Saving Mutual Fund)
|
Copy of Account Statement
|
6
|
Children’s Tuition Fees
|
Copy of receipts for Tuition Fees and Exam Fees (excluding Donations & Development fees, Bus / Transportation charges, Text Books, Private Tuitions or Tutorial Fees) paid to any University/College/School or Other Educational Institution in India during the current year for a maximum of 2 children.
|
7
|
Sukanya Samriddhi Yojana
|
Copy of passbook/statement along with the cover page showing investor’s name OR
Copy of the deposit challan duly acknowledged by the Bank
|
8
|
Pension Plan from Insurance Companies
|
Copy of Premium receipt
For premium falling due after Jan ’16. Please attach previous year’s receipt with declaration (Download: Declaration for Insurance Premium Payment)
|
9
|
Post Office Tax Saving Term Deposit
|
Copy of deposit receipt
|
10
|
Tax Saving Bank Fixed Deposits
|
Copy of Deposit Receipt OR Account Statement
|
Previous Employment Details
In case you were employed with another employer in the financial year you need to give following documents:
§ Form 12B with copy of Form 16 for F.Y 2015-16/ Latest / Full and Final Tax computation statement submitted by you).
§ Copy of Form 16 for F.Y. 2015-16 / Latest / Full and Final Tax computation statement certifying Earnings and Deductions from your previous employer is mandatory.
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