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How to Calculate your H.R.A. Exemption (Salaried Employee)?

Some times Employee claimed unexpected exemption from Income Tax and unnecessarily Income Tax Department send notice for Self Assessment. Keeping in view employee mostly asked common queries that Is take benefit of HRA exemption? How it claim ? Who got benefit of HRA Exemptions? etc.  In accordance with this some points are found, which is as under:
  • Each and every Allowance in Gross Salary is a fixed monetary which paid by Employer to Employee, whether personal or for the performance of his duties.
  • Claim exemption of allowance i.e. Conv. Allowance, House Rent Allowance etc. while submitting Annual Income Tax Return. These allowances generally taxable unless a specific deduction/exemption is provided by law.
According to law House Rent Allowance (HRA) is give by the employer to the employee to meet the expenses in connection with rent of the accommodation.  HRA is exempt under section 10(13A) to the extent of the minimum of the following three amounts :

Actual House Rent Allowance received by the employee
  • Excees of rent paid for the accommodation occupied by him over 10 % of the salary.
  • 50% of salary where the residential house is situated at Mumbai, Calcutta, Delhi or Chennai and 40% of the salary where the house is situated at any other place.
The minimum of the above three amounts shall be exempt from tax and the balance shall be taxable and thus included in gross salary of employee.

Meaning of Salary for calculation the exemption of HRA
  • Salary means (Basic + D.A + Commission based on fixed percentage on turnover).
  • Salary is to be taken on due basis in respect of the period during which the period accommodation is occupied by the employee in the previous year.
Calculation Monthly or Yearly?
 
The exemption in respect of HRA is based upon the following factors:
 
Salary
HRA received
Place of Residence,
Rent Paid,

HRA exemption should not be calculated on yearly basis, if there was any change in above factors during previous year.

Examples for calculation of exemption/deduction of HRA
X has received following amount during the previous year.
  • Basic Salary – Rs. (5000*12) – Rs. 60,000/-
  • Dearness Allowance (D.A) – Rs. (1000*12) – Rs. 12000/-
  • House Rent Allowance (H.R.A.) – Rs. (2000*12) – Rs. 24000/-
  • Actual Rent Paid – Rs.(2000*12) – Rs. 24000/-
Calculation
The minimum of the following amount shall be exempt
  • Actual HRA received (2000*12) – Rs. 24000/-
  • Rent Paid in excess of 10% of salary ( 24000-7200) – Rs. 16800
  • 40% of Salary – Rs. 28800/-
Therefore, Rs. 16800 shall be exempt and the balance Rs. 7200 shall be included in gross salary.

Apply and Save of Income Tax in the Assessment Year 2013-14?

Every salaried employee plan that how to save Income Tax with small savings/Investments/Deposits. The financial year 2012-13 is just starts and thus the salaried employee must plan to save tax. Regarding this matter some saving planning tips and tricks are describe below and for this purpose some suggestions you have adopt following method to save money & income tax and escape from unwanted expenses freely.

The Following point are helpful for Salaried Employee those who are Taxpayee and Plan to Save Income Tax:

1) Proper Allocation of Annual compensation : Restructuring your salary with some additional components can reduce your tax liability. This restructuring doesn’t require any additional cash outflow. The following components can be efficiently used to reduce your income tax liability.
  • Transport allowance to the extend of Rs.800 is exempt.
  • Medical expenses which are reimbursed by the employer are exempt to the tune of Rs.15000/-.
  • Food coupons like sodexo or ticket restaurant are exempt from tax up to 50 Per meal .No of meal in day can be up to 1-2 per Day.
  • Individuals who are all living in a rented accommodation can include House Rent Allowance ( HRA ) as a part of their salary.
  • Leave Travel Allowance (LTA) can be part of your salary as this can be claimed twice in a block of 4 years.(read taxable and exempted allowance)(valuation of perquisites)
2) Effective Utilization of Tax Exemption : As far as possible utilize the maximum exemptions available under section 80 C, 80 CCF and 80 D. The maximum exemption available under section 80 C is Rs. 100000.

Under this section Rs.100000 investment or contribution can be made in PPF, NSC, Life insurance premium, 5 year FD with banks and Post offices, Mutual Fund ELSS, Principal Repayment of housing loan, and the tuition fees paid for children’s education.

Under Section 80 CCF, you can invest up to Rs.20000 in infrastructure bonds.

Under Sec 80 D, the premium paid towards the mediclaim policies are exempt. The maximum limit of exemption is Rs.15000 and for senior citizens the limit is Rs.20000 and for covering senior citizen parents there is an additional exemption to the extend of Rs.15000.

3) Properly Structure your Housing Loan : The Principal repayment of a housing loan is eligible for a deduction up to Rs.100000. The interest paid on a housing loan is eligible for a deduction up to Rs.150000. If the housing loan is for a sizable amount, then it is possible that the principal repayment and interest may exceed the specified tax exemption limit. To utilize the maximum tax benefit, an individual can consider going for a joint home loan with his/her spouse or parent or sibling. This will make sure that both the co-owners can claim tax deductions in the proportion of their holding in the loan.

4) Tax Plan in Sync with Overall Financial Plan : You should not do your tax plan in isolation. You need to do it in sync with your overall financial plan. So a tax plan is not only to just save taxes and also it should assist you in achieving your other financial goals like children’s higher education, buying a home or retirement.

5) Avoid Last Minute Rush : In fact the right time to do the tax plan is the beginning of the financial year. If you postpone your tax planning even now and do it in the last minute, then you will not be able to choose the right investment. In the last minute rush, you will be forced to choose a scheme which gives the proof immediately. Is the investment sound and profitable? Is there any other better options? You will not be able to choose the best scheme and you may settle with a mediocre one.

6) Invest Some Quality Time : Before investing your money, you need to invest your time. You need to take some quality time to understand the various tax saving options and compare their benefits and limitations.

7) Check for Future Commitments : Some tax saving options like NSC or ELSS need only onetime investment. Some other tax saving options like PPF, Ulips need periodical investments year after year. You need to be careful in choosing a tax saving scheme where you need to commit for periodical future payments. You need to check on a few things like; do you need such a future commitment? Will you be able to meet the future commitments at ease? The law may change and you may not get any tax exemption for your future payments. Would you consider the scheme irrespective of tax benefit for the future payments?

8) Changed Your Job; Redo your Tax Plan : Did you switch your job in the middle of the financial year? Then you need to redo your tax plan with consolidating the income from both the companies. It is advisable to inform the new company about the income during the particular financial year from the old company. So that your new company will deduct the right amount of TDS. Otherwise you may need to pay extra tax at the end of the financial year.

Whenever you change your job, you need to have a sitting with your financial planner or tax advisor. So that the required changes in your tax plan can be done proactively.

With proper tax planning you can reduce your tax liability; save more; invest better and become wealthier.

Tax liability and Exemption on House Rent Income.

Salaried Asssessee received House Rent Allowance is exempt u/s. 10(13A) of Income Tax Act-1961 read with Rule 2A of Salaried Assessee. The following clarification are properly clear the picutre that how to get exemption of HRA.

Assessee receiving HRA from Employer:
Salaried Assessees who are in receipt of House Rent Allowance (HRA) from an employer can claim an exemption u/s 10(13A) of the Income Tax Act-1961 read with Rule 2A of the Income Tax Rules, 1962.
The least of following can be claimed as deduction u/s 10(13A):
  1. An amount equal to 50% of salary, where the residential house is situated at Bombay, Calcutta, Delhi or Madras and an amount equal to 40% of salary where residential house is situated at any other place;
  2. House rent allowance received by the employee in respect of the period during which the rental accommodation is occupied by the employee during the previous year; or
  3. The excess of rent paid over 10% of salary.
Following points need to be taken in to consideration while calculating the amount of HRA admissible as exemption u/s 10(13A):
  1. “Salary” for the purpose of computation of exemptions u/s 10(13A) means Basic Salary and includes Dearness Allowance if terms of employment so provide. It also includes commission based on a fixed percentage of turnover achieved by an employee as per the terms of contract of employment AND EXCLUDES ALL OTHER ALLOWANCE & PERQUISITE.
  2. Exemption is not available where an employee lives in his own house, or in a house for which he doesn’t pay any rent.
Assessee not receiving HRA:
In case of other Individual assessees who are not in receipt of HRA from an employer but are living in a rented premises, option of claiming deduction u/s 80GG is available.

Taxfree perquisites for Assessment Year 2013-14 for Salaried Employee.


It is general demand of salaried employee (Taxpayee) regarding calculations of Income Tax for the Assessment Year 2013-14 to Deposit Savings, Demand of Tax etc. Thus the taxpayee go through Chaperter-VIA to save tax and project to invest for growing Deposit Savings. In accordance with this  Salaried Employee (Taxpayee) searches Tax free perquisites.  In Fin. year 2012-13 and Assessment Year 2013-14 Taxfree perquisites for Salaried Employee who deducted Tax as TDS monthly from his salary are as follows:

Justify Full1. Medical Facility or Medical Reimbursement:
  • Medical Facility :- The value of any medical treatment provided to an employee or any member of his family in a hospital, dispensary or a nursing home maintained by the employee shall be a tax free perquisite.
  • Medical Reimbursement : Any sum paid by the employer in respect of any expenditure incurred by the employee on his medicaltreatment or treatment of any member of his family subject to maximum of Rs. 15,000 in the previous year.
2. Recreational Facilities : Any recreational facility provided to a group of employees (not being restricted to a select few employees) by the employer is not taxable.

3. Training of Employees: Any expenditure incurred by the employer, for providing training to the employees or by way of payment of fees of refresher courses attended by the employees.

4. Use of health club, sports and similar facilities provided uniformly to all employees by the employer.

5. Expenses on Telephone, including a mobile phone, actually incurred on behalf on the employee by the employer.

6. Employer’s Contribution: Employer’s contribution to superannuation fund of the employee or provided such contribution does not exceed Rs. 1,00,000 per employee per year.

7. The premium paid by the employer on an accident policy taken out by it in respect of the employee would not be a perquisite. [CIT v Lala Shri Dhar (1972) 84 ITR 192 (Del) and CIT v Vinay Bharat Ram (1981) 129 ITR 128 (Del)].

8. Motor car provided by the employer to the employee or expenses incurred by the employer in connection with motor car belonging to the employee (for purposes other than exclusively for personal purposes) shall be a tax free perquisite in the hands of the employee.

9. Amount given by the employer of assessee to assessee’s child as scholarship is exempt under section 10(16). [CIT v B.L. Garg (2006) 155 Taxman 189 (All)]

10. Food and Beverages provided to Employees: The following shall be a tax free perquisite in the hands of the employees-
  • free food and non-alcoholic beverages provided by the employer to his employees during working hours:
(a) at office or business premises or
(b) through paid vouchers which are not transferable and usable only at eating joints.
Provided the value of such meal is upto Rs. 50 per meal.
(ii) Any tea or snacks provided during working hours.
(iii) Free food and non-alcoholic beverages during working hours provided in a remote area
or offshore installation.
11. Loans to Employees : - In the following cases the value of benefit to the assessee resulting from the provision of interest free or concessional loan shall be nil :
(a) where the amount of loans are petty, no exceeding in the aggregate Rs. 20000;
(b) Loans made available for medical treatment in respect of disceases specified in rule 3A of the Income-tax Rules. However, the exemption so provided shall not apply to so much of the loan as has been reimbursed to the employee under any medical insurance scheme.

12. Perquisites provided outside India : Perquisites provided by the Government to its employees, who are citizens of india for rendering services outside India, are not taxable. [Section 10(7)].

13. Rent Free House/Conveyance Facility: Rent free official residence and conveyance facilities provided to a Judge of the Supreme Court/High Court is not a taxable perquisite.

14. Specified Perquisite allowed to certain Persons:
(a) Specified perquisites allowed to Judges of the Supreme Court, Chief Election Commissioner, Election Commissioner.
(b) Chairman or retired Chairman, member or a retired member of U.P. S.C.
are not taxable perquisites.

15. Residence to officials of Parliament etc. :- The Rent Free furnished residence (including maintenance thereof) provided to an officer of the Parliament a Union Minister or Leader of Opposition in Parliament, is not a taxable perquisite.

16. Accommodation in a Remote Area : - The accommodation provided by the employer shall be a tax free perquisite if the accommodation is provided to an employee working at mining site or an onshore oil exploration site or a project execution site, or a dam site or a power generation site or an offshore site which -
(a) being of a temporary nature and having plinth area not exceeding 800 square feet, is located not less than eight kilometres away from the local limits of any municipality or a cantonment board; or
(b) is located in a remote area.

17. Educational Facility for Children of the Employee: where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, there shall be no perquisite value if the cost of such education or the value of such benefit per child does not exceed Rs. 1,000 p.m.

18. Use by the employee or any member of his household of laptops and computers belonging to the employer or hired by him.

19. Leave Travel Connection will be discussed in detail later.

20. Tax paid by the Employer on Non-Monetary Perquisites : Tax paid by the employer on non-monetary perquisites of the employee shall be exempt in the hands of the employee. [Section 10(10CC)]

Read Carefully Common Mistakes to Calculate Income Tax

There may be a difference in calculation of tax or interest due to the following reasons:
  • Mistakes in computation of Income as mentioned above leading to an increase in Income.
  • Mistake in correctly entering data or code of Income chargeable to tax at special rates such as STCG on sale of shares, LTCG where indexation benefit is claimed, winnings from lottery.
  • Incorrectly computing special rates of tax
  • Mistakes in entering or leaving blank, important fields relevant for computation of tax such as date of birth (relevant for senior citizens) or gender (relevant for female taxpayers), resident or non-resident, status (relevant in case of HUF).
  • In case of any shortfall of tax payment either due to non-payment or due to non-matching of the tax payment or TDS, interest may be charged. Typically, interest till the date of processing under 234A is charged if the return is filed beyond due date, interest under 234B is charged for shortfall in payment of advance tax and interest under 234C is charged for deferment of advance tax.
  • Interest under 234C is also charged in case advance tax on account of STCG under 111A, LTCG or Winnings from lotteries is not paid, beginning from the next quarter from the quarter in which the income is earned.
  • Details of quarterwise breakup of STCG, LTCG and Winnings from Lottery as mentioned in Schedule SI after adjustment of Losses and adjustment of basic exemption threshold, if applicable, are used for calculation of advance tax liability and interest under 234C.
  • The period for which interest under 244A is calculated on refund of tax is reduced by the period of delay in filing of return.

Claim relief u/s. 89(1) in Form 10E of previous year arrears.

The salaried employee if got the lumsum arrears of previous year, in the current financial in this circumstance the assessee reached to limit of tax and due to this cause the Salaried Employee pay tax unnecessarily. Therefore, to avoid for paying tax, mostly employee bifurcate previous year(s) arrears which got in current financial year by the employee and put exemption in form 10E, and Tax relief claimed u/s. 89(1) of Income Tax Act.

In this regard prescribed Form 10E for Assessment year 2012-13 are issued for claiming Tax exemption and get relief u/s 89(1) from Income Tax as per Income Tax Law. For Download Form 10E for Assessment year 2012-13 Click Here.

Complete Procedure to upload e-TDS/e-TCS Return.

Now a days all Quarter TDS/TCS Return submission is mandatory as Electronic Statements upload. In this matter most of TDS/TCS Deductor or collector did not know about how to submit quarterly returns and what is its procedure. Therefore the TIN-NSDL provides below most important point regarding this matter, read carefully and adopt while submitting or uploading e-TDS/e-TCS Returns:
  • Electronic statements (e-TDS/TCS/AIR) can be uploaded online to the TIN central system only for those TANs who have been associated with the organisation and duly authorised by NSDL.
  • A user can upload electronic statements online only for TANs associated with it.
  • Electronic statements should be prepared as per the data structure prescribed by the Income Tax Department (ITD). The data structure is the same as prescribed by ITD for furnishing of electronic statements through TIN-FCs.
  • After preparation of the electronic statement, entities have to verify the electronic statement through the latest version of File Validation Utility (FVU) provided by NSDL which can be freely downloaded from the TIN web-site. The upload file generated by the FVU is to be uploaded online.
  • The length of the filename should not be more than eight characters. The filename can be alphanumeric. No special characters are allowed in the filename (e.g. name of the file can be: Form27E.txt).
  • The user will login to the TIN central system by signing with the DSC associated with it. On authentication of the DSC, the user will get access to the online upload system.
  • After successful login, the user will select Upload option from the main menu. The user will have to choose sub-option 'TDS/TCS' and upload the electronic statement online to the TIN central system by digitally signing the upload.
  • If DSC authentication fails the electronic statement will not be uploaded.
  • The status of the electronic statement uploaded can be viewed by selecting File Status from the main menu.
  • After upload of the electronic statement the TIN central system will perform format level validations, check the TAN - User ID association. In case electronic statement is invalid or the TAN (for which the electronic statement was uploaded) is not associated to the user i.e. user uploads an electronic statement online for a TAN which is not associated with it, the electronic statement uploaded will be rejected. In case of an accepted electronic statement a Provisional Receipt will be generated which will contain a provisional receipt number / Token Number and will also indicate count of missing/invalid PANs. The deductor can view/print the Provisional Receipt.
  • Entities using the online upload of electronic statements facility will not submit Form 27A, CD / Pen drive for accepted electronic statements to TIN-FC or NSDL.
  • This facility is not available for online upload of electronic statements for Form 24 for those entities who have to submit physical certificates for No / lower deduction of tax and Form 12 B with respect to any of their deductees.
  • In case the entity is not able to upload its electronic statement using the online upload of electronic statement facility to the TIN central system, it may submit the same at any of the TIN-FCs by following the prescribed procedure for furnishing of e-TDS Statements with TIN-FCs.
Provisional Receipt Number is now referred as Token Number with effect from FY. 2010-11 onwards.

Circular regarding Service Tax on Vocational education/Training Course.

Service Tax applied on Vocational Education/Training Course according to Circular No. 164/15/2012-ST dated 28.08.2012 issued by Service Tax Department which clarified about the levy of Service Tax. Read the circular which is as under:

Circular No. 164/15/2012-ST

F. No. 356/17 /2012 - TRU
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
(Tax Research Unit)
153, North Block,
New Delhi, 28th August, 2012

To
Chief Commissioner of Customs and Central Excise / Central Excise & Service Tax (All)
Director General of Service Tax /Central Excise Intelligence /Audit;
Commissioner of Customs and Central Excise/ Central Excise and Service Tax/ Service Tax (All)

Madam/Sir,

Subject: service tax – vocational education/training course -- regarding.

Clarification has been sought in respect of levy of service tax on certain vocational education/training/ skill development courses (VEC) offered by the Government (Central Government or State Government) or local authority themselves or by an entity independently established by the Government under the law, as a society or any other similar body.

2. The issue has been examined. When a VEC is offered by an institution of the Government or a local authority, question of service tax does not arise. In terms of section 66D (a), only specified services provided by the Government are liable to tax and VEC is excluded from the service tax.

3. When the VEC is offered by an institution, as an independent entity in the form of society or any other similar body, service tax treatment is determinable by the application of either sub-clause (ii) or (iii) of clause (l) of section 66D of the Finance Act, 1994. Sub-clause (ii) refers to “qualification recognized by any law” and sub-clause (iii) refers to “approved VEC”. In the context of VEC, qualification implies a Certificate, Diploma, Degree or any other similar Certificate. The words “recognized by any law” will include such courses as are approved or recognized by any entity established under a central or state law including delegated legislation, for the purpose of granting recognition to any education course including a VEC.

4. This Circular may be communicated to the field formations and service tax assessees, through Public Notice/Trade Notice. Hindi version to follow.

Yours faithfully,
(S.Jayaprahasam)
Technical Officer, TRU
Tel/Fax: 011-23092037

Simultaneously claimed capital gain deduction u/s. 54EC and 54F or 54BC


Taxpayee must be aware about Exemption u/s. 54F and us/ 54EC on Long Term Capital Gain arising on sale of plot can be saved by claiming an exemption us/s. 54F and/or u/s. 54BC of Income Tax Act.

What is exemption U/s. 54F:
  • For exemption u/s. 54F. subject to various other terms/stipulations, you have to invest the amount of net sales consideration for purchases of residential house property within a prescribed period.
  • Exemption u/s. 54F is available on the basis of net sale consideration invested (and not on the basis of LTCG earned). If entire net sale consideration is not invested, exemption will be available on proportionate basis.
What is exemption U/s. 54EC:
To save LTCG tax u/s. 54EC, you are required to invest the amount of Long Term Capital Gain (LTCG) within a period of 6 months from the date of sale/transfer of assets in the specified bonds issued by REC/NHAI. There is a maximum celling of Rs. 50 Lakh in a financial year for investment in 54BC Bonds.

There is no specific restrictions/bar in claiming simultaneous exemption u/s. 54F and 54EC taken together. We are of the option that -
  • you can claim an exemption u/s. 54F towards investment in the residential house property and;
  • also u/s. 54EC towards investment in the 54EC Bonds.
Isolated investment in the plot of Rs. 20 Lacs will not enable you to claim any exeption from long term capital gain.

Salaried Employee submit your Income Tax Return before 31st August.


As you know very well the month of end of July is the due Date of Income Tax Return for Salaried Employee Assessee for Assessment year 2012-13. In Which form is applicable for Salaried Employee for submission of Income Tax Return for the Financial Year 2012-13. For any other assessees Like Salaried Income, Person having Income from House property, Interest income, Business Income where accounts are not required to be audited.
Free Softwares to file your Income Tax Return Online/Offline. Income Tax Department has been published Softwares for Income Tax Return Preparation for Assessment Year 2012-13. These are Excel Based Software (version 1.0). This utility is useful for Employee Assessee, Business Assessee for Annual Income Tax Return purpose.


Free ITR Software Sahaj & Sugam:

Sl. No.
Form Name
Return Preparation Software
Remarks
System Requirements
1
ITR-1 (SAHAJ)
New Release
MS Excel
2
ITR-2
New Release
MS Excel
3
ITR-3
New Release
MS Excel
4
ITR-4
New Release
MS Excel
5
ITR-4S (SUGAM)
New Release
MS Excel

How to Work in this Software?
To work in excel based utility all above Softwares are mandatory to enable macros. After enable macros this software is working properly in Microsoft Office 2003, 2007 and 2010.

How to Enable Macros in MS Excel for Return Preparation Utility?
It is necessary to ENABLE the execution of macros in Return-Preparation-Utility in order to enter, validate and generate an .XML file for upload. Follow these steps to ENABLE execution of macros depending on the version of [Microsoft Office Excel] being used to open the Return-Preparation-Utility :

[Microsoft Office Excel 2003]
Navigate through the following excel menu option to reduce the level of security in executing macros :
Tools --> Macros --> Security --> Low
OR
Tools --> Macros --> Security --> Medium
Save the excel-utility and re-open it.

[Microsoft Office Excel 2007]
Navigate through the following excel menu options to reduce the level of security in executing macros :
Excel Options --> Trust Centre --> Trust Centre Settings --> Macro Settings --> Enable all macros
AND
Excel Options --> Trust Centre --> Trust Centre Settings --> ActiveX Settings --> Enable all controls without restriction and without prompting
Save the excel-utility and re-open it.

[Microsoft Office Excel 2010]
When you open the EXCEL-UTILITY, the yellow Message Bar appears with a shield icon and the Enable Content button.
Click on the Enable Content to enable the macros.


Download Free Software ITR-1 (SAHAJ) (Click Here)

Benifits in Income Tax of jointly purchase property.

Is it necessary to purchase the property jointly.

Exemption is admissible even if the property is purchased individually:
It is not at all necessary to purchase a joint property to claim an exemption from LTCG. By purchasing two separate property individually also, one can have an exemption from LTCG.

Time Limit to purchase the Property:
Exemption u/s 54 (or u/s 54F,if the asset sold is not a residential house property) is available if the Assessee invests amount of LTCG for purchase of another residental house property.
  • within one year before or two years after the date of transfer, or
  • constructs a residential house within a period of three years from the date of the transfer of the original house.
Scheme to Deposit:
Although under section 54/54F,the assesee is allowed 2 years to purchase the house property,but the capital gain on transfer of the origional assets is taxable in the previous year in which the transfer took place. The return of income of the previous year is to be filed before the specified date Hence , the assessee will have to take a decision for the purchase/ construction of the house property before the date of furnishing of the return otherwise the capital gain would be taxable.

To avoid the above situation, the income Tax Act has specified an alternative in the form of a Deposit under the Capital Gain Deposit Accounts Scheme-1988 (CGDAS).

The amount of the capital gain, which is not utilized by the assessee for purchase or constructions of the new house before the date of furnishing the return of income, should be deposited by him under the Capital Gain Account Scheme, before the DUE DATE of furnishing the return. After deposits, the amount already utilized by the assessee for purchase/constructions of the new house along with the amount so deposited, shall be eligible for exemption under section 54/54F in the year in which LTCG has arisen.

The investment in the PLAIN FIXED DEPOSITS may not enable you to claim an exemption. Ensure to keep the amount in the CGDAS.

However, one can keep the amount in the plain fixed deposits after the sale of the property and can divert it in the CGDAS before the due date of filling the return of income.

It may be noted that under CGDAS also, two type of accounts can be opened as under-
  • Deposit Account A- This is a saving Account.
  • Deposit Account B - This is a term Deposit Account
Investment in Capital Gain Bonds:
Exemption can be claimed either by investing in the Bonds u/s. 54EC or u/s. 54 by investing in the house property. Assessee have the choice.

No TDS even if the Rent collected exceed limit whether the property is owned jointly.

Income Tax Act provides for TDS on collected Rent u/s. 194-I. Accordance with this section 194-I, any person any person (other than individual/HUF with turnover less than the limit specified in section 44AB in immediately preceding financial year), who is responsible for paying to a resident any income by way of rent is required to deduct tax at sources at the prescribed rates. Before 01.07.2010 the Limit of exemption for deducting TDS on collected Rent u/s. 194-I is Rs. 1,20,000/- and after this the Income Tax exceed exemption limit by Rs. 1,80,000/-.

Rates of TDS on Rental Payments:
  • @ 2% for payment towards the use of any machinery or plant or equipment.
  • @ 10% for the use of any land or building or furniture or fittings for all persons.
  • @ 20% in all cases, if PAN is not quoted by the deductee with effect from 01-04-1010.
What is the provision for non-deduction of TDS on Rent?
Though the property is owned by two or more person then the income from such property shall not be assessed as income of association of person (AOP) exempted to deduct TDS u/s. 26 from tenant. Instead, the share of each such person in the income from the property shall be included in his total income, if the following condition are satisfied:
  • The property consists of buildings or buildings and land appurtenant thereto, and
  • Respective shares of such persons are definite and ascertainable.
Clarification on non-deduction of TDS on Rent by CBDT:
Whether the limit of Rs, 120,000 per annum would apply separately for each co – owner of a property ?
Under section 194–I, the tax is deductible from payment by way of rent if such payment to the payee during the year is likely to be Rs. 120,000/- or more. If there are a number of payees, each having a definite and ascertainable share in the property, the limit of Rs. 120,000/- (Now Rs. 180,000/- per annum) will apply to each of the payees/co – owners separately. The Payers and payee are however, advised not to enter into sham agreements to avoid TDS provisions.”

To pay revised H.R.A rate to Principals of Affiliated Aided Colleges to Non-Agriculture University.

Maharashtra State Government has been issued a resolution No. NGC-1293/(3476) Vishi-4 Dated 01.02.1996 to pay Revised rate House Rent allowance to Principals of Non Agricultural University in the State. Accordance with the Government Resolution of Finance Department Dated 30.12.1991 there are so many discrepancies and so many senses has been taken on the regional ground to pay excess or recovered House Rent Allowances from Principals of Affiliated Aided Colleges to Non-Agriculture University. And on this basis Principal Forum placed suit against Maharashtra State vide Suit/Petition No. 116/2008 Dated 02.07.2011. The Maharashtra State Government has been implemented the same as dated 01.02.1996 not by Government Resolution dated 30.12.1991.

In this regard Maharashtra State Government directed to all Directors and Regional Directors/Joint Directors to pay excess House Rent allowances immediate to Principals of Affiliated Aided Colleges to Non-Agriculture University by latest issued Government Resolution Dated 22.08.2012.

Click Here to Read Full Government Resolution

G.R. To pay H.R.A to the Principals of Affiliated Aided CollegesClick Here

How to file Income Tax Return without Form. 16 (Salaried Employee), is it valid or not?


There is big problem when TDS Deductor deduct Tax as TDS from Salaried Employee, but not issued a TDS Certificate (Form 16) to the Deductee or issued a Form 16 by TDS Deductor to Deductee but Deductee (Salaried Employee) not received the same then beneficiary of TDS Certiicate (Form 16), how to file Income Tax Return without TDS Certificate or Form No. 16. In this case an Assessee can file the Income Tax Return on the Basis of TDS Credit relfected in Form No. 26AS rather than waiting for the TDS Certificate from the concerned Deductor.

Now, the Income Tax Department is also replying mainly on the amount reflected in 26AS for granting TDS Credit to the assessee. However, it is advisable to get the copy of the TDS Certificate for record purpose as the option of filing the reviced TDS Return is always available with the Deductor.

Latest Quarterly e-TDS/TCS Utility (FVU) Free Download.

Latest File Validation Utility Version 3.5 has been lanched by NSDL TIN for e-TDS/e-TCS quarterly Statement preparation for Financial Year 2011-12 and onwards. FVU is generally an ".exe" file which validates the TDS/TCS statements and the final assessment of tds/tcs is prepared with the help of FVU. There are some new features in this file validation utility FVU 3.5 which are as follows.

e-TDS / e-TCS returns prepared for FY 2005-06 and onwards (i.e. Forms 24Q, 26Q, 27Q and 27EQ) can be validated using this utility.

The e-TDS/TCS FVU is a Java based utility. JRE (Java Run-time Environment) [versions: SUN JRE: 1.4.2_02 or 1.4.2_03 or 1.4.2_04 or IBM JRE: 1.4.1.0] should be installed on the computer where the e-TDS/TCS FVU is being installed. Java is freely downloadable from http://java.sun.com and http://www.ibm.com/developerworks/java/jdk or you can ask your vendor providing computer facilities (hardware) to install the same for you.

The e-TDS/TCS FVU setup file (e-TDS/TCS FVU.exe) comprises of three files namely:
  • TDS FVU Readme.rtf: This file contains instructions for setup of the e-TDS FVU.
  • e-TDS FVU Setup.exe: This is a setup program for installation of FVU.
  • TDS_FVU_STANDALONE.jar: This is the FVU program file.
Key features of File Validation Utility (FVU) version 3.5
  • Changes in the structural validations of Book Identification Number (BIN) quoted in quarterly TDS/TCS statements for TDS/TCS deposits made by Book entry (applicable only in case of Govt. deductors).
  • FVU version 3.5 (for quarterly TDS/TCS statements pertaining to FY 2010-11 onwards) will be applicable from July 01, 2012.
Download File Validation Utility (FVU) Version 3.5 Click Here

All about Your PAN Card, New Pan Application, Correction in PAN Data etc.

With effect from April 8, 2012, PAN applications are required to be furnished in the new forms prescribed by ITD. Indian citizens will have to submit their ‘Application for allotment of new PAN’ in revised Form 49A only. Foreign citizens will have to submit their ‘Application for allotment of new PAN’ in newly notified Form 49AA only.

Uses of PAN Card:
PAN Card is very useful for whose income near about Taxable limit (Business Person) and all Employee (Salaried Persons). There are many uses of PAN Card such as to Open New Bank Account, At the time of Registry of any Property, When you make your Driving Licence or While submitting your Income Tax Return etc.

Statistics of PAN Card:
It contains 10 digits alpha+numeric. First 5 digits are related to character and next 4 digit are related to Numeric and last 1 digit is again to character.

Due Causes without PAN Card:

Higher Tax Rate Charges if PAN not available.


Know your Pan Here:
Find out your Jurisdiction of your PAN Here.
Apply for New PAN (Only Indian citizens) Here.
Apply for New PAN (Only for foreign citizens) Here.
Reprint of Your PAN card Here.

Change/correction in PAN data Here.

How to determine Personal Taxation, Payments, Investments, Deductions and Exemptions from Income Tax?

It is a common demand with lot of practical relevance and need a sensible & personalized by individual approach. The Taxpayee doesn’t have any benefits without investments from Income Tax. In a family, flow of funds plays a very vital role in tax-ability and accrual of income therefrom. Under the Income Tax Act-1961, the movement of funds also determines the admissibility & availability of deduction. By whom or in whose name the amount should be invested vary significantly depending upon various factors as under:
  • Applicable Income Tax Slab of the individuals investor of relevant Assessment Year
  • Nature of Investment for Long or Short Term Capital Gain
  • Nature of Earning of Income whether it is Tax Free or Taxable
  • Risk Element involved therein
  • Present & Future Income comes out from investment etc.
The investment in the name of wife or husband or major/minor child need to be done after considering various other factors also & it is practically impossible to standardize or advise it in totality in an isolated manner.

Normally, most of the deductions are admissible subject to the condition of payment. The deduction u/s 80C towards the repayment of the principal portion of housing loan would not be available to wife when-
  • the husband pays the amount
  • the same is paid by & on his own behalf by the husband and
  • the amount appears to be non recoverable from wife.
However, if the correct accounting treatment is given in the books & Balance-sheet to show that the amount though paid by husband is indeed paid on behalf of the wife as well and the same is recoverable or adjustable against other amount, the wife could also claim the deductions. The same is the case with the claim towards interest on housing loan.

Maximum Limit of Investment, Charges of Tax and Applicable Items under Wealth Tax?

Taxpayee mostly not well aware about Wealth Tax, Wealth Tax Investment Limit, its Tax Charges and which items are applicable under wealth Tax etc.

What is wealth Tax?
Wealth tax is charged for every assessment year on the “Net wealth” of every individual, HUF and company.

What are the applicable charges on wealth tax?
It is charged @1% on the amount by which the net wealth exceeds Rs.30,00,000/-.[Section 3].

Which Item are applicable under Wealth Tax?
Applicable to all excepts the following items-
(a) Section 25 company (b) Co-operative society (c) Social club (d) Political party (e) Mutual fund specified u/s 10 (23D) of the I.T.Act. [Section 45]

For the levy of wealth tax, Assets under Section 2 (ea) means

1. House- Any building or land appurtenant thereto whether used for residential or commercial purposes or for the purpose of maintaining a guest house or a farm house in an urban area.
Exceptions- Houses which are.
  • mean exclusively for residential purposes and which is allotted by a company to a whole time employee (including officer or director in whole time employment), having gross annul salary of less than Rs.5 lacs.
  • Stock-in-trade.
  • Occupied for business or profession of the assessee.
  • Residential property and which is let out for a minimum period of 300 days in the previous year.
  • Commercial establishments or complexes.
2. Motor cars-Except that which is used in the hiring business or as stock-in-trade.
3. Jewellery-Except that which is used as stock-in-trade
4. Yachts, boats and aircrafts-other than those used for commercial purposes.
5. Urban land-any land situated in urban area.
Exceptions-
  1. Land on which construction of a building is not permissible under any law.
  2. Land occupied by any building which has been constructed with the approval of the appropriate authority.
  3. Unused land held for industrial purposes up to 2 years
  4. Land held as stock-in-trade up to 10 years.
6. Cash in hand-For individuals and HUF’s, in excess of Rs.50,000/- and in the case of any other person, any amount not recorded in the books of account.

What is Net Wealth?
Net Wealth- Section 2(m)- The difference between aggregate value of assets and the value of all debts owed by the assessee on the valuation date which have been incurred in relation to the said assets. There is no separate rate for individual items. Net Wealth is liable for wealth Tax.

What is valuation date of Wealth?

Valuation date means the last day of previous year.

Updated All ITR Forms for Asstt. Year 2012-13 with Instructions.

I am very glad to inform you that every year the Income Tax Department has been changed Annual Income Tax Return Form to submit your Annual Income Tax Return at Income Tax Office by Online or Offline. so this also IT changed ITR Form for Assessment Year 2012-13. There for Year wise online excel based return preparation software, manual forms and acknowledgment, Income Tax Calculators excel based and others Free calculators links are given in this blog. So, take benefit of it and Free download the following forms :

NEW INCOME TAX FORMS

Form Name
Download Forms & Specifications
Instructions
Who can file this?
ITR-1 SAHAJ

This Return Form is to be used by an individual whose total income for the assessment year 2012-13 includes:-

(a) Income from Salary/ Pension; or
(b) Income from One House Property (excluding cases where loss is brought forward from previous years); or
(c) Income from Other Sources (excluding Winning from Lottery and Income from Race Horses)
ITR-2
This Return Form is to be used by an individual or a Hindu Undivided Family whose total income for the assessment year 2012-13 includes:-

(a) Income from Salary / Pension; or
(b) Income from House Property; or
(c) Income from Capital Gains; or
(c) Income from Other Sources (including Winning from Lottery and Income from Race Horses).
Further, in a case where the income of another person like spouse, minor child, etc. is to be clubbed with the income of the assessee, this Return Form can be used where such income falls in any of the above categories.
ITR-3

For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship
SUGAM (ITR-4S)

Sugam - Presumptive Business Income tax Return
ITR-4

For individuals and HUFs having income from a proprietory business or profession
ITR-5

For firms, AOPs and BOIs
ITR-6

For Companies other than companies claiming exemption under section 11
ITR-7
For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D)